Dubai:In a first of its kind in regional capital markets, Dubai Financial Market (DFM) on Sunday launched a trading platform for exchange traded funds (ETF), as the bourse seeks a pie of the burgeoning $3.7 trillion global ETF market.
Afkar Capital listed the first ETF fund on the DFM platform with Al Ramz as the new authorised participant (AP), bringing the total number of APs to four, and the Beltone Financial as the foreign liquidity provider.
“The DFM is committed to its strategy of providing investors with a wide range of innovative products. Over the past few months, the market has approved a new set of regulations developed in collaboration with traders to serve as a foundation for its new ETF platform,” Eisa Kazim, chairman of DFM said in a statement.
The fund, (with the symbol UAETF), launched in June 2016, offers single-click exposure by investing in three UAE markets: the DFM, the Abu Dhabi Exchange (ADX) and Nasdaq Dubai.
“The funds provides a less risky, less volatile, less costly, more exposure with less money, and this is a formula that can attract everybody,” said Magued Shawky, vice-chairman of Beltone Financial Holding.
“I expect more ETFs to come to the market (locally). There are on and off talks. This is the beginning and once people see this succeeds, more people will come to the market,” Hassan Al Serkal, chief operating officer and head of operational division, at DFM told Gulf News on the sidelines of the launch.
Globally, there has been robust trading from international investors in the ETF’s as they seek cost effective ways to invest in a well-diversified strategy.
The nine-year average for monthly flows into ETFs globally is $22 billion, while in January worldwide ETFs recorded inflows of $63 billion. This was the highest monthly figure since September 2015, when ETFs saw global inflows of $73 billion. Ernst and Young expects the global ETF market to $6 trillion from the current $3.7 trillion. “We want to be a part or a small chunk of that,” said Al Serkal.
“We are not anticipating that it will boom now, and it will take its time, and once people realises the value of it, they will come and trade,” said Al Serkal.
When asked if they plan to introduce more products Al Serkal said, “we are always trying to develop the market. Once the appetite is there, we introduce some products. We started with the ETF, and there are a couple of products in the pipeline.”