Japan's first exchange traded fund (ETF) linked to a yen-based gold price index may be ready for launch in July-September, the Osaka Securities Exchange Co Ltd, Japan's No 2 bourse, said on Wednesday.
Kotaro Yamazawa, OSE's executive officer based in Tokyo, said demand was high for access to the gold market other than VIA holding gold bars and that a few trust fund managers were preparing for a listing of a type of gold ETF unique to Japan.
ETFs, which are listed and traded like individual stocks, can give investors exposure to a sector, an entire market or even commodities such as gold and silver at a cost often less than buying investment trusts.
ETFs backed by gold bullion are already popular overseas, with StreetTRACKS gold shares in New York, the biggest of its kind, holding more than 400 tonnes of gold in a vault on behalf of investors. But such products are not allowed under current regulations on investment trusts in Japan, which restrict ETFs to those backed by marketable securities.
"We're expecting some action soon," Yamazawa told Reuters, adding that the exchange expected the first listing application for a Japan-domiciled gold ETF in the July-September quarter. The exchange, the country's sole listed bourse, has been seeking a hit product to lure more investors as rival Tokyo Stock Exchange Inc takes the bulk of share trading and as competition against fast-growing Asian bourses heats up.
The OSE was aimed at tapping into the 1,500 trillion yen ($12,000 billion) of financial assets held by Japanese households, which were now mostly put in bank deposits and other low risk assets, he said. In March the exchange changed its listing rules to allow ETFs based on any price index in public and in the market place, such as commodities indices and interest rates. Previously, ETFs were only based on Japanese stock indices.
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