Standard and Poor's plans to help launch the Gulf Arab region's second exchange-traded fund (ETF) this or next year in collaboration with several local providers, the ratings agency said on November 08.
-- To launch equity indices-based ETF soon
-- Hopes to introduce debt, commodity instruments later
S&P said it was working with regional banks in the Gulf Co-operation Council (GCC) to create a new exchange-traded investment tool based on its indices by year-end or 2011, Alex Matturri, S&P's global head of index services, told Reuters.
"Things are at advanced stages, but there are certain regulatory steps that we need to take before we can go ahead and launch. We should be coming out with something soon, it will be based on our indices," Matturri said, adding that fixed income or commodity instruments would launch much later.
"ETFs are one of the product categories that over time will be beneficial to the region. We are working with local providers that actually create the product," he said.
Matturri also said the launch of ETFs would bring back investors' attention and boost capital flows into the region's market, which have dried up following the global financial crisis in 2008 and last year's Dubai debt woes.
In March, Saudi Arabia's Capital Market Authority (CMA) said it would allow exchange traded funds (ETFs) that include only Saudi shares to be listed on foreign bourses.
Saudi financial firm Falcom Financial Services won approval to list the region's first ETF - the "Falcom Saudi Equity ETF" - on the kingdom's bourse, the Tadawul.
Saudi Arabia has been trying to encourage more foreign money to its bourse, having allowed indirect foreign ownership via so-called swap agreements in 2008 as part of gradual efforts to open up the biggest Arab bourse.