The Securities Commission Malaysia (SC) has revised the guidelines on ETFs to allow some foreign ...
The Securities Commission Malaysia (SC) has revised the guidelines on ETFs to allow some foreign funds to be cross-listed on Bursa Malaysia.
As a result of the revision, a fund manager can pursue secondary listing of a foreign ETF on the Bursa Malaysia, if it is from a recognised jurisdiction as stipulated in the guidelines. However, the Bursa states that "it is also possible now" to cross-list a foreign ETF from a non-recognised jurisdiction which has a regulatory regime similar to Malaysia's
The revision of the guidelines, which came into effect on June 12, entails two new chapters focussing on the offering of foreign ETFs on the exchange, along with the application procedures for offering foreign ETFs. These include the approval criteria, requirements of an offering document, as well as the appointment and functions of a representative.
In order to formulate the revision, the SC consulted selected fund managers. At present, there are three ETFs listed on the Bursa Malaysia Securities Berhad, comprising the ABF Malaysia Bond Index Fund, the FBM 30 ETF and MyETF Dow Jones Islamic Market Malaysia Titans 25.
In a move to further widen investment options, the Bursa Malaysia has also announced that it will offer multi-currency trading as of July 13, 2009.
Its multi-currency securities framework will support listing, trading, clearing and settlement of securities in currencies that are non-ringgit. Consequently the framework will be able to support primary non-ringgit listings or cross-listings from other stock exchanges. The multi-currency platform will encourage the potential for regional linkages involving settlement in common currencies.
The exchange states that investment in multi-currency securities allows for better diversification and hedging, while exporters can leverage on this by equitising their foreign currency holdings into non-ringgit securities.
Bursa Malaysia chief executive officer Dato' Yusli Mohamed Yusoff says that the implementation of the multi-currency framework will support the growing interest among domestic and foreign issuers to list Asian regional ETFs in a common global currency.
He says: "ETF issuers are becoming more enthusiastic about cross-listings as a strategy to grow their assets under management. Their interest has also expanded to cover regional ETFs.
International players such as BNP Paribas Investment Partners are considering offering non-ringgit ETFs on the exchange.
BNP Paribas Asset Management head of structure, indexed and asset allocation in Asia, Bruno Lebeda comments: "We are pleased to leverage on the multi-currency platform to offer our first US dollar ETF which is expected to be launched in the third quarter of this year."
He adds: "It will be the first of its kind in Malaysia and I hope that it will be the first in a series of ETFs that BNP Paribas Investment Partners will bring to Malaysia."
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