Kenyan Stock Exchange to introduce ETFs

INDIVIDUAL investors may from the third quarter buy into a diverse number of stocks and bonds including highly priced blue chips trading at the Nairobi Securities Exchange.

This will be possible through the Exchange-Traded Funds whose regulations, the Capital Markets Authority and the Nairobi Securities Exchange said yesterday, are being fast tracked.

An ETF basket holds stocks, bonds or commodities trading on an Exchange – in this case the NSE- tracking their value throughout the day.

CMA acting chief executive Paul Muthaura said the authority is empowered under section 12A of Capital Markets (Amendment) Act 2013 to fast-track roll out of new products through principle-based approach to regulation.

The new approach, he said, is “more flexible and promotes innovation”.

NSE head of market and product development Donald Ouma said they expect the ETF regulations, already approved by the CMA board, to successfully undergo the stakeholder validation stage by end of June.”Thereafter we should be ready to allow issuers to come in the third quarter,” Ouma said.The ETFs, issued by either a company or a trust, are bought and sold throughout the day just like shares making them more attractive than mutual funds whose value can only be known by end of the day.

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