JSE to allow actively managed ETFs in October
Significant regulatory change
The JSE has rapidly grown its ETF listings in the past few years. It now has 93 ETF listings with a total market capitalisation of more than R114 billion.
South African investors will be able to trade actively-managed Exchange Traded Funds (ETFs) on the Johannesburg Stock Exchange (JSE) in mid-October, helping to bring the local bourse in line with practices already put in place by many of its global peers.
Unlike the traditional index-tracking ETFs that investors can already trade on the JSE, these engage the services of fund manager to adjust investments with an eye to maximising returns, making them even more similar to mutual funds. Thus, they are not adhering to the passive investment strategy usually synonymous with ETFs.
The country's main bourse announced on Tuesday that the Financial Sector Conduct Authority (FSCA) has approved amendments to the JSE Listings Requirements, which include allowing companies and investment funds to list and trade actively-managed ETFs, with effect from 14 October.
The global popularity of this type of ETF has grown significantly, and according to the JSE's statistics, ETFs have grown assets under management by 7.1% to US$474 billion (R8.1 billion) so far in 2022.
The JSE says this is the most significant regulatory change to the local ETF industry since the South African Reserve Bank (SARB) issued an exchange control circular in February 2017 that allowed local unit trusts to list offshore ETFs in SA. The exchange believes this aligns its operations with international benchmarks and will make the bourse more efficient.
It comes after extensive consultation between the JSE, FSCA, and other market participants, as the exchange wanted South Africa to catch up with the evolution of the global ETF markets and not be left behind on international best practices.
"The addition of actively-managed ETFs to our already expansive product offering will enable the JSE to attract more issuers to list new instruments. In addition, actively-managed ETFs will provide South African investors with an opportunity to further diversify their portfolios in a cost-effective manner," said the JSE's Director of Capital Markets, Valdene Reddy.
The JSE has rapidly grown its ETF listings in the past few years. It now has 93 ETF listings with a total market capitalisation of more than R114 billion. -Fin24
Unlike the traditional index-tracking ETFs that investors can already trade on the JSE, these engage the services of fund manager to adjust investments with an eye to maximising returns, making them even more similar to mutual funds. Thus, they are not adhering to the passive investment strategy usually synonymous with ETFs.
The country's main bourse announced on Tuesday that the Financial Sector Conduct Authority (FSCA) has approved amendments to the JSE Listings Requirements, which include allowing companies and investment funds to list and trade actively-managed ETFs, with effect from 14 October.
The global popularity of this type of ETF has grown significantly, and according to the JSE's statistics, ETFs have grown assets under management by 7.1% to US$474 billion (R8.1 billion) so far in 2022.
The JSE says this is the most significant regulatory change to the local ETF industry since the South African Reserve Bank (SARB) issued an exchange control circular in February 2017 that allowed local unit trusts to list offshore ETFs in SA. The exchange believes this aligns its operations with international benchmarks and will make the bourse more efficient.
It comes after extensive consultation between the JSE, FSCA, and other market participants, as the exchange wanted South Africa to catch up with the evolution of the global ETF markets and not be left behind on international best practices.
"The addition of actively-managed ETFs to our already expansive product offering will enable the JSE to attract more issuers to list new instruments. In addition, actively-managed ETFs will provide South African investors with an opportunity to further diversify their portfolios in a cost-effective manner," said the JSE's Director of Capital Markets, Valdene Reddy.
The JSE has rapidly grown its ETF listings in the past few years. It now has 93 ETF listings with a total market capitalisation of more than R114 billion. -Fin24
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