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Mon 8 Nov 2010 03:26 PM

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S&P plans to create second Gulf ETF in 2010, 2011

Ratings agency working to create a new exchange-traded investment tool based on its indices

S&P plans to create second Gulf ETF in 2010, 2011
GULF ETF: Standard and Poors plans to help launch the Gulf Arab regions second exchange-traded fund this or next year (Getty Images)

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 Monday.

S&P said it was working with regional banks in the Gulf Cooperation
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.