The Capital Markets Authority (CMA) has approved the listing of NewGold Issuer Limited as the first Exchange Traded Fund (ETF) in Kenya.
NewGold Issuer plans to issue and list 400,000 Gold Bullion Debentures as a secondary listing on the Nairobi Securities Exchange (NSE) main investment market segment.
The company is incorporated in South Africa.
The value of NewGold ETF tracks the price of gold. Price of the ETF will be determined on the listing date based on the real-time cash market values of gold and the Kenya Shilling.
ETFs are a type of listed open-ended index or unit instrument whose price tracks the movement of constituent underlying securities or commodities. It can be a domestic or offshore product.
CMA developed guidelines in September 2015 to operationalise the trading of ETFs.
ETFs provide an opportunity for investors to diversify their investment portfolios to access international products.
“This is a critical milestone in positioning Kenya as a gateway for regional and international capital flows by developing creative products that promote investor confidence in regional products,” said CMA chief executive Paul Muthaura in a statement.
NewGold Issuer, a wholly-owned subsidiary of NewGold Owner Trust, was primarily listed on ETF sector of the Johannesburg Stock Exchange in 2004. Other secondary listings of the ETF have been on the Botswana Stock Exchange, Stock Exchange of Mauritius, Namibia Stock Exchange and Ghana Stock Exchange.
The NewGold Gold Bullion Debentures issued subsequent to the secondary listing on the NSE will rank equally with each other and with all other Gold Bullion Debentures already in issue, prior to the NSE listing, said CMA.