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ETF launched under new UAE regulations

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Abu Dhabi-based asset management firm Afkar Capital Limited has launched the Afkar S&P UAE UCITS ETF, the first liquid, fully fungible, fully tradeable and transparent ETF in the Middle East under the UAE’s new regulations. 

The ETF will list on the Dubai Financial Market (DFM) on Wednesday June 29th 2016 under the symbol “UAETF” (Bloomberg: UAETF UH Equity) and has been designed to replicate the S&P UAE BMI Liquid 20/35 Capped Index (Bloomberg: SPUAECAN). The index includes the largest stocks by capitalisation in the United Arab Emirates, providing exposure to the UAE economy. There are no entry or exit fees in the secondary market.
 
His Excellency Essa Kazim, Chairman of DFM says: “Dubai Financial Market is delighted to welcome this significant step from Afkar Capital, in line with our strategy to provide investors with innovative and diversified investment products. We have extensively collaborated with various market participants in general and the three leading institutions, namely Afkar Capital, BNY Mellon and S&P Dow Jones in particular to create a favorable regulatory framework for the listing and trading of ETFs based on best practices. We are pleased with Afkar Capital’s decision to list the first foreign Exchange Traded Fund on DFM, which further strengthens the market’s leading position as the most favored listing venue for companies in the UAE and beyond.”
 
“ETFs provide investors with the transparency and simplicity of a stock combined with the diversification of a fund,” says Sylvain Vieujot, Founding Partner and Non-Executive Chairman at Afkar Capital. “The ETF comprises a wide basket of equities that you can buy and sell with a single click through your brokerage account, just like a stock. We will publish our full holdings online on a daily basis,” he adds.
 
“The UAETF provides investors access to one of the most well-known indices tracking the Abu Dhabi Exchange (ADX), the DFM and Nasdaq Dubai,” said Afkar Capital Chief Executive Officer and Founding Partner Seif Fikry. “UAETF provides investors with balanced exposure to the second-largest market in the Middle East and North Africa (MENA) in terms of both capitalisation and liquidity.”
 
Fikry credited the Abu Dhabi Global Market (ADGM) with providing a stable platform for UAETF and the Emirates Securities and Commodities Authority (ESCA) and Dubai Financial Markets (DFM) for providing a hospitable environment for the ETF’s launch.
 
BNY Mellon was appointed fund administrator, Irish trustee, transfer agent and global custodian for the fund. Fikry added that BNY Mellon’s expertise in helping to create ETFs and its global capabilities were key factors in its selection.
 
“BNY Mellon has a long history supporting the unique servicing needs of ETFs,” says Tarek Sherlala, BNY Mellon’s Head of Asset Servicing for the Middle East and Africa. “Our advanced technology and highly regarded services are supporting Afkar’s launch of this exciting initiative.”
 
As of March 31, 2016, BNY Mellon supported 35 issuers offering 605 separate portfolios in the US, Europe and Asia with a total of USD286  billion in net assets.
 
Fikry also noted that S&P Dow Jones Indices is one of the world’s largest providers of financial market indices. “S&P Dow Jones Indices is pleased to be the index provider for this groundbreaking ETF launched by Afkar Capital,” says Charbel S. Azzi, Head of Middle East, Africa & CIS of S&P Dow Jones Indices. “UAE is one of the most dynamic economies in the Middle East and we are proud to play a part in supporting its development and broadening investor choice here with our world-class expertise in index design and governance.”
 
UAETF is regulated under the European Union’s UCITS Regulation, one of the world’s most well-known regulatory frameworks. It is also governed by the rules and regulations of the Emirates Securities and Commodities Authority (ESCA), the ADGM, the DFM, and the Central Bank of Ireland.
 
Steve Barnett, Financial Centre Development Director, Financial Services Regulatory Authority of ADGM says, “We congratulate Afkar Capital on launching its first ETF in the Middle East. With the increasing use of ETFs among family offices, intermediaries, such as private banks, financial advisers, platforms, and retail investors, we look forward to Afkar Capital and our member firms to introduce future products and contribute towards the liquidity and vibrancy of our capital market.”

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