Dhaka, Bangladesh (BBN)- The Dhaka Stock Exchange will launch two index-based exchange-traded funds [ETF] by October this year in a bid to diversify the bourse’s business as part of its business plan, a DSE official said.
As part of the bourse’s business plan approved by the Bangladesh Securities and Exchange Commission with its demutualisation scheme, launching of ETFs was the first priority of the bourse.
The two ETFs will be formed based on DS30, the blue-chip index of DSE, and DSES, the shariah index of the bourse, Swapan Kumar Bala, managing director of the DSE, told New Age, a local newspaper.
An ETF is like a mutual fund that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, according to the DSE’s business plan.
ETFs experience price changes throughout the day as they are bought and sold. When an investor is going long in an ETF, he is buying shares of a portfolio that tracks the yield and return of its native index, it said.
The bourse is also working to form a clearing corporation with collaboration of Chittagong Stock Exchange as launching derivative, future contract product and commodity market require it.
The DSE at present facilitates trading of equities, mutual funds, debentures and bonds.
The bourse within 2020 aims to attain a sustainable average daily turnover of BDT 25 billion, ensure steady domestic and offshore institutional investments of at least three-fourth of the total investments in the market, the DSE business plan said.
The plan also aims at attaining at least 30 per cent foreign participation of the total market capitalisation, doubling the total number of listed securities, increasing depth and liquidity of bond market, including bringing in the government securities under trading net, and increasing breadth by listing new products, the plan said.
BBN/SSR/AD-06Apr14-1:58 pm (BST)