Discussions are currently underway between market participants in Nigeria, Kenya and South Africa to launch the cross listing of Exchange Traded Funds (ETFs) in order to improve investors’ exposure around the continent.

According to the Director for Capital Markets at the Johannesburg Stock Exchange (JSE), Donna Oosthuyse, the advantages for companies included in the ETF indices, and for the exchanges from whence they come, are that ETFs need to be ‘fully covered’, “this means that the asset manager that is managing the ETF portfolio has to buy and sell the underlying shares on the home exchange, depending on the activity of buying and selling of the ETF.

“If an ETF from Kenya or Nigeria for instance is listed on the JSE, then the asset manager in Kenya or Nigeria has to buy and sell the constituent shares on the home market, as units in the ETF are bought and sold. This drives liquidity in the home market. In addition to this, it provides extra visibility on the shares on that exchange to new investors who in all likelihood don’t yet trade on that market,” he explained.

Also, the Director, Business Development, at the Nigerian Stock Exchange, Haruna Jalo-Waziri, expressed that ETF is becoming attractive to many investors offering them portfolio diversification and reduce cost of investing.

“This collaboration underscores our commitment to providing investors with a wide range of investment products to help them realise their financial goals. ETFs are becoming attractive to many investors offering them portfolio diversification and reduce cost of investing. We are proud once again to be collaborating with reputable exchanges in Africa to bring this new and exciting investment opportunity to bolster trade across multiple markets.”