ABSA corporate and Investment Bank has become the first to list Exchange Traded Funds on the A2X Markets bourse in Johannesburg - its three ETF secondary listings comprise 30percent of the market capitalisation of all ETFs on the JSE.
ETFs hold assets such as stocks, commodities or bonds and have become popular investment vehicles due to their lower cost.
ETF debenture prices move with the prices of the underlying assets being held by the ETF.
The NewGold, NewPlat and NewGold Palladium ETF will retain their primary listings on the JSE, but would also be available to trade on A2X from July 11.
Absa Corporate and Investment Bank Prime Services head Chris Edwards said in a statement that they were “delighted to be the first issuer to offer investors the option of transacting in our metal ETFs, on an alternative low-cost platform, as well as on the traditional JSE.
“By adding a secondary listing, it allows investors to capture not only the direct saving of lower transaction fees, but also the indirect savings that accrue as a result of narrower spreads and increased liquidity,” he said.
The listings follow A2X’s recent licence extension to include the secondary listing and trade of ETFs and ETNs (Exchange Traded Notes) that were granted by the Financial Sector Conduct Authority and South African Reserve Bank’s Prudential Authority earlier this year.
The Newgold ETFs that were being listed on A2X were the largest ETFs in the local market, with almost R25billion in assets under management.
A2X chief executive Kevin Brady said ETFs were experiencing significant growth due to their low cost and the market was pleased to be able to extend its offering to include these products. “These three large metal funds account for more than 30percent of the value of all ETF funds listed in South Africa,” he said. A2X is a regulated stock exchange that provides secondary listings for companies.
The NewGold Exchange Traded Fund offers the opportunity to invest in gold bullion, as it tracks the rand price of gold.
The debentures are fully backed by physical gold bullion with each debenture approximately equivalent to 1/100th of a fine troy ounce of gold bullion, which is held with a secure depository on behalf of investors at an annual fee of 0.4percent of its value.
NewGold ETF was the first of its kind in South Africa to allow institutional and retail investors to securely and conveniently invest in gold bullion. At launch, it was the third commodity ETF in the world and was, until recently, the only commodity ETF on the JSE.
NewPlat Exchange Traded Fund tracks the rand price of platinum. The debentures are backed by physical platinum, with each debenture equivalent to about 1/100th of a fine troy ounce of platinum bullion.
The NewPalladium Exchange Traded Fund tracks the rand price of palladium. The debentures are backed by physical palladium, with each debenture approximately equivalent to 1/100th of a fine troy ounce of palladium bullion. Annual management fees are 0.4 percent of the value of the debenture.