BY MTHANDAZO NYONI
THE Zimbabwe Stock Exchange (ZSE) is now able to receive applications for listing of exchange traded funds (ETFs) and exchange traded notes (ETNs) following the approval of the Securities and Exchange rules 2019.
In a statement on Friday, the local bourse said the approval was granted by the Securities and Exchange Commission of Zimbabwe in terms of section 65(3) of the Securities and Exchange Act (Chapter 24:25).
These are the Securities and Exchange (Zimbabwe Stock Exchange Listings Requirements) (Amendment) rules 2019 and the Securities and Exchange (Zimbabwe Stock Exchange Market Making) rules 2019.
“The listing rules amendment incorporates exchange traded products listings requirements, which means ZSE is now able to receive applications for listing of exchange traded funds and exchange traded notes. The ZSE is also now able to process applications for prospective market makers,” the local bourse said.
ETNs, according to Investopedia, are structured products that are issued as senior debt notes, while ETFs represent a stake in an underlying commodity.
ETNs are more like bonds in that they are unsecured.
ETFs provide investments into a fund that holds the assets it tracks, like stocks, bonds or gold.
One of the benefits of ETFs is that they can offer lower operating costs than traditional open-end funds, flexible trading, greater transparency, and better tax efficiency in taxable accounts.
Since ETNs trade on major exchanges like stocks, investors can buy and sell them and make money from the difference between the purchase and sale prices, minus any fees.