KARACHI: The Pakistan Stock Exchange (PSX) has announced 14 market participants for the upcoming Exchange-Traded Funds (ETF).
These include Bank Alfalah, Bank Al-Habib, Engro Fertilizers, Engro Corporation, Fauji Fertilizers, Habib Bank, Hub Power, Lucky Cement, MCB Bank, Oil & Gas Development Company, Pakistan Oilfields, Pakistan Petroleum Limited, Pakistan State Oil, and United Bank Limited, according to a notification (N-211) released on Tuesday.
This means the above 14 companies and banks will become part of the ETF basket.
“The above mentioned symbols shall be traded in a lot of one share, and there shall be no Odd Lot market for these symbols,” the PSX clarified.
An odd lot refers to any order for a security which is less than the normal unit of trading. Usually, this is anything less than the standard 100 shares.
According to Hassan Raza, the Head of Product Management and research at the PSX, in the current system, an investor has to go to the Odd Lot market to buy any number of shares that are less than 100.
But when the ETFs are launched, if someone would like to buy one or five shares of any one of the above symbols (or any number of shares less than 100), they will be able to do so.
The launch date of the ETFs is still to be decided, according to the exchange.
Earlier in January, the PSX said it will begin to offer ETF for the very first time in 2020. At the time, PSX had said the ETFs would be available anywhere between two weeks to one-and-half month’s time. However, no tentative date was set by the Securities and Exchange Commission of Pakistan (SECP).
Two asset management companies (AMCs) in Pakistan, National Investment Trust Fund and UBL Funds, will offer the ETFs. Alongside the two authorized companies, JS Global will be the authorized market maker. Market makers are typically large banks or financial institutions which help create a market for investors to buy or sell securities.
The process is in its final stages, as the AMCs have obtained approval for the ETFs from the SECP. The final date of the ETF launch rests with the AMCs, and is estimated in a few weeks.
When reached for comment, NIT representatives said the launch date had not been finalized, but could potentially be in the first week of March.
This recent update follows an earlier notification (N-1620) released by the PSX on December 18, which described a revision of the marketable lot of ETF constituents.
In that notification, the PSX laid down the above mentioned rules of the ETF basket, such as that the marketable lot for those securities will be at one share, and that there will be no Odd Lot market for those symbols.
However, it did not say which participants were included in the ETF, saying that would instead be issued before the formal listing and trading of the ETF on the exchange, and after AMCs obtain SECP approval for ETFs.
The PSX had been testing operational readiness for ETFs in December 2019, and also been conducting mock sessions in the after-hours with around 15 brokers, to familiarize people with the new product.