Article 48: Exchange Traded Fund

Article 48: Exchange Traded Fund

a. The unitholder of an exchange traded fund shall be deemed to have read and accepted the Fund's Terms and Conditions upon purchasing any unit of an exchange traded fund from the Exchange.

b. Units of an exchange traded fund must be deposited with the Depository Center.

c. The exchange traded fund may invest in its own measurement indicator, provided that the securities weights in the fund's portfolio are matching the weights of those securities in its own measurement to the extent that does not conflict with the Fund’s Terms and Conditions.

d. Units in an exchange traded fund may be issued and cancelled for in kind or cash transactions, provided that they are in a pre-determined block size in accordance with the Fund’s Terms and Conditions.

e. The custodian of an exchange traded fund must ensure that any units issued or cancelled in the exchange traded fund (and the value of such units) match with fund assets received or paid for those units (and their value), and to rectify any mis-match between exchange traded fund units and its underlying assets.

f. The fund manager of an exchange traded fund must appoint one or more capital market institution which are licensed to carry out dealing activity and as a market maker for the exchange traded fund.

g. The market maker must, at all times, comply with the market making requirements agreed upon with the fund manager and disclosed in the Fund’s Terms and Conditions.

h. The total indicative net asset value and indicative net asset value per unit for an exchange traded fund must be regularly calculated by the fund manager during a trading day and must be disclosed on the Exchange on a real-time basis or at any other frequency acceptable to the Authority.

i. The fund manager must calculate the total net asset value and net asset value per unit and disclose this information on the Exchange at the end of each trading day.

j. The exchange traded fund’s component securities and their respective weightings must be disclosed by the fund manager on the Exchange.

k. All documents and information of an exchange traded fund and changes thereof shall be deemed to have been made available to unitholders once they have been published on the Exchange.

l. Unitholders shall be deemed to have accepted and signed the Terms and Conditions of the exchange traded fund, upon purchase of units in an exchange trade fund.

m. An exchange traded fund must comply with any conditions or additional continuing obligations as the Authority may specify.

n. The exchange traded fund manager may submit a request for a temporary suspension of trading in accordance with the provisions of the Listing Rules.

o. An index fund may request to be listed on the Parallel Market after the issuance of a special fund resolution by the unitholders, approving of such.

p. In the event of offering the exchange traded fund units in the Parallel Market, the offering of those units shall be limited under the provisions of this Part to the categories of Qualified Investors on the Parallel Market.

q. As an exception from the provisions of Paragraph (h) of Article )43) of these Regulations, the borrowing of the exchange traded fund in the Parallel Market may not exceed )75%( of the fund’s net assets value.

r. As an exception from the provisions of Paragraph (i) of Article (43) of these Regulations, the investments in derivatives of the exchange traded fund in the Parallel Market may not exceed (25%) of the fund’s net assets value.

s. The fund manager seeking to register and offer the exchange traded fund units must submit a request to the Authority that includes the information required under these Regulations, and simultaneously submit an application to the Exchange for listing those units in accordance with the provisions of the Listing Rules.

t. The provisions of these Regulations shall apply to the exchange traded fund to the extent that they apply to nature of the exchange traded fund.