JSE to amend listing regulations to permit actively managed ETFs

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The Johannesburg Stock Exchange (JSE), has announced its intention to amend the JSE Listings Requirements to enable the listing of actively managed exchange-traded funds (ETFs). Actively managed ETFs are different from passive, index-tracking ETFs. The fund managers who run actively managed ETFs choose shares and make regular trades to generate returns for investors. 

“This is an important change that will allow institutional and retail investors an opportunity to develop beneficial investment strategies. We therefore, invite market participants to comment on the proposed amendments,” says Valdene Reddy, Director of Capital Markets at the JSE. The closing date for comments is Monday, 2 May 2022 at 17h00.

“There is rising appetite locally for listed actively managed ETFs. This is in line with international trends where demand for active ETFs is growing and is expected to significantly surpass the current $300 billion in assets under management in the coming years,” Reddy explains.

The JSE has seen significant growth in ETF listings and trading. The Actively Managed ETF listing regulations amendment is expected to increase the offering and number of ETF listings on the JSE. Most importantly, ETFs, both passive and active, offer investors an opportunity to diversify their portfolios cost-effectively. There is a significant trend internationally, especially in the USA and Canada, to list actively managed ETFs. The first actively managed ETF in the US market listed in 2008 and to date, there are more than 1000 actively managed products listed across the globe.

To make the listing of actively managed ETFs possible, the JSE intends to expand the current Section 19 (Specialist Securities) to include specific provisions. The marked-up amendments along with an explanatory memorandum are available on the JSE’s website.