March 23, 2010 / 3:48 PM / 10 years ago

UPDATE 1-Saudis to launch ETF open to foreigners

* First ETF open to foreigners to start trading on Sunday

* Move aimed at luring foreign investors to top Arab bourse

(Adds further details, background)

RIYADH, March 23 (Reuters) - Saudi Arabia plans to launch its first exchange-traded fund of Saudi shares, which will be accessible to foreign investors, as part of efforts to open up the biggest Arab bourse.

Saudi investment bank Falcom Financial Services’ exchange-traded fund for Saudi stocks will be listed and start trading next Sunday, March 28, the stock exchange said in a statement on its website.

ETFs usually track an index and can be traded like securities.

“Non-resident foreigners will be allowed to trade in this fund’s units,” it said.

Falcom won approval earlier this month to list a Saudi Equity ETF on the bourse at a time when the world’s top oil exporter is trying to attract more foreign money to its bourse, having already allowed indirect foreign share ownership via so-called swap agreements in 2008. [ID:nLDE62F1UN]

At a later stage, Saudi exchange-traded funds will be allowed to include Islamic bond and commodity instruments in addition to Saudi shares, the bourse said. [ID:nLDE62L0DX]

The bourse regulator — the Capital Market Authority — will also allow exchange traded funds that include only Saudi shares to be listed on foreign bourses.

For a news analysis on the Saudi ETFs plan, please double click [ID:nLDE62G0ET] Reporting by Souhail Karam; editing by Firouz Sedarat and Simon Jessop

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