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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Rulebook Modules
Collective Investment Rules (CIR) [VER25/07-19]
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(1 version)
Dec 18 2018 onwards

CIR 3.1.12 Guidance

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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

To view past versions of this module in PDF format, please visit the Archive.

1. CIR Rule 13.9.1 prohibits the use of the term Exchange Traded FundG or ETFG unless a FundG meets the criteria in CIR Rule 3.1.12. A similar prohibition applies to Foreign FundsG that offer UnitsG in or from the DIFCG —see CIR Rules 15.1.5(c) and 15.1.6(1)(c).
2. ETFs are different to other exchange traded Open-ended FundsG . ETFsG generally do not sell or redeem their UnitsG to and from retail investors directly at net asset value (NAV). Instead, an Authorised Participant ("AP") (i.e. a market maker appointed by the ETF Fund ManagerG ) buys and redeems ETF UnitsG , called creation UnitsG , directly from the ETFG Fund ManagerG . Generally, an AP that purchases a creation UnitG of an ETFG deposits with the ETF Fund ManagerG a 'purchase basket' of certain securities and cash and/or other assets identified by the ETF ManagerG that day, and then receives the creation UnitG in return for those assets. The basket generally reflects a pro-rata portion of the ETF's underlying holdings. After purchasing a creation UnitG , the AP may hold or sell some or all of the UnitG in the basket on the relevant exchange.
3. The redemption process is the reverse of the purchase process. The AP redeems the creation Unit from the ETF, in exchange for a 'redemption basket' of securities and/or cash and other assets (or all cash) received from the Fund ManagerG . The AP also offers to buy and sell ETF Units on the relevant exchange, where retail investors can buy and sell ETF Units at a price close to NAV.
4. See further Guidance about ETFs under CIR Rule 13.9.6.
Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]