Abu Dhabi’s ETF market is growing quickly. This week two more funds were listed on the Abu Dhabi Securities Exchange, the first Korean ETFs on the exchange, one tracking defense and one tracking advanced manufacturing. Anthony Sassine, Co-Founder and CEO of OCEANE Global, the market maker behind many of the funds trading on ADX, explains how liquidity is provided and how a cross listing works between New York and Abu Dhabi. He also breaks down the latest Gulf ETF figures, shares what he expects next, including crypto ETFs, and why local investors want funds in their own currency and time zone.
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How Korean ETFs Reached Abu Dhabi and Why the Gulf ETF Market Is Growing So Fast
What does OCEANE do?
We are a market maker. We provide liquidity for the ETFs you see on the screen here. There are almost 27 ETFs on ADX, and we are currently market making about 17 of them. We created OCEANE to strengthen the ETF ecosystem, providing liquidity and making sure investors here can access these ETFs in a good and affordable manner.
The first Korean ETFs on the Gulf exchange chose ADX. What did that launch look like for you on the liquidity side?
It has been a few months in the making. We get involved in these conversations from the very beginning, and we were able to create the cross listing link from the New York Stock Exchange to ADX. We first cross listed ETFs this year and last year in December, four of them, and this week we launched two more with the asset manager and its partner, who are the face of the ETFs in the background. They are the Korean defense ETF and the Korean advanced manufacturing ETF. The Korean defense industry has gained a lot of prominence over the past year, helping regional countries defend themselves, and it has an elaborate and up and coming industry. The other one reflects that Korea is huge in producing chips, with SK Hynix making the HBM chips and Samsung Electronics making memory and the other chips required for AI. The fund has a 45% allocation to those two big names in addition to other big names in Korea. These are very exciting, very niche ETFs for the local investor.
Is the cross listing process very technical?
Yes. ADX started by setting up the system. ADX has an account at DTC, the clearinghouse in the US, in addition to other clearinghouses around the world. With that account and the connectivity here, creating the shares and enabling these dual listings was possible. All we do is work through that system to buy shares in the US, deliver them in DTC and have them come here for local investors to trade. We do that back and forth. It is a very innovative approach to bringing ETFs to the region by global asset managers, and we are having a lot of other conversations with other asset managers, big and small, hoping they will get involved soon, so we can grow the market and bring more choice for GCC investors.
A recent report talked about 43 GCC listed ETFs with around 10 billion dollars in assets, and the four largest funds hold 85 percent. What are the takeaways?
It is 45 now. That is the GCC ETF report which we run on a quarterly basis, to deliver information on how things are going in the GCC. Over the past quarter we had multiple launches across the GCC, including a couple in Saudi, and then two cross listings after the quarter, which is why you see 43 and not 45. In that report we also mentioned that the CEO of ADX said he expects three or four ETFs this year. Two are done, so we still have hopefully one or two to go, and you will probably hear more good news and other listings in the next month or so. If you compare with two or three years ago, the GCC ETF market was at a much lower number. On ADX we have the biggest suite of Shariah compliant ETFs globally, and we are seeing more people get involved in the region. There is also a gold fund in Saudi. We have a big variety now for local GCC investors to invest locally in the local currency and local time zone, rather than being exposed in the US or Europe in the afternoon.
Are crypto ETFs coming?
We are working with a lot of different issuers. There is nothing concrete, but we are definitely working to bring more variety, including some crypto ETFs, to the arena.