This week the spotlight is on regulatory developments in Bahrain where the Kingdom’s Central Bank has announced it has launched the Bahrain FinTech Bay. The Bank and the Bank’s FinTech & Innovation Unit will work with Bahrain FinTech Bay to support and develop the Kingdom’s FinTech framework and encourage more companies to invest in FinTech. It will be the first dedicated FinTech hub and corporate incubator in the Middle East & Africa region. It will be based at the Arcapita building overlooking Bahrain Bay and have 10,000 square feet of facilities. It will be operated by FinTech Consortium who are a global FinTech ecosystem builder and operator.
The Bank has also issued directives for offshore and locally domiciled Exchange-Traded Funds (ETFs). Exchange-Traded Funds are effectively funds which are traded like stocks on a stock exchange and mainly track index, a commodity, bonds or a basket of securities and therefore divide ownership of those assets into shares. These shares can be bought or sold throughout the day on an exchange at a market-determined price. They generally provide price transparency, higher liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. By owning this type of fund, investors get the diversification of an index fund as well as the ability to easily trade the shares on the licensed exchange. They will expand the categories of locally domiciled mutual funds to include Exchange-Traded Funds as another type of Collective Investment Undertaking which may establish in the Kingdom and be listed by banks and other financial institutions on licensed exchanges. The registration of listed offshore Exchange-Traded Funds will also be allowed. Conventional and Sharia-compliant Exchange-Traded Funds are also recognised.