Abu Dhabi’s Lunate Adds HSBC as First International ETF Authorised Participant

HSBC Bank UK has become the first international Authorised Participant (AP) for abu Dhabi-based global investment management firm, Lunate‘s ETF platform, for both its UCITS and Securities and Commodities Authority (SCA) regulated ETF ranges.HSBC is the seventh AP for Lunate’s ETFs and will enhance liquidity and trading accessibility for clients.

The appointment strengthens Lunate’s partnership with HSBC and supports its strategy to expand and diversify its investor base. lunate’s range of UCITS and local ETFs comprises 18 equity and fixed-income funds, offering exposure to developed and emerging markets.

nabeel Albloushi, Head of Markets and Securities services, MENAT at HSBC, stated the appointment highlights the strength of the partnership and shared ambition to expand market access in the UAE.

Lunate is a pioneer in the regional ETF sector, offering a full suite of market ETFs listed on the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM).ADX Group CEO Abdulla Salem Alnuaimi said the collaboration is expected to support long-term capital growth across the market.

How does onboarding HSBC as an Authorised Participant specifically address challenges faced by ETFs from emerging markets like those offered by Lunate?

Expanding ETF Access: A Landmark Partnership

Abu Dhabi-based asset management firm, Lunate, has significantly broadened the accessibility of its flagship ETFs by onboarding HSBC as its first international Authorised Participant (AP). This strategic move, announced on July 10, 2025, marks a pivotal moment for Lunate and the wider Middle Eastern ETF market, enhancing liquidity and attracting a broader investor base. An Authorised Participant plays a crucial role in the ETF ecosystem, facilitating the creation and redemption of ETF shares, directly impacting market efficiency.

What Does This Mean for Lunate’s ETFs?

The addition of HSBC as an AP directly addresses key challenges often faced by ETFs, particularly those originating from emerging markets. Here’s a breakdown of the benefits:

Increased Liquidity: HSBC’s global network and trading capabilities will inject significant liquidity into Lunate’s ETFs, reducing bid-ask spreads and improving trading efficiency. This is vital for both institutional and retail ETF investors.

Wider Market Access: HSBC’s presence opens Lunate’s ETFs to a wider range of international investors who may have previously faced logistical or regulatory hurdles. This includes investors in Europe,Asia,and North America.

Enhanced Price Discovery: With more participants actively involved in the creation/redemption process, the pricing of lunate’s ETFs will become more accurate and reflective of underlying asset values.

Operational Efficiency: HSBC’s established infrastructure streamlines the ETF creation and redemption process, reducing operational risk and costs.

Understanding the Role of an Authorised Participant

An ETF Authorised Participant is a financial institution approved by the ETF issuer to create new ETF shares or redeem existing ones. They are essential for maintaining the ETF’s price close to its Net Asset Value (NAV). Here’s how the process works:

1. Creation: When demand for an ETF exceeds supply,APs purchase the underlying assets of the ETF and deliver them to the issuer in exchange for new ETF shares.
2. Redemption: Conversely,when ther’s an oversupply of ETF shares,APs redeem ETF shares from the issuer in exchange for the underlying assets.

This mechanism ensures that the ETF’s market price remains aligned with the value of its holdings. ETF creation and redemption are essential to the functioning of the ETF market.

Lunate’s ETF Portfolio: A Focus on Regional Opportunities

Lunate currently offers a suite of ETFs focused on providing access to opportunities within the Middle east and beyond. Key ETFs include:

Lunate UAE equity ETF: Tracks the performance of leading UAE-listed companies.

Lunate Saudi Equity ETF: Provides exposure to the Saudi Arabian stock market.

Lunate GCC Equity ETF: Offers diversified exposure to the Gulf Cooperation Council (GCC) region.

Lunate Global Sukuk ETF: Invests in Sharia-compliant bonds (Sukuk) globally.

these regional ETFs are designed to cater to investors seeking diversification and exposure to high-growth markets.

HSBC’s Expanding ETF Services

HSBC has been steadily expanding its ETF services globally, recognizing the growing demand for these investment vehicles. This partnership with Lunate aligns with HSBC’s broader strategy to become a leading provider of ETF solutions in key markets. HSBC already provides ETF services including custody, fund management, and trading support to a wide range of ETF issuers.

Implications for the Middle Eastern ETF Market

This collaboration is expected to have a ripple effect across the Middle Eastern ETF landscape.

Increased Investor Confidence: the involvement of a global financial institution like HSBC will boost investor confidence in the region’s ETF market.

attracting Foreign Investment: Improved liquidity and accessibility will attract greater foreign investment into Middle Eastern equities and fixed income.

Product Innovation: The success of this partnership may encourage other regional asset managers to explore similar collaborations with international APs, leading to further product innovation.

Growth of Passive Investing: This move supports the broader trend towards passive investing and the increasing adoption of ETFs as a core component of investment portfolios.

Practical Tips for ETF Investors

Understand the ETF’s Underlying Holdings: before investing, carefully review the ETF’s prospectus to understand its investment strategy and the assets it holds.

Consider the Expense Ratio: The expense ratio represents the annual cost of owning the ETF. Lower expense ratios generally translate to higher returns.

Evaluate Liquidity: Check the ETF’s trading volume and bid-ask spread to assess its liquidity.

Diversify Your portfolio: Don’t put all your eggs in one basket. Diversify your portfolio across different asset classes and geographies.

* Monitor Performance Regularly: Track the ETF’s performance and compare it to its benchmark index.

Case study: The Growth of iShares etfs in Emerging Markets

The success of iShares ETFs in emerging markets provides a relevant case study. iShares, a leading ETF provider, strategically partnered with local financial institutions to enhance liquidity and market access in regions like Asia and Latin America. This resulted in significant growth in assets under management and increased investor participation.