INVESTORS in the local equities market may soon be able to buy securities that mimic the performance of indices or baskets of stocks as part of the bourse's drive to broaden its client base.

In a statement, the Philippine Stock Exchange (PSE) said that it recently drew up draft rules that it proposes to govern the listing of exchange-traded funds (ETFs).

An ETF is an open-end fund that issues and redeems securities on demand, whenever investors put money into or take it out of the instrument. The ETF tracks indices or a basket of securities that are listed and traded in the PSE or on a foreign stock exchange acceptable to the PSE.

It is designed to track the price and yield performance of its underlying index, which may be categorized as a broad market, a sector or industry, a single country or region, or fixed income instruments.

PSE president Francis Lim said the decision of the PSE board to draft the ETF rules formed part of its program "to assure the market's sustained growth" by enticing more investors with an expanded menu of PSE products and services.

The bourse is urging all concerned groups to comment on the draft rules, which can be accessed through the PSE website. After the public comments are considered, the PSE will submit the draft rules to the Securities and Exchange Commission for approval.