UPDATE 1-TSE to permit exchange-traded notes - Nikkei

Jan 27 (Reuters) - The Tokyo Stock Exchange plans to allow listings of exchange-traded notes that track indexes for the prices of precious metals, Asian stocks and other assets, from April, the Nikkei business daily reported.

Unlike exchange-traded funds, financial institutions that issue ETNs do not have to own the assets they are based on but hedge risk by investing in a range of commodities, Nikkei said.

The exchange, which plans to list ETNs in the form of depository receipts so that they can be traded like stocks, is likely to modify its listing rules on Friday, Nikkei said.

UK’s Barclays and France’s BNP Paribas are expected to prepare ETNs for the Tokyo bourse, the paper reported.

BNP Paribas, which is exploring a product tracking a benchmark of rare-earth-related stocks, will team up with Securities Co 8703.T, which has a strong customer base consisting of retail investors. Mitsubishi UFJ Trust and Banking Corp will enter the market for managing ETNs, Nikkei reported. (Reporting by Mayuresh Tungare in Bangalore)