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As at the end of April this year the Johannesburg Stock Exchange’s (JSE) Currency Derivatives Market saw the value of futures and options traded reaching an access of R1trillion since the market’s inception in 2007.
In March this year, another milestone for the market was reached when it saw its most successful month, in the value and volume of derivative contracts traded since inception. The total value of currency derivatives contracts traded on the JSE during March this year was R80,8 billion, a massive 122% increase from March of 2013 with the number of contracts traded during March 2014 reaching 7 million contracts. The currency derivatives market also had its best ever single day performance since inception in March, with a value traded of R36 billion.
Warren Geers, General Manager: Bonds and Financial Derivatives Trading Division at the JSE, says the South African currency derivatives market continues to grow at a rapid pace. “Reaching trading values over R1trillion is a great accolade for our market. The number of contracts traded during March 2014 was 69% higher than in March 2013, while the value of the contracts traded increased by 122% in the same period. The market has continued to draw more and more trades as investors and businesses look for more efficient ways to manage their currency risk.”
Geers says the JSE has responded to this increased interest by continuously developing new currency derivative products in response to the needs of the market. “Last year we expanded our Quanto derivatives range to include a currency contract based on the Euro/Dollar exchange rate. These derivatives are traded on the JSE and settled in Rand, even though they track the movements of the Euro which is quoted in US Dollars. The product has the ability to attract local investors who want exposure to the most globally traded currency pair.”
Geers says the Dollar/Rand contract continues to remain the most liquid of all the currencies listed and traded on the JSE and contributed 81% of the total value traded in 2013. The JSE currently offers a wide range of currency futures contracts, including futures which track the movement in the Rand exchange rate to the US, Canadian and Australian dollars, the Chinese Renminbi, the Turkish Lira, the Swiss Franc and the Japanese Yen.
