JSE Cuts Fees for Interest Rate and Currency Derivatives

May 30, 2013 at 5:27 AM EDT

JOHANNESBURG, 29 May 2013. In a bid to increase liquidity and boost trading volumes, the JSE will reduce fees for both interest rate and currency derivatives effective 1 July 2013.

"The JSE has a history of reducing fees for both currency and interest rate derivatives in order to remain competitive while attracting OTC business onto the exchange. This approach has been successful, with volumes growing steadily across both types of derivatives," says Warren Geers, General Manager Bonds and Financial Derivatives. In 2012 the currency derivatives market saw the overall value of contracts trade climb 37%, while the total number of contracts traded increased by 29%. Based on 2012 trade data, clients will save R2.3 million in fees on currency derivatives and R614 000 on interest rate derivatives.

For currency derivatives, all the sliding scale bands will be decreased. For futures, fee reductions range from 1.63% to 28.57%, with the largest fee reduction being applied to the '10,000 and above' band which equates to 46% of the market's trading volume. Options will see all sliding scale bands decrease with a reduction of between 1.6% and 27.78%. Up until end April 2013, currency derivatives have seen a 175% growth rate in value traded compared to the same period last year.

For interest rate derivatives the revised fee structure applies to bond futures, bond options and index futures. For bond futures and options, both sliding scale bands and fees will be adjusted – from seven to three bands and fee reductions ranging from 17% to 29%. The most expensive fee of R7.00 per million will be reduced to R5.00 per million while the least expensive fee of R2.50 per million will remain. This follows the 2012 fees revision from a flat fee of R0.75 a contract to a sliding scale. Bond futures made up 96% of interest rate derivatives contracts traded in 2012, with contract numbers growing by 150% in the first quarter of 2013.

The JSE will be moving to a value-based fee for bond index futures. Going forward the fees will no longer be a flat R7.50 per contract, but will be charged as a percentage of nominal value traded.

Market makers will receive higher rebates for bring trading volumes into the market for both on-screen and reported trades. Rebates on on-screen trading will be higher than that for reported trades as the JSE aims to grow more on-screen in the interests of greater transparency which in turn should see trading volumes grow.

The revised billing for currencies futures and options will be as follows:
Currency Futures


Sliding scale band (per deal)

Existing Fee per contract

Proposed Fee per contract

% Decrease

1 – 499

R1.25

R1.23

-1.60%

500 – 999

R1.20

R1.18

-1.67%

1,000 – 2,999

R1.10

R1.07

-2.73%

3,000 – 4,999

R1.05

R1.01

-3.81%

5,000 – 7,499

R0.95

R0.92

-3.16%

7,500 – 9,999

R0.60

R0.57

-5.00%

10,000 and above

R0.45

R0.35

-22.22%

Currency Options


Sliding scale band (per deal)

Existing Fee per contract

Proposed Fee per contract

% Decrease

1 – 499

R0.63

R0.62

-1.59%

500 – 999

R0.60

R0.59

-2.50%

1,000 – 2,999

R0.55

R0.54

-1.82%

3,000 – 4,999

R0.53

R0.51

-3.77%

5,000 – 7,499

R0.48

R0.46

-4.17%

7,500 – 9,999

R0.30

R0.29

-3.33%

10,000 and above

R0.23