New billing model reduces fees for JSE currency derivatives market

June 4, 2012 at 3:48 AM EDT

JOHANNESBURG, 4 JUNE 2012. In a bid to increase liquidity and boost trading volumes in the fast-growing currency derivatives market, the JSE has once again revised pricing on its suite of currency products. This new billing model includes a revision of the current sliding scale of fees as well as volume rebates for market makers. It was implemented on 1 June 2012.

“In total, the new billing model reduces fees to the market by R4.4m in 2012 alone, which means we are giving a significant sum back to JSE clients,” says Warren Geers, General Manager of Derivatives Trading at the JSE. “This calculation assumes that trading volumes will be the same as in 2011.”

The exchange hopes that the billing model changes will prompt more volume growth in the currency derivatives market, which has seen dramatic growth over the past 3 years. “We are confident that this adjustment will make us more competitive and attract more over the counter business onto the exchange,” says Geers.

Market makers, who provide the live pricing to the market and are essential to making the market attractive to both local and international investors, will now receive higher rebates for bringing trading volumes into the market. These rebates are for both on-screen and reported trading. “Rebates on on-screen trades are higher than those for reported trades, as the JSE is aiming to grow more on-screen trading in the interests of greater transparency, with the ultimate effect of growing higher volumes of trade,” adds Geers.

Since the introduction of the on-screen rebate volume incentive in May 2011, the bid and offer spread has remained tight with most of the trading day at less than half a cent wide. “Tighter spreads, while benefiting the investor, also mean that margins for market makers are put under pressure. This has meant that we’ve needed to adjust our rebate model accordingly,” says Geers.

This new fee adjustment follows on from a reduction of fees in May 2011 designed to encourage more trading in currency derivatives from wholesale investors. This proved to be the case, as the market enjoyed incredible growth in 2011 with overall value of contracts up 111% (2011: R102.7 billion; 2010 R48.8 billion) while total number of contracts traded up 97%.

New sliding scale fee structure: Futures

Current sliding scale band

Fee per contract

New sliding scale band

Fee per contract

1-999

1.28

1-499

1.25

500-999

1.20

1,000 – 4,999

1.10

1,000 – 2,999

1.10

3,000 – 4,999

1.05

5,000 – 7,499

0.91

5,000 – 7,499

0.95

7,500 – 9,999

0.60

7,500 – 9,999

0.60

10,000 and above limited to R39,900 per deal

0.45

10,000 and above limited to R39,900

0.45

 

 

New sliding scale fee structure: Options

Current sliding scale band

Fee per contract

New sliding scale band

Fee per contract

1-999

0.64

1-499

0.63

500-999

0.60

1,000 – 4,999

0.55

1,000 – 2,999

0.55

3,000 – 4,999

0.53

5,000 – 7,499

0.46

5,000 – 7,499

0.48

7,500 – 9,999

0.30

7,500 – 9,999

0.30

10,000 and above limited to R39,900 per deal

0.23

10,000 and above limited to R39,900

0.23

 

 

 

FOR FURTHER INFORMATION PLEASE CONTACT:
Roz Thomas/Rosemary Renton
Corporate Communications Consultants
Tel: +27 11 463 2198
Cell: +27 82 925 8806
Email: rozt@corpcom.co.za rosemaryr@corpcom.co.za

ON BEHALF OF
Warren Geers
General Manager Trading
JSE
Tel: +27 11 520 7470
warreng@jse.co.za

 

About JSE Limited

As South Africa’s only full service securities exchange, the JSE connects buyers and sellers in four different financial markets, namely equities, equity derivatives, commodity derivatives and interest rate products. The JSE Ltd offers the investor a truly first world trading environment, with world class technology, surveillance and settlement in an emerging market context. It is amongst the top 20 largest equities exchanges in terms of market capitalisation in the world. In terms of derivatives, the JSE is currently ranked the 20th largest exchange by the Futures Industry Association (FIA).

For further information, please visit http://www.jse.co.za/