Over R10bn Currency Futures traded in less than 1 year on Yield-X
JOHANNESBURG, 17 JUNE 2008. At the futures closeout on Friday (13 June 2008), 80 719 currency futures (CFs) contracts with a value of R736,921,745 were traded on the JSE’s interest rate exchange, Yield-X, thus setting a new milestone with over R10bn worth of currency futures being traded in just under one year.
Since the launch of CFs on the 18th June 2007, in excess of 1, 2 million currency future contracts to the value of R10, 228, 296, 266 billion have traded on Yield-X.
“It took 6 months to achieve the R1bn milestone of CFs traded and less than another 6 months to get to the R10bn milestone, indicating the exceptional growth of these futures. The trade in CFs is still predominantly by retail investors since it was only in February this year that the dispensation was granted for corporates to trade in CF’s,” says Warren Geers, GM, Trading Division at the JSE. “We are confident that volumes and value traded will continue to rise consistently over time, particularly as more corporates start trading. The Dollar/Rand contracts still remain the firm favourite underlying currency with 1,027, 238 contracts trading at a value of R7, 928, 235, 249 in just less than a year, however the Euro/Rand and Pound/Rand contracts have also become very attractive contracts adding to the total number of contracts traded”, continues Geers. The fourth contract, the Australian Dollar/Rand CF, was launched in May this year.
Geers attributed the exceptional growth to the fact that retail clients are now more aware than ever of the benefits that currency futures have to offer and the fact that they now have access to the currency market which until a year ago, was generally reserved for institutions. Trading volumes have also grown due to the recent market volatility as well as from an increase in marketing efforts pursued from the market makers Investec Bank, Standard Bank and Rand Merchant Bank.
Steven Greenstein of Investec Capital Market’s Currency and Derivates trading division commenting on CFs success says: “We believe the success of currency futures can be attributed to the fact that South African individuals can now use currency hedging as part of their investment armoury. No exchange control approvals are required, pricing is aggressive and gearing is high. Although the contracts are rand settled, investors can still gain full exposure to the US Dollar, Sterling, Euro and most recently the Australian dollars fluctuations against the Rand. We believe this product is still in its early stages and as the leader in volume, we expect increased turnover from the Corporate and Hedge fund sectors who are now allowed to trade. Investec is proud to be involved in this product from inception and we congratulate Yield-X on reaching this milestone.”
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