5 August 2009
The JSE has listed a single stock future on Bank of America, enabling South African investors to gain exposure to one of the world’s biggest financial institutions without using their foreign allocations.
The single stock future (SSF) was listed on 3 August, and 43 000 contracts had already been traded by 5 August.
Bank of America is one of the world’s largest financial institutions. It is listed on the New York Stock Exchange, has its headquarters in Charlotte, North Carolina, and operates in 150 countries.
“Offshore exposure is an important component in a diversified investment portfolio, but until recently, this involved paperwork and dispensation from the South African Reserve Bank,” JSE derivatives trading head Allan Thomson said in a statement this week.
“The International Derivatives (IDX) suite of products offers local investors the opportunity to gain exposure to international blue-chip companies by purchasing SSFs without dealing with a foreign bank or broker.”
The Bank of America SSF can be purchased through any JSE-registered broker in the same way that one would purchase local derivatives products.
The IDX range of products listed on the JSE includes SSFs on companies such as Nokia, LVMH Moet Hennessy Louis Vuitton, BP, Vodafone, GlaxoSmithKline, Apple and Berkshire Hathaway.
“We will expand IDX investment opportunities in terms of both product and regions based on market demand,” Thomson added.
While retail investors and corporate entities do not have any exchange control restrictions in trading the instrument, institutional investors do have to comply with foreign portfolio regulations.
Contracts are priced and settled in rands. If the rand depreciates, then the local investor will benefit, allowing IDX products to be used as a rand hedge.
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