5 November 2008
The JSE has partnered with Deutsche Bank to launch International Derivatives (IDX), a new asset class that allows South African investors to trade single stock futures on internationally listed companies for the first time.
Deutsche Bank will provide liquidity on futures over 21 top European companies, selected from both the FTSE 100 and DJ Eurostoxx 50 benchmark indices. The companies include major multinational corporations such as BP, GlaxoSmithKline, LVMH, Nokia and Vodafone.
“This is a new landmark in trading for the JSE,” JSE trading head Allan Thomson said in a statement this week. “For the first time, local investors will be able to gain exposure to international companies without dealing with an offshore bank or broker.”
Thomson said that in the past, participating in international markets was an onerous process with complex administrative and approval requirements.
“In contrast, International Derivatives contracts can be traded through a JSE registered broker in the same way you would purchase any local derivatives product.”
Thomson pointed out that individuals and corporate investors would not have any exchange control restrictions when trading International Derivatives on the JSE, though the fund management industry would have to comply with their foreign portfolio allowances.
“We will hopefully list further derivatives products according to market appetite and we believe there will be great demand for these investment opportunities,” he said.
JSE derivatives specialist Magnus de Wet said that investing offshore played an important role in building a diversified investment portfolio.
“The international companies being listed include companies from the oil and gal, telecommunications and pharmaceutical sectors,” he said. “This allows South African investors to further diversify their portfolios internationally, and in different industries.”
The contracts are priced and settled in South African rands, meaning that investors will benefit if the rand depreciates – and as such, De Wet anticipated that discerning investors would use International Derivatives as a rand hedge.
IDX plans to expand by including additional markets and companies over time, with futures on select US and Asian stocks, available from the first quarter of 2009.
“This is an exciting initiative which provides SA investors convenient access to foreign markets” said Deutsche Securities equities head Max Koep.
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