JSE starts variance future trading

24 July 2008

South Africa’s JSE has listed and begun trading on the first ever variance future on the exchange, which, with increasing demand, could see the listing as a forerunner to an entirely new asset class at the exchange.

According to the JSE – which claims to be at the forefront of developing world-class derivative instruments – a variance future is a complex derivative instrument used by asset managers, fund managers and hudge funds as a hedging and speculating tool against volatility.

“We are very proud of this listing – to our knowledge, only two other exchanges are known to have listed this type of instrument, namely [the] Chicago Board Options Exchange and liffe (the London International Financial Futures and Options Exchange),” JSE derivatives specialist Hannes Viljoen said in a statement this week.

“With many other requests for variance futures, this listing is the first of a completely new asset class on the JSE.”

Increased investment options

In an effort to offer its clients more investment options to choose from, the JSE also recently launched the Shariah Top 40 Index in partnership with the FTSE Group, allowing for interested investors – including South Africa’s 850 000-strong Muslim community – to invest in Shariah compliant companies.

In July 2007, the JSE overtook the National Stock Exchange of India as the largest operator of single stock futures (SSF) market in the world, in terms of volumes of contracts traded. In terms of the value of trades, the JSE came in at sixth position, after the National Stock Exchange of India, the Euronext.liffe, Eurex, Borsa Italiana and MEFF.

As South Africa’s only full service securities exchange, the JSE connects buyers and sellers in four different financial markets – equities, equity derivatives, agricultural derivatives and interest rate instruments (which are traded on the Yield-X platform).

SAinfo reporter

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