26 July 2007
South Africa’s JSE has overtaken its Indian counterpart as operating the largest single stock futures (SSF) market in the world in terms of volume of contracts traded, according to a World Federation of Exchanges (WFE) report on derivatives markets.
The WFE’s 2006 Derivatives Market Survey, covering 49 exchanges trading derivatives products, was presented at the 2007 conference of international derivatives market trade group the IOMA-IOCA in Mexico in May.
According to the report, the JSE traded 44-million contracts in the first quarter of 2007, compared with 30-million traded on the National Stock Exchange of India, 12-million on Euronext.liffe and 11-million on Eurex.
Single stock futures activity on the JSE almost tripled both in 2005 and 2006, the report found, attributing this growth to “an aggressive advertising campaign aimed at both the retail and the wholesale market, and of positive changes in the regulatory regime of these products in South Africa.
“The open interest increased even faster (it was multiplied by eight between 2005 and 2006), thanks to a new method of valuation of all contracts, including non-liquid contracts.”
Because the size of stock futures contracts is smaller on the JSE compared to the other leading exchanges, however, South Africa’s exchange dropped to sixth place for the value trades on this market, after the National Stock Exchange of India, Euronext.liffe, Eurex, Borsa Italiana and MEFF.
“Taking into account that the JSE really got this market off the ground only six years ago, this is an achievement which we can be justifiably proud of,” said Allan Thomson, director of trading at the JSE.
“It is also encouraging that an African exchange has risen to the fore, given the world’s overwhelming interest in Asia.”