JSE mixes exotic flavours in currency derivative trading

South Africa’s securities exchange, the JSE Ltd (www.jse.co.za), is to launch a set of exotic currency products after demand from some South African banks. These derivatives give investors the advantages of listed derivatives with the flexibility of over-the-counter contracts.

Investors can negotiate the terms of an option contract, choosing the underlying asset as well as the expiry date. SuperDerivatives (SD – www.superderivatives.com), a derivatives benchmark and multi-asset front office system, announced on 23 May that it will provide the market data to power the Johannesburg Stock Exchange’s (JSE) new exotic currency options offering, namely the ‘any-day expiry’ contracts.

The JSE will feed in SD’s independent market data to enable accurate calculation of daily closing prices, ensuring investors are equipped with the most accurate information to inform trading decisions.

Warren Geers, General Manager of Trading at the JSE, said in a press release: “As the South African listed derivatives market develops and matures, investors are seeking more complex structures, such as non-vanilla/standardised options, in order to hedge their specific risk profiles. These exotic products are often illiquid and difficult to price – however with SuperDerivatives’ market data we can be sure that investors know the true market value of the derivatives they trade with us. Accurate data is an essential component of increasing transparency and improving confidence and liquidity in this market overall.”

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Maria Johansson, Regional Sales Manager UK and Africa at SD, added: “Our data is sourced from trading desks at close to a hundred global and local interdealer brokers, market makers, exchanges and trading platforms as well as top data aggregators. These true live market rates are then acid tested in real-time in the marketplace by active traders.

“Our insistence on broad market data contribution means that pricing information is truly neutral and unbiased, ensuring market participants trading on the JSE will have access to the most accurate information at all times.”

SD is seeking to bring more transparency to all major traded derivative classes including foreign currency, interest rates, equities, commodities, energy and credit by providing prices that reflect the interdealer market. At the core of all its solutions is SD’s extensively sourced and intelligently amalgamated market data, comprising true live market rates that are tested in real-time in the marketplace by active traders and run through a proven pricing model.

Its web-based, market-calibrated solutions are widely accepted as the benchmark for derivatives pricing and customers include leading banks, hedge funds, asset managers, custodians and hedge fund administrators in more than 60 countries, supported by a global network of SD offices with 24-hour support.

Trading professionals on both the buy and sell side benefit daily from SD’s unique combination of unbiased, aggregated market data and sophisticated modeling techniques. The company also provides fully-fledged risk management solutions, award winning derivatives data and independent portfolio revaluation services.

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