Market history
History and Development
In most major markets in the world, exchange traded interest rate derivatives form a significant portion of a healthy and vibrant market. This is not the case in South Africa where SAFEX interest rate products have enjoyed limited success.
In an attempt to identify issues, the JSE consulted with market participants, during which time it became evident that the underlying causes were numerous and diverse and that tinkering on the periphery would not solve the problems.
During the consultative process, many market participants suggested that the JSE should initiate a totally separate environment for the trading, clearing and settling of all interest rate products. In so doing the JSE would create a "one-stop yield shop" for a wide range of interest rate products. After careful investigation, the JSE decided to effect such a new system and the concept of Yield-X was born.
2007 Development
The Minister for Finance, Trevor Manuel, in his 2007 Budget speech, granted the JSE and in particular Yield-X the dispensation to trade currency derivatives. The JSE has launched currency derivatives in response to market requests for such a product to be traded on a regulated exchange. To begin Dollar/Rand currency futures began trading on 18 June 2007. Many more currency futures and currency options are expected to be listed in the future. Currency derivatives grant market participants the chance to hedge against currency risk, diversify internationally as well as take a view on the movement of the underlying exchange rate. Given the direct relationship between currency derivatives and interest rates, the JSE decided that Yield-X would be the most suitable platform.