Risk management
Risk Management Stucture
The Risk Management philosophy when trading Safex Derivatives is very simple - "You stand good for your client".
What this means is that each member will carry its client's losses if the client defaults just as each clearing member will carry its member's (for whom it clears) losses if the member defaults. This pyramid structure forms the basis of the Safex Risk Management Structure.
The risk that Safex therefore bears is the risk that one of the clearing members could possibly go into default, whether it is as a result of a member causing it to default or as a result of its own doings. The clearing members of Safex are all the major banking institutions hence the risk of default by one of them is very limited indeed.
This puts the onus of proper risk management squarely onto the shoulders of the clearing members who in turn pass this responsibility onto the members for whom they clear.
Notwithstanding what is said in the previous paragraphs, Safex does, however ,require a deposit to be paid by all participants in the market when they take on position. This margin is in reality a "good faith" deposit on the position that is registered in the name of a person or member. It is by no means the full purchase price of any contract, in fact only between 5% - 8%, hence the risk that is associated when trading in this market.
This good- faith deposit, or initial margin as it is referred to, is reassessed everyday by the Risk Manager at Safex on the basis as described in the next document, namely "The Margining Methodology". This document will give you an idea of how the initial margin requirements are calculated and the reasoning behind it.
The JSE’s Equity Derivatives division offers options on all the equity instruments listed as single stock futures and on all tradable indices. The documents, cashflows and calculators on this page are essential tools for new potential users as well as existing participants of the JSE’s Equity Options Market.
For more information please do not hesitate to contact the JSE on +27 11 520 7051 or send an e-mail to derivativestrading@jse.co.za
Equity_Future_Option_Example
Equity Options Cashflow Example
|
Tuesday, August 03, 2010
|
43.50 KB |
|
|
|
Index_Future_Options_Cashflow_Example_V04
Why Early Exercise of Options on the JSE is suboptimal
|
Tuesday, August 03, 2010
|
61.50 KB |
|
|
|
An_Introduction_to_JSE_Options
An Introduction to JSE Options
|
Tuesday, August 03, 2010
|
49.44 KB |
|
|
|
JSE_Options_ATM_Vol_Change_Guidelines
25 January 2010 - Equity Options ATM Vol Change Guidelines
|
Tuesday, August 03, 2010
|
139.51 KB |
|
|
|
JSE_SAFEX_Options_Project
25 January 2010 - JSE Safex Options Project
|
Tuesday, August 03, 2010
|
209.91 KB |
|
|
|
Whats new
25 January 2010 - JSE SAFEX Options Project
|
Tuesday, August 03, 2010
|
209.91 KB |
|
|
|
What_are_options_on_ ssfs
Equity Options
|
Tuesday, August 03, 2010
|
258.83 KB |
|
|
|
TEC303
Safex Margining - Technical Specifications
|
Thursday, April 07, 2011
|
2.45 MB |
|
|
|