Interest Rate Market

Introduction to Interest Rate Market

The Johannesburg Stock Exchange’s Interest Rate Market provides investors with the opportunity to trade products in both the cash and the derivative markets.

Clients can trade on-exchange (Central Order Book) or away from the market (Report Only). When trading on the exchange, counterparty credit risk is eliminated and all trades are guaranteed via margining.

JSE and BESA merge operations post sanctioning of the BESA Scheme of Arrangement

The Bond Exchange of South Africa (BESA) became a wholly-owned subsidiary of the Johannesburg Stock Exchange (JSE) on 22 June 2009, the operative date of the scheme of arrangement in terms of which the JSE acquired the entire issued share capital of BESA. The finalisation of the acquisition signals a new chapter for South Africa’s fixed income market.

We are pleased to announce that Graham Smale has been appointed as Director: Interest Rate Products, effective 1 October 2009. Graham brings a wealth of experience and knowledge to the JSE having worked in financial markets for the past 23 years in a variety of capacities with special emphasis on the trading, structuring and risk management of bonds, interest rate products and derivatives. He has been intricately involved in the formation of the new interest rate strategy thus far.

Clarifying the way forward for the domestic interest rate market is of key importance for the exchange. Whilst a work in progress, focus continues to be that of seeking ways of changing the functioning and structure of the South African interest rate market such that the enhancement of overall market transparency and liquidity is achieved.

With this in mind, various proposals have been crafted for the development of the spot bond market, repo market and interest rate derivatives in particular. In addition, exchange membership, clearing and settlement and systems requirements are also being reviewed. Part of the strategy process will also involve the formation of an interest rate advisory committee which will incorporate members of the exchange, relevant industry associations, regulators and other key stakeholders.

The strawman proposal looks to grow and develop both the spot and derivative interest rate markets. It is in the process of being developed in consultation with the market, National Treasury, the Financial Services Board and other key stakeholders.

Quarterly Review download here