JSE expands foreign-referenced commodities range with
introduction of Quanto
July 24, 2012
Johannesburg, 23 July 2012: The Johannesburg Stock Exchange
(JSE) has further expanded its foreign referenced commodities product range with
the introduction of Quanto Futures, which enable investors to gain exposure to
price fluctuations in the foreign commodity while shielding them from movements
in the ZARand:USDollar exchange rate.
The exchange has partnered with
Rand Merchant Bank (RMB), as the initial market maker, with Brent crude, gold
and copper being the initial commodities to be referenced as part of the JSE’s
existing licensing agreement with the CME Group. Quanto Futures will open for
trading on 25 July 2012.
A Quanto Future is a rand denominated commodity
investment product that delivers the same payoff as a pure dollar denominated
commodity investment, allowing investors immunity from exchange rate
fluctuations between the rand and dollar.
Currently, South African
investors often don’t receive the full benefit of commodity price movements due
to the influence of the exchange rate on the dollar denominated product. It is
possible through the use currency futures to remove this influence however with
the introduction of Quanto Futures things are made simpler for the investor
since through a single trade the payoff, although still in rand, will track the
international commodity market.
Chris Sturgess, Director of the
Commodities Division at the JSE says, “The JSE is excited to offer derivative
market participants this additional choice of energy and metal products in the
form of Quanto Futures, yet another innovative product offered by the JSE making
it that much simpler for local investors to gain access to the international
commodities markets. ”
A Quanto product can be understood as follows: if
the price of a commodity, say Brent Crude, increases by 20% in Dollar terms,
then the value of the investor’s Rand position in Brent Crude (via the Quanto
product) will also increase by 20%. The movement of the Rand relative to the
Dollar plays no part in determining the investor’s return.
Head of
Metals and Energy Trading at RMB’s Global Markets Division, Ettienne van Wyk,
says “The introduction of Quanto Futures as an asset class on the JSE represents
an invaluable addition to the commodity investors’ arsenal. RMB is proud to have
played a pioneering role in bringing this ground-breaking product to the
market.”
JSE Limited
As South Africa’s only full service securities
exchange, the JSE connects buyers and sellers in four different financial
markets, namely equities, equity derivatives, commodities derivatives and
interest rate instruments. The JSE Ltd offers the investor a first world trading
environment, with world class technology, surveillance and settlement in an
emerging market context. It is amongst the top 20 largest equities exchanges in
terms of market capitalisation in the world.
For further information,
please visit www.jse.co.za/quantofutures
ISSUED BY:
Roz Thomas/ Pheliswa Mayekiso
Corporate Communications Consultants
Tel: + 27 11 463 2198
Email: rozt@corpcom.co.za / pheliswa@corpcom.co.za
ON BEHALF OF:
Chris Sturgess
Director of the
Commodities Division
JSE Limited
Tel: + 27 11 520 7299
Ettienne
van Wyk
Head of Metals and Energy Trading, Global Markets division
Rand
Merchant Bank
Tel: +27 11 296 9995
ABOUT RMB:
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