Trade on the JSE for Free
July 07, 2010
Johannesburg, 6th July 2010 - The JSE has cut trading fees
to zero on Single Stock Futures and Options traded through the exchange’s
central order book. The Equity Derivative market’s new billing model, which is
the result of extensive consultation with market participants, advisory bodies
and regulators, came into effect this Monday the 5 July 2010. The model is aimed
at making pricing structures more equitable by rewarding participants bringing
liquidity to the market. Ultimately, this is likely to encourage greater
activity and transparency on the market.
The new billing structure
follows the internationally recognised Maker Taker model, which is widely used
by derivatives exchanges worldwide. It rewards liquidity providers – that is,
anyone posting a price on the central order book – and charges price takers a
reduced fee. Global experience is that this pricing structure increases trade
volumes on exchanges by giving traders an incentive to post additional
liquidity. The model also enables smaller traders – such as individual investors
– to compete with larger firms to ensure more competitive markets.
“The
time is right to incentivise market participants by acknowledging the role of
liquidity providers, reducing average trading costs and introducing lower
minimum charges to trade for all central order book participants,” says Director
of Equity Derivatives Allan Thomson. “We also aim to encourage diverse market
participants, including individual investors and algorithmic traders.”
Price makers trading single stock futures and options through the
central order book won’t attract a transaction charge. Single Stock Futures and
Options fees for price takers will also be reduced. In terms of the new model,
price takers’ transaction cost has been reduced to 1 basis point of the value of
the underlying (or 0.0001 times the value). The maximum cost of transacting has
also been reduced from R1.40 to R1.20 per contract on central order book trades.
Off-screen reported trades are more expensive in order to further encourage
on-screen central order book trading.
The new billing model, which has
been approved by the JSE’s Executive Committee and Board, reduces fees for
trading Single Stock derivatives and increases fees on Index futures by moving
to a value based billing methodology. Trading in standardised contracts (those
defined by the exchange and traded in high volumes) is cheaper than
non-standardised contracts such as Can Do derivatives, which are tailor-made to
the specifications of each client.
Equity derivative investors are
advised to consult with their broking firm in order to assess the impact of the
new billing model on their trading costs.
FOR FURTHER
INFORMATION PLEASE CONTACT:
Victoria Williams
Corporate
Communications Consultants
Tel: (011) 463 2198
Email: victoria@corpcom.co.za
On
behalf of
Allan Thomson
Head of Equity Derivatives Trading
JSE Ltd
Tel (011) 520 7000
About 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, commodity derivatives and interest rate products. The JSE Ltd
offers the investor a truly 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
About FTSE
Group
FTSE Group (“FTSE”) is a world-leader in the creation and
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Kong, Madrid, Milan, New York, Paris, San Francisco, Sydney, Shanghai and Tokyo,
FTSE works with investors in 77 countries globally. It calculates and manages a
comprehensive range of equity, fixed income, real estate and investment strategy
indices, on both a standard and custom basis. The company has collaborative
arrangements with a number of stock exchanges, trade bodies and asset class
specialists around the world.
FTSE indices are used extensively by
investors world-wide for investment analysis, performance measurement, asset
allocation, portfolio hedging and for creating a wide range of index tracking
funds. www.ftse.com