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 management of indexes. With offices in Boston, Beijing, London, Frankfurt, Hong 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