Can Do Futures and Options
Can Do products also referred to as Structured products are non- standard, derivative products that are customisable for clients specific requirements. Clients are able to approach the JSE team with their requirements which standard derivative products cannot solve and the team will investigate and provide a solution that can be listed on the JSE.
Is the Product OTC or on-Market?
Exchange traded products are standardised, highly liquid products that are traded on a central platform and cleared via a clearing house. In contrast, OTC products are bespoke, customised products designed for specific use by two counterparties and are traded on that basis.
Types of Products
Due to the nature of the listing requests, the Can-do platform offers a wide range of products. The product types include but are not limited to the following:
- Any-Day Equity Derivatives – Futures and Options on Futures that have all the parameters of a standard derivative but expire on non-standard dates
- Basket Derivatives – Futures and Options on Futures on a Basket of Shares
- Quanto Derivatives - Futures and Options on Futures on a Foreign Reference Asset only but with no currency conversion
- Variance Futures – Future on the historical variance of an underlying instrument/li>
- Exotic Options – A Future whose underlying profile is a non-standard option such as, but not limited to, a Barrier Option, Digital and Asian Option
- Structured Portfolio Derivatives – A Future whose underlying profile is a portfolio of derivative instruments that have a defined payoff as required
Can-do Products are also available in the Interest-Rate, Currency and Commodity Markets.
Benefits of the Can-Do Platform
- Flexibility - Can-do products provide the client with a great deal of flexibility in determining the underlying parameters for the product in line with various risk and valuation guidelines
- Transparency – The nature and dynamics of the product are defined in a specification and available to all market participants.
- Valuation – All Can-do products are independently valued daily and variation margin is calculated based on this valuation.
- Listed Products – Once listed on the exchange, the Can-do product inherits all the benefits of a listed, cleared derivative product.
- Common Clearing Platform – once listed and cleared, the product is marked-to-market daily and variation margin flows between counterparties in exactly the same process as that used in the more standard, vanilla derivative products. The advantage is that the client merely sees another product in the portfolio and the cash flows follow the same procedures as other cleared instruments.
The JSE performs all the valuations for the Structured Products listed on the Can-do Platform. As some of these products have complex valuation models, the models are developed in-house by an independent Valuations team. There is a strong focus on working with counterparties and market participants in ensuring that valuations and processes follow best practice with close adherence to the latest market valuation principles.