The wide variety of the JSE’s derivatives offerings garnered much interest at this year’s IDX conference


This year marked the JSE’s 11th consecutive year of attendance of the annual IDX conference, which is held in London and attracts 1 800 delegates from 35 countries. This year, however, was the first time JSE representation spanned the equity, currency and commodity derivatives markets. Elaine Mabiletsa, Senior Specialist on Currency Derivatives at the JSE, said the themes at IDX 2018 largely focused on the status of markets since the financial crisis 10 years ago and, hence, new regulation frameworks. Additionally much attention was directed at clearing and technology.

‘Consideration was given to whether Brexit is the right fit for the current financial market; technology and where it is going; and, importantly, the debate on whether exchanges are the future space for the financial markets, given that regulation being imposed in the over-the-counter space appears to be aligning more with that within exchanges in terms of transparency, best execution principles and counter regulatory requirements,’ she says.While much of the regulatory conversation applied more to the Western markets, particularly Europe, Mabiletsa was pleased to note that the JSE is operating on par and, in some instances, slightly above the curve. ‘We have been doing so for a long time, given the tight rules we apply as a regulator, and how we are regulated, which are far more stringent than other global exchanges.’ The JSE exhibition stand provided an opportunity to solicit perceptions and provide information about the exchange. It attracted an audience that was particularly interested in the JSE’s ability to trade, clear and settle, which is also not common practice in other global bourse environments. ‘We also determined that there is a serious demand for Can-Do [products] internationally, [as they’re] considered a rare offering, so we will be looking to market this offering of ours globally,’ says Mabiletsa.

Can-Do (or structured) products are attractive because they’re non-standard, derivative-based and can be customised to clients’ specific requirements. The range is also broad. Selections can be made from any-day equity, basket or quanto derivatives – all of which are futures and options on futures, or from exotic options, which is purely a future. The range of Can-Do products is also available in the interest rate, currency and commodity markets.

According to Mabiletsa, visitors were impressed with the benefits of Can-Do products, with their ‘flexibility being most appealing, followed by transparency. We also highlighted that all Can-Do products are independently valued daily with a variation margin calculated on this valuation’.

That some of the Can-Do products have complex valuation models is not a problem, given the JSE provides those.

Developed in-house by an independent team, the focus is on working with market participants to ensure that the valuations and their related processes follow best practice and close adherence to the latest market valuation principles.

‘The JSE’s Can-Do also has a common clearing platform, which – once products are listed and cleared – is also daily marked-to-market, in exactly the same way [as] in the more standard derivative products. The client will only be aware that there is another product in the portfolio with cash flows following the same procedures as other cleared instruments. The appeal really lies in that once listed on the exchange, Can-Do products encompass all the benefits of a listed, cleared derivative.

‘Visitors were also impressed by the wide spectrum of asset classes that the JSE offers,’ says Mabiletsa, adding that conferences such as IDX, in combination with an exhibition stand, allows the JSE to tap into the learnings of other exchanges, understand better the shortfalls and requirements of markets, determine what the JSE is doing well and could excel at, and more importantly ‘attract a wide spectrum of stakeholders that may not have been exposed to our local offerings’.

By Kerry Dimmer
Images: Gallo/Getty images