Johannesburg - South Africa's planned currency futures market was aimed at giving retail investors access to offshore foreign exchange markets and further stimulate the economy, exchange operator JSE Limited said yesterday.
It said pension funds and long-term insurance companies could trade currency futures subject to their 15 percent foreign allocation allowance, while asset managers and registered collective investments could participate subject to their 25 percent foreign allocation.
The national treasury said last week that it would allow trading in rand futures. It hoped futures would lead to increased local liquidity in the rand.
Warren Geers, the senior manager of the JSE's YieldX interest rate exchange, said: "Currency futures are bringing offshore markets closer to home. This means positive growth for our economy." Planned currency futures will be traded on YieldX.
The JSE said corporates and trusts would be allowed to trade currency futures only if they had valid exchange control approval numbers or Reserve Bank approval.
The launch date of the futures exchange is unclear because the JSE is still awaiting central bank approval.
The bourse has developed standardised, cash-settled and rand-denominated contracts in response to market requests. The rand contracts will be followed by other currency futures contracts at a later stage.
Analysts said the futures exchange would put South Africa on a par with other developed emerging markets and facilitate foreign investment.
Investment bank and asset management group Investec said currency futures would benefit South African investors as well as the country's financial market as a whole.
The bank's head of derivatives and securities, Grant Barrow, said: "We have been working closely with the JSE and other relevant parties and look forward to launching what we believe will be a highly tradeable product in the near term."
A JSE spokesperson said Investec and Standard Bank would provide liquidity and prices.