REGIONAL e-FX PERSPECTIVE
to be around three months driven by large corporates and investors hedging their exposure to asset classes denominated in
Dollars or Euros. T ere is however a healthy and developing market in more sophisticated instruments.
“T e liquid forward curve in the Rand goes
out to 2 years,” says de Roos. “However because the bond market goes out to 30 years we are able to create forwards out that far. Demand for the longer-term transactions tends to be driven by large infrastructure projects or large capex spend which would be required to match the life of a project or purchasing cycle for example. T is we would price off of the swap curve.”
T is is a view shared by Standard’s Richard de Roos. His bank is actively developing its end-to-end off ering across the value chain from research and pre-trade to execution. Moreover reporting needs to be an integrated feature of electronic off erings to corporates, both for their internal needs and in order to meet Reserve Bank compliance.
Product menu still limited
In terms of available forex products South Africa is far in advance of any other African country. Spot and forward trades against the G10 currencies account for most of the market. Forwards can stretch as far out as two years but de Roos says that average demand tends
In addition the Johannesburg Stock Exchange quotes currency futures that are also used by institutions to hedge the currency risk associated with foreign asset holdings. However for the moment other products targeted at institutional clients such as prime brokerage are still in early growth phase.
Prime brokerage
“At present the prime brokerage market is in its infancy with most of it concentrated in South Africa. says T omson Reuters’ Jacob Dajani.
360T’s Alex Johnson who manages the fi rm’s sales in the region notes that the market is currently somewhat becalmed. “Hedge funds in places like Mauritius, may
72 | april 2012 e-FOREX
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