The JSE Ltd today announced that it had extended its existing licensing agreement with CME Group, the world's largest and most diverse derivatives marketplace, to give South Africans the ability to trade rand-denominated platinum, gold and crude oil futures contracts.
In January this year, the JSE signed an agreement with CME Group to use its benchmark corn futures settlement prices for a local corn future.
The new agreement enables the JSE to offer trade in futures contracts referencing benchmark gold settlement prices from CME Group's COMEX division and platinum and crude oil prices from its NYMEX division. As a result, the JSE will list cash-settled futures contracts for platinum, gold and crude oil on the JSE's Commodities Derivatives Market in September 2009.
"Expanding the existing relationship with CME Group to incorporate these additional products is an achievement for the South African derivatives market," says Rod Gravelet-Blondin, head of the Commodity Derivatives Market at the JSE.
"South Africa is the world's largest platinum producer and third largest gold producer and so it made sense that we needed to offer South African investors related futures products which they could use either to gain exposure or hedge their exposure to a listed equity stock involved in the two commodities. The gold and platinum settlement prices from NYMEX and COMEX, two highly liquid exchanges forming part of CME Group, will ensure that the locally listed contracts reference an international benchmark for final settlement. This will bring much comfort to investors who will be able to access the international market via these rand-denominated contracts."
The South African Reserve Bank granted the JSE approval to trade future and option contracts on Foreign Referenced Commodities in June 2008, subject to certain conditions.
"We are also particularly excited about the opportunities a crude oil contract gives to investors seeking exposure to the international oil market or to organisations wanting to hedge their energy usage against the benchmark," says Gravelet-Blondin. "The opportunity to work with CME Group has increased the products we can offer market participants and complements our future growth strategy."
"Following the success of the JSE's corn futures contract based on our CBOT settlement prices, we are pleased at the opportunity to extend our relationship with the JSE in the form of these new commodity-linked products," said Rick Redding, CME Group Managing Director, Products and Services. "CME Group continues to explore new and innovative ways of facilitating effective risk management for suppliers and investors globally. By referencing our global benchmark prices, the JSE is enabling its users to access new tools to further their hedging needs."