The integration of the futures trading system with the JSE`s new Stock Exchange Trading System (SETS) will not occur as it is not designed with built-in logic to handle transactions such as delta trades.
We will continue to use two systems for the two markets for the foreseeable future.
Alan Thomson, director equity and derivative trading, JSE
One of the arguments for the merger of the SA Futures Exchange (Safex) with the JSE was that dealers would have seamless integration between Safex`s Automated Trading System (ATS) and SETS, which will replace the Johannesburg Equity Trading System (JET) from 13 May.
Alan Thomson, the JSE`s director in charge of equity and derivative trading, says the JSE`s decision to go with SETS was taken before it bought Safex and absorbed it as a division in July last year.
"We will continue to use two systems for the two markets for the foreseeable future," Thomson says.
ATS was an in-house development by Safex using companies such as Securities & Trading Technology to create a system that was dedicated to futures and derivative trading.
Thomson says volumes traded in the derivative market seemed to have reached a peak with a decline or static growth in a number of the contracts.
"Industrial futures were always dominated by the jobbers and the conditions in the underlying market have left them little opportunity to trade," he says.
The heavy weighting of resources shares has ruled the Alsi 40 contracts with the result that the futures traders have been forced to follow the underlying trend.
"No asset manager has a portfolio that looks the same as the Alsi 40 and so its use as a hedging devise is limited at the moment."
He says the futures market will undergo some restructuring in order to cater for the new JSE/FTSE 100 Africa index series that will replace the current indices in June. "We are also working at developing new products for the market that will be announced in the near future."
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