The Derivatives Market in South Africa: Lessons for Sub-Saharan African Countries

September 1, 2009

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Format: Chicago

Olatundun Janet Adelegan. The Derivatives Market in South Africa: Lessons for Sub-Saharan African Countries, (USA: International Monetary Fund, 2009) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the role of the derivatives market in South Africa and provides policy options for promoting the development of derivatives markets in sub-Saharan Africa. South Africa's derivatives market has grown rapidly in recent years, supporting capital inflows and helping market participants to price, unbundle and transfer risk. There are tight regulations on asset allocations by insurance and pension funds to prevent excessive risk taking. The development of derivatives markets in sub-Saharan African countries could enable market participants to self-insure against volatile capital flows. Theiroverdependence on bank credit as a source of funding could be reduced and their management of seasonal risk could be improved through the introduction of commodity futures. However, these markets must be appropriately regulated and supervised. Since such markets would likely be small, consideration should be given to the establishment of a regional derivatives market.

Subject: Derivative markets, Financial institutions, Financial markets, Futures, Futures markets, Options, Over-the-counter markets

Keywords: Africa, Agriculture commodities derivative, Bond futures, Bond market, Currency derivative, Currency futures market, Derivative instrument, Derivative markets, Derivative platform, Derivative trading, Derivatives, Equity futures, Exchange control reform, Fixed income, Fixed income derivative, Futures, Futures contract, Futures markets, Market, Market growth, Market operator, Market participant, Options, Over-the-counter markets, South Africa, Stock futures futures contract, Sub-Saharan Africa, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/196
Stock No:

WPIEA2009196
ISBN:

9781451873436
ISSN:

1018-5941

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