The South African Futures Exchange (Safex)

The development of exchange-traded derivative instruments in South Africa started in the late 1980's

located in Sandton, South Africa

In 1988 twenty-one banks and financial institutions met and established the South African Futures Exchange (Safex) and the Safex Clearing Company (Safcom)

Serious Information

Trivia

.The South African Futures Exchange (Safex) has a financial markets division and an Agricultural Markets Division (AMD).

The measures of the financial markets division have grown from R3.4 million at its formation in 1990 to R69 million at June 1997. Safex has experienced a growth of 10.36 million contracts during he 1996/97 financial year, a year-on-year increase of 35 percent.

AMD was formed in 1995 and by 30 June 1997, the net reserves amounted to R3.2 million compared with the original operating forecast of R1.4 million.

Safex has kept abreast of developments in the world financial markets, and continues to make steady progress despite intensifying competition from international derivative exchanges and over-the-counter alternatives. The Safex reserves have grown sufficiently to allow a significant reduction in the fees it levies per future or options contract. Consequently, all fees were reduced by 50 per cent in 1997 and the changes on allocated trades were removed.

The Exchange is directed by an executive committee consisting of up to 11 elected members all with full voting rights, and an additional non-voting nominated people that the executive appoints. Policy decisions are made by the committee and carried out by a full-time management team headed by the CEO.

The Exchange is governed by members, but through their use of the exchange services, they are also its clients. The exchange is a Self Regulatory Authority and exercises its regulatory functions in terms of the Financial Markets Control Act, 1989 and its rules. The Exchange, in turn, is supervised by FSB.

A futures contract is a standardized contract, traded on the futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. The future date is called delivery date or final settlement date. The pre set price is called a futures price. The price of an underlying asset on the delivery date is called the settlement price.

An informal futures market was started in South Africa by local merchant bank Rand Merchant Bank (RMB) in April 1987. It was the exchange, the clearing house and the only market maker and although it survived the October1987 market crash, volumes remained relatively thin. In May 2001 Safex and JSE Securities Exchange members agreed to a buyout of Safex by the JSE. Effective date of the transaction was 1 July 2001. The JSE agreed to retain the Safex branding and will move the Financial Products business into a division within itself known as Safex Financial Derivatives Division.

The Safex Agricultural Products Division

The deregulation of the agricultural market in South Africa led to the establishment of a viable futures market. In early 1995 the Safex Agricultural Markets Division (AMD), with a start-up capital of R 4.2 million, listed its first commodity on the exchange- a physical settled beef contract. The free market has created the correct environment for farmers and processors to use price risk management policies in their everyday management of their business.

In May 2001 Safex and JSE Securities Exchange members agreed to a buyout of Safex by the JSE. The Effective date of the was 6 August 2001. The JSE agreed to retain the Safex branding and moved the Agricultural Products business into a division within itself known as Safex Agricultural Products Division (APD).

http://www.safex.co.za/ The South African Futures Exchange Website

address:

Safex
One Exchange Square
Gwen Lane
Sandown
Sandton

Trivia

Sandton is a town in the northern part of the Greater Johannesburg Metropolitan Area, South Africa in the Gauteng Province. The name comes from the combination of two suburbs, Sandown and Bryanston, both of which were named after places in the United Kingdom.
It has become the new financial centre of South Africa and Johannesburg's premier business area. Much of the financial focus of Johannesburg has shifted from the CBD to Sandton, especially in the last 15 years. Only South Africa's four largest banks have kept HQs in downtown Johannesburg, as well as Transnet, the transport parastatal. But much of the finance industry has moved north to Sandton, including investment banks, financial consultants. A considerable amount of the city's A-grade office space is found in Sandton. The JSE Securities Exchange, Johannesburg's stock exchange, relocated its offices in Sandton from CBD in the late 90s. Sandton's gain was the CBDs loss: it resulted in urban blight and "white flight" of the downtown Johannesburg area. Sandton is home to the Sandton Convention Centre. The Sandton area is one of the most opulent and wealthy in Johannesburg and South Africa.

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