Online binary exchange launched

Stephen Gunnion

Stephen Gunnion joined CNBC Africa in April 2009. He has presented the programs Open Exchange and Power Lunch since his start with the channel enjoying...

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The choice of financial instruments available to South African investors continues to grow, with the Bond Exchange of SA (Besa) on Tuesday announcing a joint venture with Market Tech to roll out Africa’s first online binary options exchange, Justtrade.com, while the JSE said it was expanding the single stock futures to include internationally listed companies.

A binary option is a financial bet which pays out a finite amount.

Rory Mackay, co-founder and director of Market Tech, which developed the platform for Justtrade.com, said the Financial Services Board had limited Justtrade.com to making a market in financial contracts.

These covered local and international equities, commodities and interest rates. He hoped to expand it to foreign exchange soon. The public would get access to these markets in contracts valued at R100.

Mackay said the risk was limited, unlike other derivatives markets. “There are no hidden surprises; you know what you are in for as the risks are finite.”

The party accepting the bet, known as the “aggressor”, would be liable for the fee, equal to 1,5% of the contract, Mackay said. Justtrade earned a further 1% “margin haircut” off the interest gained on client funds sitting in Besa’s trust account.

The market was transparent and showed all bids and offers on all contracts, he said.

Mackay said he was confident the joint venture would remain in place if the JSE was successful in its bid to buy Besa as agreements had been signed.

Meanwhile, the JSE said it had launched International Derivatives together with Deutsche Bank London, which would give South African investors the opportunity to gain exposure to 21 top European stocks.