derivatives

By Joe Leahy and Samantha Pearson

Brazil has reduced a financial transactions tax on currency derivatives from 1 per cent to zero after its currency, the real, hit four-year lows against the dollar on Wednesday.

The measure was the second such move in a week to dismantle currency controls as the government sounds a rapid retreat from its earlier “currency war” against foreign capital inflows. Continue reading »

Zambia’s second bourse is hoping to kick off trading “in weeks”, giving investors a chance to trade derivative products alongside the bonds and equities available on the main Lusaka Stock Exchange (LuSE).

Peter Sitamulaho, deputy chief executive of the Bonds and Derivatives Exchange Zambia, or BaDEx, said the bourse is just waiting on getting its first clearing member, which would guarantee trades: “When the first bank signs, we will be able to trade.” Continue reading »

The departing chairman and chief executive of the Libyan Investment Authority has said he was about to appoint lawyers to seek compensation from banks including Société Générale and Goldman Sachs – banks he has accused in the past of causing losses worth billions of dollars.

In a wide-ranging interview published in Euromoney magazine, Mohsen Derregia (pictured), who is being ousted from the LIA after just 11 months in the top job, speaks passionately about his removal – which he is challenging – and the importance of the approximately $60bn sovereign fund. Continue reading »

South Africa is already known for being a one of the best-regulated financial markets – ranked first in the world by the World Economic Forum, no less. Now the country’s desire to keep in line with international market standards has prompted the Johannesburg Stock Exchange to strengthen its exchange traded derivatives market with a new default fund to protect investors.

The fund, announced on March 14, is aimed at protecting investors in the event of a clearing member defaulting – a necessity for clearing houses following the 2008 financial crisis. The question is – in the event it is needed, who ultimately pays? Continue reading »

Two women pack corn into bags on a farm on the outskirts of Lusaka, Zambia, on Friday, Feb. 1, 2008. Photo: Bloomberg

Time to hedge?

Good news for Zambian famers, as well as other grain traders: the Johannesburg Stock Exchange will offer derivative contracts on Zambian grain from next year, giving farmers and others a chance to hedge their grain price risk.

The contracts will be settled in US dollars – which may provide an added appeal to other groups given the recent depreciation in the kwacha. Continue reading »

There was a triumphant moment earlier this year when Brazil was able to claim that the cost of protecting against default on its bonds using credit default swaps was lower than that of US treasuries.

In spite of the arguments in Brazil’s favour, the claim never held much weight – the credit default swaps in question were of the one-year variety while the most relevant one is the five-year. Continue reading »

Spiralling food prices have been a source of unrest in China, the Middle East and parts of Eastern Europe and sub-Saharan Africa over the past year.

So sensitive is the issue of food prices in EM countries - where a much higher proportion of income is spent on food than in developed countries – that some have warned of an imminent wave of “hunger riots” should the issue not be addressed. Continue reading »

There is an undisputed king of the hill among Taiwan’s brokerage houses after Yuanta Financial announced its plans to acquire Polaris Securities over the weekend.

Yuanta, which was already market leader before the deal, will buy Polaris for T$49bn (US$1.7bn), with about half the proceeds in cash and half via a share-swap. The merged entity will control about 15.7 per cent of Taiwan’s securities brokerage market, and be the biggest on the island by just about every measure. Continue reading »

Çetin Ali Dönmez is a happy man. The chief executive of TurkDex, Turkey’s derivatives exchange, has received two pieces of good news that should make his market an easier place to invest.

Late on Wednesday, US regulators allowed TurkDex’s flagship Istanbul stock exchange index futures contract – the ISE 30 – to be offered directly into the US. Aside from a few hedge funds with special exemptions, US investors were not allowed to trade Turkish derivatives on TurkDex before the decision, which was made by the Commodity Futures Trading Commission (CFTC). Continue reading »

The problems at Vitro, the Mexican glassmaker, refuse to go away. Today, the Mexican Stock Exchange suspended trading in the company’s shares after it missed a deadline for filing its fully audited earnings for 2009. The exchange said that trading in its bonds was also suspended.

This latest twist in the Vitro saga comes after a calamitous 2009 which, among other things, saw the Monterrey-based company default on $1.5bn of debt in February following an ill-fated excursion into derivatives.

Add to that a vertiginous fall in demand for glass during the global economic recession last year, and a longer-term trend of increasing competition in the production of flat glass, once the company’s core business, and you have all the basic elements of a horror story. Continue reading »