[South Africa] JSE drives more transparency and liquidity, provides access to real-time market-making scheme
07-04-2021 10:03:00 | by: Pie Kamau | hits: 603 | Tags:

In an effort to increase liquidity and price transparency for Index Option contracts in the options market, the Johannesburg Stock Exchange (JSE), will now be providing access to real-time, on screen pricing for its JSE Top 40 Index Options contracts.

Historically, contracts were traded off screen, and the introduction of the JSE Index Options Market-Making Scheme will bring a much needed shift in the options market, giving the exchange a competitive edge and putting it on par with large international exchanges. Access to real-time market-making will enable market participants to seamlessly trade Index Options contracts on the exchange.

The Market-Making Scheme will enable better pricing, bring improvement in spreads and depth of the order book which will lead to a more consistent valuation of trading books.

“We are continuously investigating new initiatives that will enhance transparency and liquidity for market participants. We are excited to work with the market and trial an Index Options Market-Making Scheme because it will promote price transparency in the options market and will drive liquidity for Index Options contracts in the options market,” said Langa Manqele, Head, Equity & Equity Derivatives at the JSE.

The JSE will be taking a phased approach to introduce this offering to the Equity Derivatives Options market. In the first phase, JSE members will voluntarily post competitive bids and offers on screen for various index option strikes and expiries, with no obligations imposed on participants. This will facilitate an improvement to visible option prices which will enable tighter bid/offer spreads and enhanced liquidity.

The exchange is committed to exploring and launching products that respond to the evolving market needs, and looks forward to expanding instruments offered under the scheme.