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

 
Author/Editor: Adelegan, Olatundun Janet
 
Publication Date: September 01, 2009
 
Electronic Access: Free Full text (PDF file size is 1,068KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
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.
 
Series: Working Paper No. 09/196
Subject(s): Bond markets | Capital flows | Capital markets | Financial instruments | Financial risk | Investment | Liquidity management | Risk management | Securities markets | Securities regulations | South Africa | Stock markets | Sub-Saharan Africa

Author's Keyword(s): derivatives | South Africa | options | futures
 
English
Publication Date: September 01, 2009
Format: Paper
Stock No: WPIEA2009196 Pages: 19
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org