The Johannesburg Stock Exchange (JSE) and RMB (as the initial market maker) have brought quanto futures to the South African market.
A quanto future is a rand-denominated commodity investment product which delivers the same payoff as a pure dollar-denominated commodity investment, while protecting you from USD/ZAR exchange rate fluctuations.
South African investors don’t always derive the full benefit of commodity price movements. This is due to a combination of the exchange rate and the country’s exchange control regulations (which govern the provision of investments in foreign assets. It requires that commodity investments to be listed and settled in Rand).
An example of how the product works:
If the price of Brent crude increases by 20% in US dollar terms, the value of a rand product (via quanto futures) will also increase by 20%. The exchange rate movement plays no part in determining a return. Initially, Brent crude, gold and copper will be referenced as part of the JSE’s existing agreement with the