• A currency future is a futures contract to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date.
• Since investors can close out at any time prior to the contracts delivery date, most contracts are closed out before the contract conclusion.
• This means that currency futures are cash settled in rand and no physical delivery of the underlying currency will take place.

A futures contract is listed on the JSE Limited. Performance by the counterparties is guaranteed via Safcom (the JSE Limiteds clearing house) for all futures contracts that are traded.

The currency market is the largest and most liquid market in the world. Futures trading is an alternate form of investment suitable for experienced traders seeking greater diversification with their current portfolio. Futures offer the advantage of leveraged investment, where investors could profit in both a rising and falling market; in other words, they are a cost effective way to gear on exchange rates. Long or short trades, i.e. buying or selling a currency, can be executed with ease.
Currency futures also allow individuals to trade outside their two million Rand foreign investment allowance stipulated by the South African Reserve Bank. There are no limits on the value that individuals may transact in the currency futures market.
The old adage high risk for high return is especially appropriate to currency futures trading, since it is more advanced than normal currency trading. It should only be attempted by individuals who are already familiar with the currency market and are comfortable with the concept of gearing.

Face-to-face courses
The futures market is extremely liquid, risky and complex by nature. However, it can be understood if broken down into its component parts and analysing how each functions. Attending a course on the futures market will help you to develop your knowledge and better understand the associated risks of trading this exciting product. We offer an intermediate level half-day derivatives course.

Existing clients can log into the platform to check course topics and details, upcoming dates in your city, and to make a booking.

New clients please phone our call centre for further information.

New clients: Click here to register now with Standard Online Share Trading.
Existing account holders: To trade currency futures, please:

1. Log-on
2. Click on the other products menu
3. Select currency futures registration.

Download our brochure which explains in detail how Currency futures work and how to get started.

ALSI futures are a futures contract based on the Top 40 index usually trading at a slight premium to the underlying asset being the Top 40 index.

Considered the Holy Grail for traders due to the huge liquidity, cheapness of transaction and tight spreads thousands of local and international traders are regularly day trading in the ALSI futures.

It is important to note that while the ALSI futures tracks the underlying Top40 index there is no perfect relationship as ultimately the ALSI futures price is driven by the buyers and sellers and a large order on either side can push the ALSI futures price of out sync with the underlying index.

ALSI futures every index point is worth R10, so a 100 point move in the index would result in a R1,000 profit or loss (depending on the direction of the move).

When one transacts in the ALSI futures you trade at the index price and pay a margin as set per SAFEX plus the OST variation margin (currently R25,500). Your profit or loss will then depend on where you exit the trade based on the R10 per point value.

You can short the index buy selling and buying back at a later stage and make money on the way down.

The ALMI future is basically the mini version of the ALSI futures with every index point worth only R1 and the margin required also being a tenth of the ALSI futures margin R2,550. As there is a market maker this index will track the ALSI futures.

Here the underlying assets these futures contracts are based on are respectively the Financial 15 index (Fini15) and the Financial and Industrial 30 index (Findi30).

The DTOP index future, bases pricing off the Shareholder Weighted Top 40 index (DTOP). The construction of this index assumes the same rules as for the TOP 40 index, however offers the following features:

• The DTOP index is created to reflect locally held free float.
• The index is adjusted to eliminate foreign shareholding, thus allowing for a more diversified index.

• The contracts all expire on the third Thursday of every quarter (March, June, September and December).
• Standard Online Share Trading will roll over clients into the next contract on the morning of the close out.
• Margin requirements are subject to change as and when SAFEX changes them.

• In order to trade index futures you need a futures account, to open a free futures account on the menu other products futures registration.
• You will find these contracts on the menu under find or trade index futures.
• To find the list of shares that make up these indices log onto OST and on the menu key market statistics list of indices and click on the short code for the complete list. You will also find the online charts of these indices here.

• To find these instruments on Easy Trader type the contract month (eg: Sep) and the list will auto drop down.

• We must stress that neither Online Share Trading nor the Standard Bank of South Africa are market makers in these index futures products and as such cannot offer pricing to clients in the event that there is insufficient liquidity in the market to exit positions.
• This does add an element of risk to trading this product.

* - Margin is correct at time of writing but is subject to change from SAFEX.

Examples