Bond index futures are derivatives that track the JSE’s bond indices and provide exposure to an underlying basket of JSE-listed government bonds. Bond index futures are cash settled.
Who should use this?
Bond index futures are used by international and South African institutional investors seeking a diversified exposure to South African bonds. Individual investors with expert knowledge of interest rate derivatives can also participate. Market participants can go long (to buy at a future date) or short (to sell at a future date) as they see fit.
Features:
- Exposure is spread over a range of bonds reducing the risk of default.
- Exposure is geared.
- The JSE guarantees settlement.
- Are subject to initial margin and margin payments.
- Derivatives can be risky and should not be tackled by novice investors.
How to get it:
To use Bond Index Futures, investors need to register as a client with a JSE Interest Rate Derivatives Member