SSF’s
have become a popular investment tool.
Stay ahead of the game - familiarize
yourself about SSF’s.
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1)
DEFINITION AND PRACTICALITIES |
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2)
FEE STRUCTURE |
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3)
LATEST DEVELOPMENTS |
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1)
DEFINITION AND PRACTICALITIES |
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| A Single
Stock Future (SSF) is
a futures contract derived from an underlying
equity listed on a stock exchange.
An SSF contract is standardized
as to:
Size
Expiration date
Tick movement
The pricing of a SSF contract
tracks the price of its underlying share, and
the contract value is 100 times the quoted price
of that share.
Single Stock Futures (SSF’s)
in practice – what happens:
You want to buy 10 000 Anglogold shares and the
current price is R350/share. This would give you
a position in Anglogold of R3.5 million.
To enter such a position using SSF’s
you would buy 100 Anglogold futures contracts,
thereby giving you the same exposure:
1 contract = 100 shares; 100 contracts = 10 000
shares.
The SAFEX Futures Exchange would
require you to deposit an initial margin of R3
750 per contract:
R3 750 x 100 contracts = R375 000, giving you
exposure to a gross contracts value of
R3.5 million, & a gearing ratio of 9.33 (R375
000 x 9.33 = R3.5 m).
If the price of Anglogold increases to R400/share,
and you sell your 100 Anglogold futures contracts
at this price, you will realize a profit of R50/share
or R5 000 per contract
(R50 x 100), and your total profit on this transaction
would be R500 000 -
(100 contracts x R5 000/contract), less brokerage
fees. |
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2) FEE
STRUCTURE |
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Position Trading
Costs per contract are: |
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Purchase: |
Brokerage fees of 0.3% of
contract value, plus
Safex booking fees of 0.033% of contract
value
Total fees: 0.333% of contract value |
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Sale: |
Brokerage fees of 0.3% of contract value,
plus
Safex booking fees of 0.033% of contract
value
Total fees: 0.333% of contract value |
Therefore, total “round trip” fees
are 0.666%.
Day Trading
Costs per contract are: |
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Purchase: |
Brokerage fees of 0.2% of
contract value, plus
Safex booking fees of 0.033% of contract
value
Total fees – 0.233% of contract value |
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Sale: |
Brokerage fees of 0.2% of contract value,
plus
Safex booking fees of 0.033% of contract
value
Total fees – 0.233% of contract value
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Therefore, total “round trip” fees
are 0.466%.
| Notes: |
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Safex booking fees are levied on the
closing spot price (not on the futures buy
or sell prices). |
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Costs as set out above include the
market makers charges. |
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Brokerage fees are negotiable, depending
on volumes and frequencies of trades. |
Example of Contract Costs:
Buy 200 Didata futures contracts – equivalent
to 20 000 shares @R4/share:
1 contract = 100 x R4 = R400
200 contracts = 200 x R400 = R80 000
Position Trading Fees:
R80 000 @ 0.333% = R266.40
Total cost per share = R4.013
Day Trading Fees:
R80 000 @ 0.233% = R186.40
Total cost per share = R4.009
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3)
LATEST DEVELOPMENTS |
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Currently,
SSF’s are traded telephonically
via a broker, such as SIGNAL
FUTURES.
The JSE is developing software for an Auto
Quote System for both SSF’s
and SSF Options (SSFO’s).
This will enable market makers to make prices
electronically, and will enhance liquidity.
If you wish to
commence trading SSF’s, or for additional
information about trading SSF’s contact
Claudia Cone:
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Tel:
(021) 434.7554
E-mail:
info@signalfutures.co.za |
SUPERIOR SERVICE; COMPETITIVE FEES
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