Stellar growth in JSE's dividend futures

THE JSE's dividend futures market, which was launched in 2003, has grown by 19,000% year on year in the past fiscal period. "We didn't market it. It's a work in progress," said Allan Thomson, the JSE's director of equities and derivatives trading. "They were originally conceived to alleviate a problem single stock futures were having with corporate actions."

Brett McLaren, a derivatives trader at Investec, said the dividend futures market had developed because most banks writing single stock futures carried inherent dividend risk.

"It's mostly banks and their clients in the market. I've not seen brokers taking a speculative position on a dividend future."

Thomson said dividend futures were a complex financial instrument that was not easy for technological systems to use or for retail investors to understand. A month ago he was behind the launch of SA's first currency futures market, and by the end of the month there were more than 14,800 contracts daily.

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