Rand volatility jolts South Africa's quanto stock futures market

Currency controls in South Africa limit the ability of domestic investors to build stakes in big overseas companies. Listed quanto futures are one way round that, but the users remain exposed to currency risk – so some banks are now pushing an options-based alternative. Tom Osborn reports

In the South African equity derivatives market, necessity has long been the mother of invention. Currency controls that restrict the amount firms and individuals can invest offshore have given birth to a growing market for listed quanto products – equity futures on foreign companies that end-users can trade and clear locally in rand, although they remain exposed to the risk that currency movements could erode the value of the contract. As a result of that exposure, the market has taken a hit in