Zambia’s Bond and Derivatives Exchange (BADEX) will officially launch currency futures as the African continent is fast becoming an alternative market as investors in the stagnated US and European markets look to shift their investments elsewhere.
The recently launched derivatives exchange will offer FX futures after recent government reforms were applied to exports of $10,000 or above, which has consequently created demand among corporates for suitable risk management and hedging tools.
Peter Sitamulaho, Deputy CEO at the Bond and Derivatives Exchange Zambia, told Forex Magnates: “The recent introduction by the Zambian government of statutory instruments 32&32 which reinforces the use of the Zambian Kwacha as legal tender and requires additional reporting on foreign exchange transactions, the business community is desperate for hedging instruments such as currency futures.”
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The county’s currency, the Zambian kwacha, will be traded against four major crosses, the US dollar, the South African rand, British pound sterling and the euro.
BADEX will be offering a fully automated trading solution, all trading will be executed on the trading platform within the exchange’s rules and regulations, and all positions will be cleared by clearing members and balanced back to the exchange at close of business every day. The exchange that was established in 2009 is using one of South Africa’s leading technology firms for financial markets, Securities & Trading Technology used by neighbouring Johannesburg Stock Exchange (JSE).
BADEX, joins to do the growing list of trading venues in Africa, India’s Financial Technologies, the technology behind the MCX and DGCX launched the Bourse Africa in 2008 as Africa’s requirements for complex financial instruments grow amid global trade and rising commodity prices. Zambia has consistently been achieving economic growth exceeding 5%.
Mr Sitamulaho adds: “There is only one operational derivatives exchange in Africa i.e. JSE. The African market is in dire need of hedging instruments particularly as many countries use foreign exchange to trade and in transactions. Many firms within the African countries and Zambia in particular are exposed to foreign exchange risk with its implications.”