Standard Bank Oil ETN · JSE:SBOIL
Standard Bank Oil ETN — Standard Bank — Investor Presentation (2011)
37 slides from Standard Bank Oil ETN's investor presentation, 2011
Slide 1: Commodity Derivatives Presentation
Private and confidential Commodity Derivatives Presentation Retail Equity Derivatives
Slide 2: Contents
Contents 1 Section 1. Introduction 2. Introduction to ETNs 3. SB Commodity ETNs 4. SB Commodity Warrants 5. Commodity Futures 6. Using the websites
Slide 3: Introduction
Introduction 2 Today we will cover several types of Listed Derivatives ▬ ETNs (Exchange Traded Notes) ▬ Warrants (options) ▬ Futures What is a listed derivative? – A financial instrument, traded on an exchange, the price of which is directly dependent upon (i.e., "derived from") the value of one
Slide 4: Risk Return Profile
Risk Return Profile 3 Commodity Futures >10x Movement RETURN Commodity Warrants 4-10x Movement Commodity ETNS 1:1 Movement Cash RISK
Slide 5: Global Markets
Global Markets 4 • Global Markets: Retail Team • The largest Sub- CIB South Africa •Rated Number 1 in Warrants and Instalments Saharan African Global by Risk Magazine for the last 4 years. Markets Group •Number One in Warrants in market share for • Treasury Operations in 8 years 15 African countries
Slide 6: Commodity ETNs
/ Commodity ETNs i) Standard Bank
Slide 7: What are ETNs?
What are ETNs? 6 • JSE-listed instruments that track the performance of an underlying instrument or index. • Traded in the same manner as a listed security. • Standard Bank is the issuer and market maker of the ETNs and will therefore facilitate the buying and selling, ensuring the liquidity. • Stan
Slide 8: Standard Bank Commodity ETNs
Standard Bank Commodity ETNs 7 • Standard Bank‟s Commodity Linker ETNs provide investors with exposure to commodities in a cost effective manner. • A total return index is created from the near dated USD commodity future, USD interest rates and the USDZAR exchange rate. • The near-dated future is us
Slide 9: ETN Price
ETN Price 8 • The ETN price = ZAR commodity future price x Exposure Factor. ($ 1,750 x 7.00 x factor) • Each ETN gives the investor exposure to a portion of an ounce/pound/barrel or bushel of the commodity, this fraction is determined on issuance of the note and fluctuates marginally through time as
Slide 10: Commodity Linkers
9 Commodity Linkers 1. No gearing 2. Liquid 3. No need to own physical 4. Cost Effective
Slide 11: Commodity Reference Warrants
10 Commodity Reference Warrants
Slide 12: An Introduction to Warrants
An Introduction to Warrants 11 Warrants are options They trade on the JSE in the same manner as shares They enable Traders to maximise returns whilst strictly limiting losses They give traders the opportunity to make money in rising or falling markets Have a limited life span Their price
Slide 13: Advantages of Warrants
12 Advantages of Warrants Low cost Potential to leverage your investment Leverage can’t make a bad investment good, but it can make a good investment bad! Leverage can limit your staying power. Downside limited to the initial premium paid Traded on exchange Transparency of a listed instrum
Slide 14: Calls & Puts
13 Calls & Puts Call Warrants Right to buy Right to buy at fixed price Expires on fixed date Increase in value if the underlying goes up Put Warrants Right to sell Right to sell at a fixed price Fixed Expiry Date Go up if underlying goes down
Slide 15: What are Commodity Reference Warrants?
14 What are Commodity Reference Warrants? A CoRW is a derivative that‟s value is based on an underlying, being a commodity. The underlying is the Rand value of the underlying commodity Gold $ 1,750 x R 7.15 = R 12,512 The investor has the right but not the obligation to either buy or sell the pe
Slide 16: CoRW's come in Calls and Puts
15 CoRW’s come in Calls and Puts Call Warrant PLT SB A A = the series of the GOL = GOLD Commodity Reference Issuer code: Warrant PLT = PLATINUM SB = Standard Bank OIL = OIL (A being the first and B being the second) Put Warrant PLT SB P P = the series of the GOL = GOLD Issuer code: Commodity Referen
Slide 17: List of Commodity Warrants
16 List of Commodity Warrants Underlying Code Strike Expiry Type Ratio Gearing European GOLD GOLSBC R 10,250 02 Aug 11 3,000 17 Call European GOLD GOLSBD R 11,250 04 Jan 12 1,800 7 Call European OIL OILSBB R 860 04 Jan 12 90 8 Call European PLATINUM PLTSBD R 13,250 04 Jan 12 2,600 7 Call
Slide 18: Commodity Futures
Commodity Futures i) Standard Bank
Slide 19: Wealth Warning
WEALTH WARNING 18 Trading futures can offer significant returns BUT also subject you to significant losses if the market moves against your position. You may, in a relatively short time, sustain more than a total loss of the funds placed by way of initial margin. You may be required to deposit a sub
Slide 20: What is a Future?
What is a Future? 19 A futures contract is an agreement between two parties that: 1. is of a standardised contract of a specific quantity of underlying asset 2. is listed on the exchange (SAFEX), removing counterparty risk 3. expires on a predetermined date in the future, rand settled.
Slide 21: Features
20 Features Require reduced capital to trade – Only pay a deposit (initial margin) – This LEVERAGE / GEARING adds risk. Allow you to benefit in both rising and falling markets – (short / bear sales). As the underlying asset price goes up and down, so to does the futures price. Unlike most in
Slide 22: Margin
21 Margin Every trade that takes place on SAFEX is guaranteed by SAFEX. By a process known as novation SAFEX becomes the counterparty and thus guarantees the performance on each trade and removes the risk of counterparties not meeting their obligations. In order to protect itself against any p
Slide 23: Initial Margin
22 Initial Margin To ensure that you meet the obligations of your trade, SAFEX requires that you post (deposit) initial margin. This money remains on deposit as long as the position is open. The initial margin is returned to the investor when the position is closed out, or the contract expires
Slide 24: Variation margin
23 Variation margin At day end, the JSE calculates a closing price (mark-to-market “MTM”) for each future. The profit or loss for the day for each position is calculated based on the MTM of the current day less the MTM of the previous business day. The profit or loss is referred to as the “var
Slide 25: Futures Pricing
24 Futures Pricing 1. In most cases the price of a Futures will be above the price of the underlying with the price of the Future and the underlying asset converging as we get closer to the expiry date 2. The price at which the Future is priced is referred to as the “Fair Value” Fair value = The und
Slide 26: List of Commodity Futures
List of Commodity Futures 25 Contract Contract Code Expiry Date SBG Initial Margin Est. Exposure Gearing Size COPP SEP 11 01-Sep-11 R 9,000 2500 lb R 70,000 8 COPP DEC 11 01-Dec-11 R 9,000 2500 lb R 70,000 8 SILV SEP 11 01-Sep-11 R 18,750 500 oz R 140,000 7 SILV DEC 11 01-Dec-11 R 18,750 500 oz R 14
Slide 27: Comparing Costs
Comparing Costs i) Standard Bank
Slide 28: Comparing Brokerage Costs
27 Comparing Brokerage Costs ETNs: 0.5% B/O: 0.5% - 1% Futures: 0.1% B/O: 0.5% Warrants: R50 Flat B/O: 1 cent
Slide 29: Using the Websites
Using the Websites i) Standard Bank
Slide 30: Using the OST Site - Looking for a ETN
29 Using the OST Site - Looking for a ETN List of all ETNs Select ETNs From Instrument List
Slide 31: Using Warrants Site - ETNs
30 Using Warrants Site (www.warrants.co.za)– ETNs Select ETNs From Instrument List ETN Brochures in PDF
Slide 32: Using Warrants Site - Looking for a Warrant
31 Using Warrants Site (www.warrants.co.za)– Looking for a Warrant List of all CoRWs Select ETNs From Instrument List
Slide 33: Using Warrants Site - Looking for a Warrant
32 Using Warrants Site - Looking for a Warrant Download the warrants tutorial Select Help & Education
Slide 34: Using the OST Site - Looking for a Commodity Future
33 Using the OST Site - Looking for a Commodity Future Select ETNs From List of all Commodity Instrument List Futures
Slide 35: Using the JSE Site
34 Using the JSE Site - http://www.jse.co.za/Markets/Commodity-Derivatives-Market.aspx Important Commodity Information
Slide 36: Contact details
Contact details 35 Richard Juchniewicz Equity Derivatives Corporate and Investment Banking Division of Standard Bank Email: richard.juchniewicz@standardbank.co.za / Contact number: +27 11 384 2514
Slide 37: Disclaimer
Disclaimer 36 This presentation is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential. It is not to be delivered nor shall its contents be disclosed to anyone other than the entity to which it is being p