The Commodities Trading and Structuring team offers our clients risk management and yield-enhancing structured solutions
Overview
The Commodities Trading and Structuring team provides risk management and yield-enhancing structured solutions for clients.
Products include:
Commodity forwards;
Futures;
Swaps;
Asian swaps;
Cross currency commodity swaps;
Commodity options.
The major commodity markets include:
Precious metals – gold, silver, platinum and palladium.
Base metals – copper, aluminium, zinc, lead, tin and nickel.
Energy – WTI crude, Brent crude, natural gas and gas oil.
Softs – corn, wheat, soybeans, sugar, cotton, cocoa and coffee on the Chicago Board of Trade (CBOT) and the South African Futures Exchange (SAFEX), where applicable.
The team also provides physical grain carries under repo, haircut and optional structures. By working closely with our Global Commodity Finance team, we are able to provide additional facilities that include collateral management arrangements (CMAs) and milldoor financing.
We are the primary marketmaker on SAFEX for cash-settled foreign-referenced commodity futures and options, and quote prices on the options for these foreign-referenced commodities.
Equities
Nedbank provides a full range of services for institutional equities, equity derivatives and prime broking.
Institutional equities
Nedbank is home to the stockbroking arm of the Nedbank Group, which provides a full range of services including research, sales and trading to domestic and international institutional and financial market clients.
As a member of the JSE Limited, we combine indepth knowledge of the local market with a sophisticated understanding of global financial and investment trends.
Our team of passionate financial market professionals aims to build long-term partnerships with clients, thereby delivering real value and customised solutions. Our expertise across products from cash equities through to delta one and option trading enables us to innovate constantly, making us a preferred solution provider within our industry. Click here to access the Nedbank CIB Research Portal
Equity derivatives
We offer a comprehensive range of standard as well as bespoke services and products: We perform:
Nedbank provides customised solutions that reflect the unique requirements of each of our clients
Overview
By combining a proven range of leading linear and non-linear derivative products with the vast local and global expertise of our experienced team of specialists, Nedbank provides customised solutions that reflect the unique requirements of each of our clients and demonstrate our ability to deliver tailored solutions that meet their long-term financial vision.
Our well-established reputation as one of South Africa’s leading fixed-income solutions providers has been earned, over time, through the knowledge, experience and insight of our investment and structuring specialists.
Our professional and highly experienced structuring team offers:
Integrated diverse products and service offerings for a solution tailored to your specific needs.
Specialised and well-proven market and product knowledge in all areas.
A full understanding of national and international fixed-income markets and offerings.
Global reach combined with extensive African insight.
Indepth knowledge of legislation and the regulatory environment, and the impact thereof on fixed-income solutions.
The backing of one of South Africa‘s largest, most respected banking groups.
Extensive experience in the successful application of black economic empowerment (BEE) principles.
We provide these structured solutions for:
Institutional clients such as local fund managers, asset managers, pension funds, banks, proprietary investors, hedge funds and international funds.
Non-institutional clients including government, parastatals, municipalities, corporates, small and medium business, commercial clients and crossborder borrowers.
The unique, research-driven solutions we develop for our clients cover the full spectrum of risk and return strategies, but share the common themes of discipline, efficiency, innovation, diversification and effective risk management.
They are designed to complement and enhance our clients’ wealth creation and management strategies and are constructed by:
identifying interest rate, inflation, commodity, credit and currency exposures;
ensuring full understanding of each client’s unique needs and risk appetite;
partnering with the client to create precisely the right solutions for maximum growth without compromising risk preferences; and
constantly reevaluating and optimising portfolios throughout the investment period.
We use the full suite of both linear and non-linear derivative instruments in the interest rate, inflation, commodity, credit and currency markets to deliver first-class bespoke solutions to our entire client base.
Foreign Exchange
Nedbank has a team of foreign exchange specialists to provide all the practical support and advice to make managing currency risk simple and cost-effective
Overview
Businesses that trade internationally are likely to be exposed to foreign exchange risk arising from volatility in the currency markets. If not managed effectively, the impact that exchange rate fluctuations can have on a business’s profitability can be significant. Nedbank has a team of foreign exchange specialists who can provide all the practical support and discerning advice to make managing currency risk simple and cost-effective.
We will work with you to develop an appropriate foreign exchange risk management strategy that effectively meets the requirements of your business, using instruments such as spot cover, forward exchange contracts (FECs) and derivative instruments.
We provide the following key services:
Spot cover – This refers to foreign exchange transactions where one currency is bought or sold against payment in another currency, at a specified rate, with settlement taking place two business days later. The two-day settlement process, commonly referred to as spot, is international practice and is due to differences in time zones and the time required by banks to ensure that settlement occurs correctly.
Same-day and next-day value deals – Where urgent currency payments or receipts need to be processed, one-day value or even same-day value exchange rates may be provided, depending on the currency cutoff times.
FECs – These are used to hedge exposures to exchange rate fluctuations by ‘locking in’ future foreign exchange rates. FECs are contractual agreements between the bank and its clients to exchange a specified amount of one foreign currency for another at a predetermined exchange rate on a specified future date. There are various types of FECs that can be used depending on the client’s requirements:
A fixed FEC can be used only on the specified maturity date.
A partly optional FEC can be used within a prespecified period between two future dates.
A fully optional FEC can be used at any time between the date of establishing the FEC and the specified maturity date.
Swaps – A swap is the simultaneous purchase and sale of identical amounts of one foreign currency for another, but on two different value dates, either spot against a forward date, or one forward date against another forward date.
Early delivery (or pre-takeup) swaps are used to bring forward the maturity date of an existing FEC.
Extension (or rollover) swaps are used to extend the maturity date of an existing FEC to a later date.
Long-dated forwards – These are FECs with a maturity date longer than 12 months forward.
Currency derivatives – These can also be used to hedge exposure to exchange rate fluctuations, but are fundamentally different from FECs. Whereas the parties to a FEC are ‘locked-in’ to a future transaction in a forward contract, the buyer of an option contract has the right, but not the obligation, to buy or sell a fixed amount of currency at a fixed exchange rate on a predetermined date in the future. The option holder (buyer) can therefore choose the better exchange rate – either the prevailing rate in the market at the time, or the price specified in the option contract. There are two main types of option contracts, namely call options and put options, and these can be used in various combinations to provide structured solutions to meet a client’s hedging requirements. While currency derivatives provide greater flexibility as a hedging instrument, they also have a cost in the form of a premium that is payable at the time of purchasing the option contract. With a call option the buyer has the right, but not the obligation, to buy the underlying currency at a fixed exchange rate on a predetermined future date. With a put option the buyer has the right, but not the obligation, to sell the underlying currency at a fixed exchange rate on a predetermined future date.
Currency futures – A currency futures (CFs) contract is an agreement that gives the buyer the right to buy or sell an underlying currency at a fixed exchange rate at a specified date in the future. One party to the agreement agrees to buy the CF contract at a specified exchange rate and the other agrees to sell it at the expiry date. The underlying instrument of a CFs contract is the rate of exchange between one unit of foreign currency and the South African rand. Contracts are cash-settled in rand and no physical delivery of the foreign currency takes place. CF contracts are traded on the JSE and have margin requirements that the client must provide.
Currency orders, stop-loss orders, call-levels – We provide 24-hour monitoring and execution of currency orders, stop-loss orders or call levels on behalf of clients.
Financial markets information and advice – Pertinent data and astute perspectives on the foreign exchange markets are also provided to our clients.
Nedbank provides a range of capital market products and related derivatives that allow credit investors to achieve their risk-return objectives.
Overview
Clever management of credit risk can add unique risk-return characteristics and diversification to portfolios.
At Nedbank we understand that our clients have a need to enhance returns while managing risk. To meet this need we provide a range of capital market products and related derivatives that allow credit investors to achieve their risk-return objectives.
Our Global Markets credit team has many years’ experience in delivering structured credit solutions to the investor community. We offer a range of vanilla credit products, but at the same time we also understand the unique needs of investors, never attempting to ‘shoehorn’ the unique needs of any client into an off-the-shelf offering. Instead, we leverage our vast experience of South African, African and international credit markets and combine this with our keen insights to deliver tailored credit solutions with appropriate risk return characteristics that complement our clients’ investment strategies.
It’s an approach that has allowed us to develop a strong reputation as a preferred business partner for global clients seeking opportunities to invest in Africa as well as African and South African organisations looking to expand their operations beyond their home country or continent.
Our professional and experienced Structured Credit team offers:
Extensive African and South African market knowledge, combined with a comprehensive understanding of global financial markets.
A valuable partnership with Ecobank Africa that provides the proven ability to deliver market-leading solutions to capitalise on African assets, trade and development opportunities.
A range of proven credit products and solutions that can be expertly combined or tailored to meet your precise requirements and deliver the outcomes you target.
Access to comprehensive, insightful and up-to-date African and international research.
Nedbank’s range of credit solutions is valued by clients across the spectrum of private and public sector organisations.
In developing leading structured credit solutions for you, we use our extensive knowledge and insights, combined with our understanding of you and your needs, creatively to combine an extensive range of innovative credit offerings, including:
