BSI futures deposit criticised

Press, 21 November 1987, Page 32

BSI futures deposit criticised

The minimum deposit required by the International Commodities Clearing House (ICCH) on the Barclays share price index futures contract (BSD has been criticised. The managing director of Egden Wignail and Company Futures, Dr Brent Layton, said yesterday that the high minimum deposit ($7500) required by the ICCH was a factor in dampening trading. The minimum deposit has moved up sharply since the “Black Monday” market crash on October 19, doubling from $2500 the next day, and then to $7500 the following week. "It is hard to believe that the prospective volatility of share prices can justify requiring traders to front up Chase price Chase Corp has announced a strike price of 131 c to calculate bonus shares for its dividend reinvestment scheme. The strike price related to the dividend payable on December 11. Commodore buy Fortuna Corporation has bought a further 1.1 million Commodore Computer Corporation ordinary shares at 35c a share, raising its holding to 71.1 per cent Fortuna said it was offered the parcel of shares.

with roughly 18 per cent of the face value of a contract” An overnight BSI move to about 1700 points or 2500 points looked a remote prospect But the rules were that ICCH set the minimum deposit as it guaranteed performance on contracts to its members. Dr Layton said. Barclays index The manager of Mair Astley Futures, Mr Geoff McDonnell, said that the BSI would have to be described as volatile and in a downward trend. The New Zealand market was seeking overseas guidance and, like Australia, was looking to the United States economy and the outcome of budget deficit cuts. The spokesperson for Marshall Futures, Miss Jenny Chin, said that there were signs of consolidation at 2200 to 2280 in the physical index. The market had been reflecting movements on Wall Street and was cautious of buying too early. However, sentiment was better and a rally above 2350 would bring a correction back to 2700 on futures. Interest rates Mr McDonnell said that the recent 2 per cent to 3 per cent drop in 90-day rates had been followed by a 0.5 per cent drop in 5-year rates. This had culminated in a flattening of the yield curve.

Again the market was wary of any adjustments to primary liquidity by the Reserve Bank which could have a flow-on effect to long term rates. The 8500 mark could be breached shortly if the market believed that the fall in rates would not be subjected to Reserve Bank intervention. Miss Chin said that bullish economic forecasts, increases in dally cash targets, announcement of only one more stock tender for the financial year, and other Reserve Bank activities lead to interest rate markets feeding off themselves, giving way to lower rates. Because call rates were now in positive funding the market should remain bullish, although a small downward correction on futures can not be discounted. BABs traded from 8245 to 8365 for December, but as with the GSK it met resistance, and was subject to a profit-taking. Dr Layton said that the rise in futures had been punctuated by profit-taking and a brief spell of nervousness when AMP offered SIOOM ol

Government stock to the market Futures looked set to head even higher, provided the Reserve Bank did not become nervous and tighten liquidity. Unless there were signs that Inflation was moving up again, the Reserve Bank was not likely to act “With the economy headed for a post-crash recession, inflation looks well and truly beaten this time round and the long awaited fall to sharply lower rates appears to be on its way.” However, in the middle of last year, just as a fall in rates appeared set to continue, inflation took off again and the Reserve Bank tightened up sharply. Rates surged back up. In the light of this experience, traders were understandably cautious this time round.

Sydney index The December share price index futures were sharply lower at 1172.0 yesterday — an 84.0 point discount to the physical market — from 1244.5 on Thursday.

SUS CONTRACTS Mth Open H/L Last Vol Mar 6740 740/740 740 2 Contracts traded: 2 Open positions at November 19: Dec 369, Mar 3, total 372 (up SICOMMERCIAL BILLS Contracts traded: Nil Open positions at November 19: Dec 40, Mar 39, Jun 10, total 89 (same). GOVERNMENT STOCK Mth Open H/L Last Vol Dec 8479 489/476 481 731 Contracts traded: 731 Open positions at November 20: Dec 2815, Jan 4, Mar 12, Jun 70, total 2901 (up 258). WOOL Mth Open H/L Last Vol Dec 665 665/660 660 7 Jan 681 681/680 680 5 Mar 712 712/710 710 5 Contracts traded: 17 Open positions at November 19: Dec 80, Jan 301, Mar 353, May 320, Aug 34, Oct 1, Dec 2, total 1091 (down 3).

,96-DAY BANK BILLS Mth Open H/L Last Vol t Dec 8328 350/290 315 284 Jan 8345 345/300 320 71 r Mar 8400 400/385 385 14 » Jun 8425 425/425 425 10 Contracts traded:. 379. Open positions at November 19: Dec 1045, Jan 276, Feb 80, Mar 332, Jun 177, Sep 165, Dec I 180, Mar 27. Jun 12, total 2294 (up 120). SYDNEY ALL-ORDS (half-points omitted) Prev. Mth close H/L Last Vol , Dec 1244 1210/64 1172 749 Contracts traded: 749 Open positions at November 19: 9621. BARCLAY’S SHARE INDEX Mth Open H/L Last Vol Dec 2130 150/50 50 119 Contracts traded: 119. Open positions at November 19: Dec 887, Mar 12, total 899 (up 10).

NX FUTURES MARKET WEEK ENDED November 20 Trading Traded prices Total Open months This week To date this cont’s sus High Low Last High LOW week Dec ’87 1.6610 1.6285 1.6285 1.69001.6209 40 369 Mar ’88 1.6740 1.6740 1.6740 1.67401.6740 2 3 Totals 42 372 PCP •<? ■ Dec ’87 8525 7800 40 Mar ’88 8500 7800 39 Jun *88 8430 7815 10 Totals 89 GOVERNMENT STOCK Dec '87 8490 8447 8481 8500 8315 4800 2815 Mar ’88 8446 8390 12 Jun ’88 8500 8400 70 Totals 4800 2897 WOOL Dec ’87 665 650 660 747 541 13 80 Jan *88 709 680 680 750 541 15 301 Mar '88 715 710 710 770 551 16 353 May ’88 745 730 730 780 575 21 320 Aug ’88 750 750 750 785 635 2 34 Oct ’88 735 735 1 Dec ’88 789 745 2 Jan *89 800 800 0 Totals 67 1091 M-DAY BANK ACCEPTED BILLS Dec ’87 8365 8425 8315 8365 7985 1063 1045 Jan ’88 8360 8260 8320 8360 8040 235 276 Feb ’88 8360 8290 8355 8360 8220 117 80 Mar ’88 8450 8350 8385 8450 8000 59 332 Jun *88 8425 8400 8425 8430 8100 11 177 Sep ’88 8480 8480 8480 8480 8100 2 165 Dec ’88 8450 8400 8450 8450 8100 3 180 Mar ’89 8500 8200 27 Jun ’89 8320 8320 12 Sep ’89 0 Totals 1490 2294 BARCLAY’S SHARE INDEX Dec ’87 2290 2050 2050 4290 1972 905 887 Mar ’88 2350 2260 2335 2850 2125 7 12 Totals 912 899