DERIVATIVES IN SOUTH AFRICA – AN EMPIRICAL INVESTIGATION

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Abstract

This paper, which is the second of a two-part series, presents the empirical findings of testing a number of variables influencing investors’ decisions to use derivatives in their portfolios. Five variables were deemed very important by a sample of 21 experts in the financial services industry in South Africa. These were: the level of information available (including the transparency of price determination); investor’s knowledge of different derivative instruments; investor’s level of risk tolerance; the level of liquidity in the market; and investor’s knowledge of and familiarity with financial markets. Education is required to change negative sentiments regarding derivatives and more regulation is called for, especially in over-the-counter markets.

Keywords: Derivatives, South Africa, Characteristics, Variables, Proposition, Sample, Investor, Risk Tolerance, Education, Expectations, Regulation

How to cite this paper: Schwegler, S., & Viviers, S. (2011). Derivatives in South Africa – an empirical investigation. Risk Governance and Control: Financial Markets & Institutions, 1(1), 68-84. https://doi.org/10.22495/rgcv1i1art5