THE ENHANCEMENT OF THE DETERIORATED SOUTH AFRICAN BOND OPTIONS MARKET

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Abstract

Investments, especially those in the bond market, carry a level of risk. Risks in the bond market can be mitigated by transacting in option contracts. In the developing South African economy, trading activity of over-the-counter (OTC) bond options decreased significantly. Possible deteriorating factors and interventions to enhance OTC bond options were investigated in this research. Experts in the OTC bond option market were surveyed and the quantitative data collected was analysed with descriptive statistical methods. Results indicated that three factors were positively identified as deteriorating factors in the OTC bond option market and that five different interventions were possible to possible enhance this market.

Keywords: Bond Options, Deterioration, Developing Economy, Enhancement, Over-the-counter (OTC), South Africa

How to cite this paper: Erasmus, C.F. (2015). The enhancement of the deteriorated South African bond options market. Risk governance & control: Financial markets & institutions, 5(2-1), 92-100. https://doi.org/10.22495/rgcv5i2c1art3