May 30, 2012 11:36 pm by Jude Webber
Argentina seems to have developed a new export line: futures markets know-how.
After a deal earlier this year to set up a futures exchange in Uruguay (a joint venture between Argentina’s commodity derivatives exchange MATBa and the Uruguayan bourse), Argentina’s futures and options exchange Rofex is now helping Paraguay establish its first futures market.
Paraguay is a soya powerhouse (it is the world’s fourth-biggest exporter of the oilseed) and though it remains one of the poorest countries in South America, its economy has been developing fast. It grew by 15.3 per cent in 2010, before slowing to 3.8 per cent in 2011.
This year, the IMF reckons the economy will contract by 1.5 per cent, in part because of a drought that has hammered soya production, but then the lender forecasts a blistering 8.5 per cent growth in 2013.
Rofex is the main market in Argentina for trading dollar futures and Argentina Clearing is its clearing house. Argentina Clearing, together with Primary, a leading service provider for exchanges and brokerages, have signed a deal with the Asunción stock exchange, BVPASA, to establish a futures market in Paraguay.
The first contract – expected to launch early next year – will be a dollar/Guarani (Paraguay’s currency) product similar to the dollar future contract that is traded on Rofex. Why? Because that’s where the volatility is. For example, on the day the parties signed the contract to move ahead with the futures Exchange, there was a 5 per cent move in the exchange rate in Paraguay, notes Ignacio Miles, president of Argentina Clearing, who is also on the board of Primary.
Soya futures or “some agricultural product” could follow the dollar/guaraní contract next year if all goes well, he told beyondbrics.
The contracts will initially only be open to Paraguay residents, operating through brokerages, though that could in future be extended. As for sophisticated algorithmic or high frequency trading, Miles says markets take time to develop, but “why not?”.