The derivatives market offers investors the means to execute strategies for obtaining a higher rate of return (speculative strategy) and to hedge against existing risks. For instance, options and futures for gold enable gold mining companies to mitigate financial risks stemming from potential future decline in the global price of gold. Conversely, banks and jewelry manufacturers use these derivatives to reduce the risks associated with a sudden surge in the price of the precious metal.
In the Kyrgyz Republic, the exchange market for futures contracts operates on the basis of the Government Decree No. 185, dated March 29, 2017. This decree approved the Regulation on the types and conditions for issuing and circulating derivative securities, as well as the requirements for their underlying asset in the Kyrgyz Republic. Notably, derivative contracts do not fall under the definition of ‘emission’ (series-issued) securities, and there is a simplified procedure for their entry into the organized market.
The Stock Exchange of Kyrgyzstan – BTS offers the possibility of concluding the following types of futures contracts:
In the future, the exchange is expected to launch exchange trading in futures and swaps.
The underlying assets of futures contracts can be any goods (commodities), currency, virtual assets, securities.
Trading in the following futures contracts has been launched:
1. Settlement option on gold bullion
2. Forward for refined gold, which delivers in a non-cash form
3. Forward for refined gold bullion, deliverable
4. Settlement futures on the USDT stablecoin price