Page 20 - The Corporate Report Pack

and cash or cheques required to nalise trades Issuers of these securities would deal directly with their own investors when ownership changed hands, dividends or interest was paid, or when the company changed its name or merged with another company
However, beginning in the late 1960s, trading volumes grew exponentially and the variety of securities expanded, which made the already labour-intensive, paper-based processing a huge and expensive burden e solution was the development of the CSD Rather than rms or issuers having to deliver, reregister, and reissue individual paper certi cates with every trade or every time a stock split, the CSDs immobilised, or secured, the certi cates in a single location
class post-trade services to the market ese are not only limited to keeping a record of the ownership of shares, but also help to make all of the other aspects of managing these investments easier and less risky
In the last two years alone, we have introduced collateral management services to the market as well as our e-tutor training portal First, Strate launched its collateral management services in response to the impact of new international regulations on our clients, such as Basel III and Solvency II ese regulations aim to protect the nancial markets from systemic risk but will a ect the South African market as nancial institutions will require better collateral management systems in place
Strate will be looking to adopt further pioneering projects that will change – for the better – the South African electronic post-trade environment and risk management landscape.
Within South Africa, Strate was created in 1998 to implement the electronic settlement of all listed shares on the JSE e previous paper-based records were ‘dematerialised’ (converted to an electronic record) in Strate Today, Strate uses its world-class IT infrastructure and technology to provide electronic settlement both e ciently and e ectively, eliminating the risks that the investors used to face in the paper- based environment Even though some investors still hold on to their paper share certi cates, over 98% of the value in the market has been dematerialised though the stockbroker and/or the CSD participant (eg a bank, Computershare, etc) network
CSDs settle huge volumes of securities traded every day in the world’s capital markets is is done in a fast, cost-e ective and, most importantly, secure manner Before Strate was created, there were less than 4 000 trades a day on the JSE Today, there are over 250 000 trades on average a day, showing the growth, advances and e ciencies that have been brought to the market
Since its inception, Strate has used international benchmarks to ensure that, as a South African nancial market infrastructure, it provides world-
Although South African nancial institutions use cash more so than liquid securities as collateral, a global move to largely use securities as a form of collateral has become a solution to enhance liquidity and meet regulatory requirements Strate, in the role of a ‘triparty agent’, has implemented a centralised, market-wide system to complement current collateral management functions within nancial institutions for the valuation, automatic allocation, substitution and optimisation of local securities as collateral, aimed to mitigate counterparty risk and enhance liquidity in the market
As we continue to innovate, the company also launched an online training portal called Strate e-Tutor to improve access to education about the nancial markets We rmly believe that education is one of the most important investments that can be made to secure a brighter future for a country and its people Similarly, an investment in people who want to learn about the nancial markets provides numerous bene ts for the economy, as it transfers knowledge and critical skills, which contribute positively towards society
e portal allows individuals working in the nancial services industry or students wanting to participate in the industry to learn about the workings of the capital
28 The Corporate Report
Where to next for South Africa’s nancial markets?