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STRATE THE CLEARING & SETTLEMENT & DEPOSITORY FOR ALL FINANCIAL INSTRUMENTS IN SOUTH
AFRICA
Punte del Este, Uruguay 27 October 2005
Monica SingerCEO- STRATE Ltd (S.A.)
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STRATE Overview Electronic clearing, settlement & depository services for equities listed on the JSE and
some unlisted companies, bonds & money market instruments (Mid 2006)
The Licensed Central Securities Depository for all financial instruments (excluding
derivatives and unit trusts) in South Africa
Electronic transfer of ownership using STRATE technology
Transfer of value via the Central Bank (SARB)
Beneficial Ownership download and other services to listed companies
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Vision
We are committed to be the trusted and
preferred centralised provider of products and
services which are accessible to, and create
value for, our current and future stakeholders.
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Volumes of transactions in Bonds as at end September 2005
▪ Redemptions for year ending 30 September 2005 = USD 16 billion
▪ Interest payments for year ending 30 September 2005 = USD 8.2 billion
▪ Exchange rate USD 1 =R6.00
2002 2003 2004 9 months 2005
Annual Volumes USD 1.8 trillion USD 1.64 trillion USD 1.29 trillion USD 0.95 trillion
Number of daily trades 1580 1423 1356 1297
Market Capitalisation USD 72.8 billion USD 86.8 billion USD 103.4 billion USD 109.6 billion
Liquidity 24.6X 18.9X 12.5X 11.5X
No of Instruments 274 331 384 465
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Volumes of transactions on Stock Exchange Listed Securities as at August 2005
2002 2003 2004 8 months 2005
Annual Volumes USD134 billion USD 125 billion USD 172 billion USD 129 billion
Number of daily trades 3.7 million 3.25 million 3.91 million 3.07 million
Market Capitalisation USD 264 billion USD 297 billion USD 428 billion USD 429 billion
Number of Listed Companies 472 426 403 389
USD 1 = R6.00
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Success in STRATE in chronological order
October 1996-project begins
November 1999 to 2001 pilot project with 14 listed companies into STRATE, 617companies to go
March to December 2001 all listed companies move into STRATE
August 2003 –merger with company that settles bond
Currently there are 389 listed companies listed on the Johannesburg Stock Exchange
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Shareholders of STRATE Ltd
Johannesburg Stock Exchange
41% 59%
ABSA BankNedcor BankStandard BankFirst Rand BankCitibank
41% 59%
STRATE Ltd
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Board Members• Chairman:
– Mervyn King
• Johannesburg Stock Exchange:– Russell Loubser – Bobby Johnston
• Banks:– Stuart Yates (FirstRand)– John Stathoulis (Standard Bank)
• Non Executive Independent Directors– Rick Cottrell– Sindi Zilwa– Raisibe Morathi– Heather Sonn– Annamarie van der Merwe– Leon Campher
• Executive Directors:– Monica Singer – CEO– Erna Solomon – COO
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Dematerialisation
Required in terms of the JSE Rules
Can be rematerialised but a penalty is charged
New listings do not require the issue of share certificates
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94.78%
5.22%
Dematerialised in STRATE
Dematerialisation of listed securities as at September 2005
Held by investors in certificated form
outside of STRATE
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Bonds dematerialised in STRATE as of March 2005
Total market capitalisation as at March 2004 R556 billion9%
25%
66%
Held outside of STRATE as block of securities
Immobilised under STRATE
Dematerialised under STRATE
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Message flow in South Africa
Client JSE member
Delivering CSDParticipant
Receiving CSD Participant
SETS
BDA
SAFIRESTransfer Secretary Registrar
SAMOS
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The electronic contractual and guaranteed settlement
No transaction has ever failed to settle in STRATE
All dividends for listed shares and interest for bonds have been paid to the investor on time.
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Key lessons learnt from the implementation of STRATE in South Africa
The implementation of an electronic clearing and settlement of financial instruments is of national interest, with efficiency the volumes increase
The brokers and the banks have to work together with the Central Bank in order to achieve the electronic delivery vs payment in Central Bank funds
The Central Bank should implement a Real Time Gross Settlement system for the cash settlements
The financial instruments should be dematerialised The technology is available. Do not reinvent the wheel Allow for the borrowing and lending of securities in order to
enable the settlement of trades on time Assign ISIN codes to all financial instruments.
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Current and Future Projects
Finalise implementation of settlement of Money Market
Instruments
Migrate the settlement of bonds to SAFIRES
Implement the Alternative Settlement Model (ASM)
Improved corporate action functionality
Settlement for unlisted companies
Settlement of trades of other African stock exchanges
Expand the newly acquired Registrar business
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Contact
For more information contact STRATE:
Telephone Number: + 27 11 759 5300 / 5311Fax Number: + 27 11 759 5500 Website: www.strate.co.za
Monica SingerE-mail: [email protected]
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Thank You!
The South African Central Securities Depository
www.strate.co.za