South African bond market to witness historic change

The South African bond market will soon receive a new clearing and settlement system that will replace the one that has served the market since 1991.  

The revolution is being spearheaded by the country’s Central Securities Depository, Strate, which owns the current bond settlement system it inherited from UNEXCor, following a merger between both parties in 2003. Strate is responsible for the electronic settlement of securities in SA and safely keeping these ownership records.

 On July 24, 2017, Strate plans to implement its Debt Instrument Solution (DIS) to replace the UNEXCor system. In so doing, much-needed changes to the bonds settlement model, capital event payments processes and communication between bond issuers and Strate will be introduced.

“With an average of R2.4 trillion worth of bonds under Strate’s custody and settlements exceed R100 billion daily, this is a significant project being undertaken by Strate and members of the capital markets,” says Beverley Furman, Managing Executive: CSD Operations at Strate.

She adds that with the country’s best interests at heart, and risk mitigation top of mind, Strate will continue to ensure its Go-Live date can be met without introducing risk. “You can appreciate the stringent governance that Strate has over a project of this scale and importance. Given that several project milestones must still be met between now and 24 July 2017, Strate is regularly assessing progress on these milestones to ensure that this Go-Live date can be met. Should the implementation be postponed, there are contingency arrangements in place. These will be communicated in need.”

Read the full article here, and watch the CNBC Africa interview online here.