While Strate was created more than 17 years ago to replace paper share certificates with electronic records of ownership, a process referred to as dematerialisation, it continues to receive requests about dematerialisation.
Only a small percentage of securities are yet to be dematerialised in the equities market. The closer the market gets to full dematerialisation will result in a lower settlement risk, as well as less costs of servicing shareholders by listed companies. Strate therefore encourages any outstanding paper to be moved into the dematerialised environment
Stakeholders have enjoyed the increase in liquidity as a result of simultaneous delivery / registration of securities and payments and timely settlement as opposed to the delays experienced previously. Dematerialisation has significantly lowered South Africa’s risk profile and encouraged local and foreign investment to South Africa.
The market has already been accustomed to the convenience of technology – as the electronic format provides further security as well as accurate and up-to-date electronic record of ownership. The benefits to the investor include a reduction in the risk associated from loss, fraud or theft of paper securities, as well as less costs from printing, transporting and administering physical paper certificates.
Investors with paper certificates who wish to dematerialise them may submit their share certificates to either a Central Securities Depository (CSD) Participant or stockbroker for dematerialisation. They will not be charged to dematerialise shares, but may be charged a custody fee for keeping record of these shares on an ongoing basis by the custody agent.
Should you have any further queries regarding dematerialisation, you may contact info@strate.co.za or call the helpdesk via +27(0)11 759 5529.
To read the FAQ online, click here.
