During the last quarter of 2015 and early 2016, the South African Financial markets saw the entry of two new foreign companies listing on the Johannesburg Stock Exchange (JSE). Steinhoff Limited de-listed from the JSE and was re-created as Steinhoff International Holdings N.V. (a Dutch Incorporated Company) with a primary listing on the Deutsche Borse (Frankfurt) and a secondary listing on the JSE. Anheuser-Busch InBev (AB InBev) already listed in Belgium, USA and Mexico was now listed on the JSE.
Both transactions brought with them significant challenges in that both Dutch and Belgium Law prohibited the CSDs within these regions from connecting to and/or opening an account with a Transfer Secretary/Issuer Agent. This posed a hurdle for both listings, particularly as a key principle for cross-border listings is the ability to enable an investor (no change in beneficial ownership) to move their securities between two markets for arbitrage opportunities, amongst others. This function, termed “a removal process”, was traditionally performed by a Transfer Secretary/Issuer Agent.
The restrictions in the European legal framework prompted Strate to consider and implement what is commonly known as an “Indirect CSD Link”. This was successfully implemented via both Standard Chartered (for the Steinhoff listing) and Citibank (for the AB InBev listing). An “Indirect CSD Link” can be best described as the ability to link CSDs between two markets by using a common participant in both markets. By introducing this solution, Strate was able to readily and successfully move securities for these listings between markets.
With Strate’s innovative technology, Strate was able to support the market with these recent complex corporate action events.