South Africa’s central securities depository (CSD) will leverage the solution to improve voting efficiencies and increase shareholder participation in South AfricaContinue reading
Strate is proud to announce that its new website is live, where current and prospective clients will find useful information about our services in a fresh and fluid design that can be viewed on both desktop and mobile versions.
Leigh Bevis, Head of Marketing and Business Development explains, “The digital marketing landscape has changed significantly and people want to interact with content. Strate’s new website is far more visual, which means it’s easier for many users to remember. When customers remember your visual site, which incorporates videos and infographics as content, they also remember your brand and you as a company.”
People visiting Strate’s website will now find that information is much easier to digest in its repackaged form and key products and services have been given prominence as visual blocks on the landing page. “There is movement in some of the diagrams, animations and infographics and the videos provide informative news or views on industry trends, our market or Strate’s services,” Bevis adds.
Given that some content has been shortened, or removed, email addresses have been provided for clients to request the information from the correct people within Strate. Should you wish to access Strate’s Directives, Special Gazettes, or Guidance Practice Notes, then you need to email Strate-Directives@strate.co.za to request a copy of the document that you would like to access. (If you have registered for the Strate Exams and require a copy of the Directives as part of your study material, please request this directly from the Strate Academy via firstname.lastname@example.org)
To visit the new site, go to www.strate.co.za.
Strate welcomes the news that its client – one of South Africa’s newest exchanges, 4 Africa Exchange (4AX) – announced its first two issuer listings on the Exchange – NWK Limited and NWK Holdings Limited.
NWK used to trade shares in the over-the-counter market. However, changes to financial market legislation and regulations meant that companies like NWK had to trade these shares on a formal market.
The changes to regulation was one of the reasons that led to the creation of 4AX, which intends to provide a formal trading platform for the over-the-counter equities market. The company has indicated that it would broaden this to medium-sized enterprises, real estate investment trusts, restricted schemes and special purpose vehicles given that its licence allows it to serve multiple asset classes.
At the beginning of September 2016, the Financial Services Board notified the market that it had granted 4AX an exchange licence. Strate was appointed by 4AX to provide it with central securities depository and settlement services. 4AX offers investors a T+3 settlement cycle, allowing trades matched on its system to be cleared and settled within three business days after the trade date.
Gregory Naicker, the General Manger Product Development at Strate, says, “Strate welcomes the news of 4AX’s inaugural listings and we would like to commend 4AX on their historic milestone.”
According to news sources, 4AX is targeting nine more companies across the construction, engineering, hospitality, property development and tourism, two of which are expected to be inward listings.
Below are images of Greg Naicker with the 4AX executive team, as well as the NWK executive teams:
On Friday 13 October, 2017, the first non-cash collateral exposure between A2X Markets and one of its brokers was successfully reported and settled using Strate’s Tri-Party Collateral Management Services. This came just over a week after A2X Markets had announced it was operational and settling transactions on a T+3 settlement cycle using Strate’s settlement infrastructure.
Instead of placing cash to cover the capital exposure requirement (where cash is typically required to cover market and settlement risk), Strate’s collateral solution also enables broker’s to place securities as collateral for their exposure risk on A2X. This frees up cash for the broker, allowing brokers to more efficiently use cash to fund other transactions.
“A2X is excited with the prospects that Strate’s Collateral Management System adds to the market in reducing the risk between trade date and settlement date. Strate’s Collateral Management System brings about high levels of automation and the calling of collateral is seamless to the users,” says Brett Kotze, Head Post-Trade Services at A2X Markets.
Beverley Furman, the Managing Executive of CSD Operations at Strate, adds: “The capital markets are evolving and Strate has been nimble in developing premier solutions that cater for such dynamic players. A2X has an innovative business model that further decreases risk and capital costs for brokers, which ties into Strate’s philosophy of creating solutions that are efficient, reduce risk and add value to stakeholders. We are proud to be partnering with A2X Markets and its clients for both settlement and collateral solutions.”
Financial services companies, African Rainbow Capital Investments (AIL), Peregrine Holdings (PGR) and Coronation Fund Managers (CML) are the first counters to have a secondary listing on A2X Markets. It has approved RMB Morgan Stanley, Peregrine Securities, Investec Securities and Avior Capital Markets as its stockbrokers, with more brokerages expected to be approved in coming weeks.
A2X Markets was officially granted its licence by the Financial Services Board in April 2017, then becoming the country’s fourth licensed South African exchange and Strate’s newest client. It is targeting many of the largest companies currently listed on the JSE, to secondary list on A2X Markets. It says it is also offering brokers material discounts to transact in these shares, while maintaining the high standard of regulation as set by the Financial Market Act.
To provide you with a holistic understanding of the impact emerging FinTechs will have on the future of financial services, GIBS partnered with Strate to host the Fintech Innovation Conference during August 2017.
The videos for the following topics are now available online:
- Welcome Remarks from Strate;
- Keynote Address from the Deputy Governor of the SA Reserve Bank;
- Digital Trends and Implications for Financial Services;
- Panel Discussion: Disruptive Technologies, Big Data, Robotics and Artificial Intelligence;
- Panel Discussion: Future of Financial Transactions and Integration – Partnerships, Design Thinking and Customer Centric Innovation; and
- Blockchain and the Disruption of Financial Services.
Please click on the respective topics to access the video directly, or visit Strate’s YouTube channel to watch our videos online.
South African Central Securities Depository (CSD), Strate, has confirmed that all the milestones necessary to proceed with its Debt Instrument Solution (DIS) Project have been met. This landmark has been achieved through an extended period of commitment and testing involving all market stakeholders.
Strate is, therefore, pleased to announce that 22-26 September 2017 has been set aside for the formal implementation of the new system – with Tuesday 26 September 2017 being earmarked as the first day of operation using the new DIS platform.
We thank you for your support and look forward to your continued focus and dedication to achieving this successful transformation for the South African capital markets.
The 24 financial market players who form part of the SA financial blockchain consortium (SAFBC) have been recognised for their blockchain research efforts in the Banker Technology Projects of the Year Awards 2017. The Banker is owned by the Financial Times and is one of the world’s premier banking and finance resources, read in over 180 countries.
Formed in 2016, the consortium aims to redefine the South African financial system based on blockchain technology, which has tremendous promise to improve transaction speeds and reduce costs that will help address financial exclusion issues. Members of the Fractal Solutions team at Strate Chair the IT Stream of the SAFBC and are the Secretariat as well for the consortium.
Members of the SAFBC are: ABSA, AlexanderForbes, BankservAfrica, Bowmans, Capitec, Curo Fund Services, Citadel Wealth Management, Finswitch, FirstRand, FNB, Ince, Investec, JSE, Nedbank, PASA, Rand Merchant Bank, Sanlam, Silica, Standard Bank, Standard Chartered, Strate, ZAR X, FSB (observer), SARB (observer).
According to the magazine, SAFBC is exploring different technologies, including Ethereum, Chain, Hyperledger and Corda. “The consortium is attempting to show how this technology is a paradigm shifter. The historic assumptions that were taken for granted, such as digital money intimately tied with credit risk against the institution holding the money, as well as the entire concept of fractional-reserve banking, are being questioned, and this questioning is allowing a whole host of possibilities to emerge, pointing to a much better financial system that better serves the needs of customers and clients of the industry, according to SAFBC,” it reads.
The SAFBC acknowledges its collaboration between members as the key recipe for its success.
Regulation for cleared and non-cleared derivatives has driven the themes of collateral transparency, segregation, collateral tracking , standard reporting requirements and eligibility. Upcoming regulation, such as Secured Funding Transaction Reporting (SFTR), is further driving these themes at a transactional level for securities lending and borrowing, margin lending, commodities lending and borrowing and repurchase transactions. It is clear that the administrative burden on secured funding transactions is only going to increase in the foreseeable future, especially as collateralisation takes place on a per security basis. It is therefore critical to have certainty that each transaction undertaken, whether on a pledge or cession basis, fully complies with local market regulations in an efficient manner.
Strate offers a Tri-Party collateral product called Strate Collateral Management Services (SCMS), which is offered in addition to the traditional pledge and cession options. SCMS fully automates collateralisation processes between collateral givers and receivers, as well as the underlying post-trade ‘plumbing’, to ensure that transactions are effected efficiently and in compliance with local regulations, while futureproofing against upcoming regulations. This functionality fully alleviates the administrative burden typically associated with both pledge and cession transactions. This is achieved by Strate’s direct integration to the CSD Participants of collateral givers and receivers, and the use of segregated depository accounts. The solution is abstracted above the settlements layer and is able to manage complex collateral rules and then automatically execute the most optimal collateral by instructing custodians in an efficient, compliant and accurate manner.
Typically, pledging at a securities level has been a significant administrative burden. However, with SCMS, pledges are perfected at a securities level in terms of Section 39(1) of the Financial Markets Act via an automated system in just a few minutes, with no manual intervention or administration required from users. This enables highly efficient intra-day collateral substitutions on an unlimited basis. SCMS further extends this automation by allowing collateral givers to trade out of a single account, while at the same time enabling both cession and pledge of securities at an ISIN level – as corporate events, pending sales and reserved securities are already factored into the solution’s algorithm. Collateral optimisation is thus enabled for collateral givers, as they will not be required to manage collateral between separate collateral accounts and keep ‘buffer’ collateral in order to meet needs of multiple collateral receivers.
The SCMS solution is already live in the South African market and has enabled the automated use of both pledge and cession constructs across multiple exposure types and categories of financial and non-financial institutions.
If you are interested in learning more about our Tri-Party Collateral Services, please contact email@example.com Steve Everett on +27 11 7595496.
South African market participants can now enjoy unprecedented automation and straight-through processing by leveraging newly available, integrated cloud-based technology to exchange tri-party SWIFT1 messaging for collateral instructions, settlement and confirmations. CloudMargin, the multi-award winning creator of the world’s first web-based collateral and margin management solution, and Strate, the South African Central Securities Depository (CSD) and South Africa’s first Tri-Party Collateral Management Agent, today announced that they have just integrated their platforms. The move makes tri-party messaging and collateral optimisation more accessible for both buy- and sell-side participants in the country.
The agreement enables clients to efficiently and seamlessly use their collateral held at Strate to cover their margin calls in the over-the-counter (OTC) derivatives market. For local market participants without their own SWIFT membership, this previously would have been a time-consuming, manual process to handle messaging related to collateral instructions, confirmations and settlement. Now, they can take advantage of the CloudMargin and Strate Collateral Management Services straight-through processing capability via SWIFT.
Due to the fact that the solution is cloud based, collateral management clients can implement it quickly at a reasonable cost, the firms said.
Lee McCormack CloudMargin Head of Strategy, said: “We are delighted to roll out this breakthrough service in conjunction with Strate Collateral Management Services to market participants in South Africa, helping them increase their efficiencies via our cloud-based platform. We are continuing to build an inter-connected network of organisations globally that give clients one-stop access to a broad range of collateral management and other related services for cleared and uncleared derivatives transactions.”
Steve Everett, General Manager of Strate Collateral Management Services, said: “We are delighted to partner with CloudMargin to provide a fully integrated, cost-effective and powerful collateral management capability to the South African market. This comes at a time when firms here are preparing to meet the requirements of the non-cleared OTC derivatives margin regulation due to take effect on Sept. 1, which will require enhanced collateral management capability from both the buy-side and the sell-side.”
Did you know that 35 days is the average that a new technology takes to attract 50 million users in Silicon Valley? In a world where it takes a little over a month to attract and retain customers, companies have never been more serious about putting the customers first through strategies that resonate with their emotions.
While meeting customer’s needs has been one of the cornerstones of any business strategy, business leaders will soon, if they have not already, realise that strategies have evolved to be customer centric across all pillars – by understanding how the client engages with the business from the pre-sale to the post-sale interaction, how the business makes the customer feel, and how the full experience can be improved across each potential interaction point.
According to Strate CEO, Monica Singer, it’s about under promising and over delivering using technology to improve what customers may experience. “Technology allows people to feel connected, so the use of advanced technologies, such as big data, distributed ledger technology, the Internet of Things and machine learning, are playing a huge role in how we make our customers feel, which underpins the success of the business.”
Singer adds that with the rise of a tech-savvy generation of clients, businesses need to embrace being innovative through design thinking and technological advancement to remain relevant and be competitive in today’s dynamic environment, or risk becoming obsolete.
Strate, as a Central Securities Depository serving South Africa, has existed since the 1990s and incorporated innovation into its business model from the beginning. By understanding global best practice, engaging stakeholders to regularly assess market dynamics and needs and keeping abreast of the latest technological advancements, it introduced many market changing solutions that add value to clients. One such example is a collateral management solution that would help bolster liquidity in the face of regulations, such as Basel III, that would threaten the balance sheet of many banks. However, Singer says that while the business brought this innovative solution to the market, it had to up the ante, which is one of the reasons the company’s collateral solutions can look at cross border collateral transfer using Distributed Ledger Technology, or that soon, it will also be offered using Cloud Computing.
“We have the alpha generation of customers who have been born after 2010 in a technological world. Everything they learn is from technology. Children are likely to learn things now from YouTube before they do from their teachers. Over the next two decades, businesses can’t be asking this generation to fill out paperwork, these businesses need to evolve to generate loyalty from the alpha generation and beyond,” she adds.
Design thinking is a collaborative process that is human centred. Businesses need to look at the whole pattern in the ecosystem and, through collaboration and the facilitation of social interaction, understand the full customer experience. They then need to combine left- and right-brain thinking when approaching their strategies to be analytical and intuitive when defining the emotional needs of customers without being held ransom by the needs of the product or service.
“It’s hard to kill your own product, but rather be the one to do it first before others do. If you are not using a design thinking approach, your customers may just kill the product as they did with Kodak, a giant which no longer exists thanks to innovation with mobile technology,” explains Singer. She elaborates that businesses need to spend three quarters of their time holistically looking at the whole ecosystem to understand it, then focus the rest of the time on product development. “Once businesses understand the ecosystem, they should create ideas without limitations and prototype those ideas with the market to get feedback, then improve on those ideas by combining customers’ needs with their aspirations.”
While evolution is key to keep up with the unprecedented rate of change, some businesses need to acknowledge that they need an ambidextrous strategy with leadership that too, can apply ambidextrous thinking. “Yes, companies need to establish themselves to be relevant in the future, but there are many cases where they need to nurture the core that currently serves the market. This happened with the media a number of years ago when digital news and Twitter threatened to be the demise of print media, yet print still exists because there is a market for it that wants to turn the pages of a newspaper or magazine. As the environment gets more competitive, companies need to remain relevant by designing their strategies around the customer; Strategies that continue to build trust by understanding the customer’s point of view, where customer-centric solutions are designed with this in mind.”
Similarly, a company like Strate has to nurture and evolve its core, while explore disruptive technologies. During 2016, it created two divisions within the company, CSD Operations and Fractal Solutions to achieve this. While initial thoughts would be that disruptive technologies could, and may even still, threaten the core business of CSDs – there is more of a case that they complement the business model and can drive solutions that address business problems across the ecosystem. One such example is proxy voting for corporate actions, which is admin intensive and flawed. Fractal Solutions has been working closely with the market to develop an e-Voting solution using Distributed Ledger Technology. The CSD is also looking at its big data capabilities to create value-adding solutions that provide further insights to clients.
Elsewhere within the business, the company continues to incorporate design thinking to address the needs of clients within the current model. Traditionally, financial markets have existed with one stock exchange and a Central Securities Depository. In South Africa, this is no longer the case after multiple exchanges were awarded licences after the country existed for more than 100 years with a single service provider, which has been a client of Strate’s since the CSDs inception. The new exchanges have also appointed Strate as their CSD, and Strate has had to show its flexibility and innovative thinking to understand their respective business models to create bespoke solutions for each.
Singer explains that it still remains a necessity to serve the market loyally and maintain the high-levels of service delivery, but it is also imperative to adopt the most advanced technologies and models that make you a best-of-breed company. “To survive, businesses need to be innovative to keep up with the rate of change of a new breed of customers. To thrive in this new era, businesses must choose to notch it up another gear and adopt design thinking with advanced technologies, without losing sight of the current market’s needs,” she concludes.