CSD Working Group Releases Product Requirements for General Meeting Proxy Voting on Distributed Ledger

CSD Working Group on DLT, an association of Central Securities Depositories working on developing reference products using Distributed Ledger Technology, has released product requirements for the proxy voting business case during the International Securities Services Association (ISSA) Operational Committee meeting in London on April 24, 2017.


The document titled “General Meeting Proxy Voting on Distributed Ledger: Product Requirements” contains requirements to all technical aspects of the product:

  1. Functional requirements for the process, described as a minimal viable product aimed at a generic market, and extension functionality that covers specific local needs of the markets in Russia, South Africa, Switzerland, Chile, Nordic and Baltic countries.
  2. Non-functional requirements.
  3. Trust requirements, enabling to provide the value typically associated with DLT-based solutions.
  4. Baseline data entities, roles and their access rights.


The document aims to provide a complete description of a reference product for proxy voting – one that can be used by business in most markets worldwide. The priorities of the working group were to capture the business value of using DLT in the field of proxy voting without completely reworking established business practices.


Alexander Chekanov, Enterprise Architect at NSD, the leader of the working group, says: “With this effort, we aim to provide clarity to the infrastructure operators and market participants in how to implement DLT-based solutions in their local markets and to create value associated with the technology. Proxy Voting has served as an excellent business case where the advantages are both visible and easy to achieve without causing a major disruption on the market. For NSD in particular, it is one of the many steps that we take to make Russian post-trade infrastructure more open and reliable for both the local market and internationally”.


Monica Singer, CEO of Strate, says: “Strate has always maintained that collaboration with key market players and experts leads to the successful implementation of industry-wide projects that add significant value to the markets. Distributed ledger technology has opened the doors to a new world of how people can transact and we’re excited to be an integral part of this journey, where we’re changing history. Together with other working group members, we have embraced this technology to improve the financial markets and are excited at the progress being made on proxy voting using distributed ledger technology”.


Javier Jara, Commercial and Legal Affairs Manager at DCV, says: “For the Central Securities Deposit of Chile, it is very important to be part of this project as one of the representatives of Latin America, it implies being in the leadership of projects that use Blockchain technology for Securities Deposits. In particular, this project of Proxy Voting raised the common requirements to all markets, allowing the incorporation of extensions that adapt to other specific markets, so when this project reaches the Chilean market, will already be thought of local needs. We hope to continue working with our colleagues from other Central Securities Depositaries around the world, to increase in the collaboration and support in adaptations and developments in new technologies”.


The document has been produced by the working group during the period between October 2016 and April 2017 and involved collaboration between NSD, Strate (South African CSD), SIX Securities Services (European ICSD based in Switzerland), Nasdaq (CSD in Nordic and Baltic region) and DCV (CSD of Chile). The presentation to the ISSA Operational Committee in London on April 24th was the first public reveal of the document.


The group is continuing to work on the business case of proxy voting on DLT. Future updates of the document will be focused on:

  • business value distillation for infrastructure operators and market participants,
  • standardization and formal alignment with the existing market practices and ISO20022 standard,
  • extensions for more markets worldwide.


The latest version of the document is available online (Click here).


The CSD Working Group on DLT welcomes any feedback or collaboration opportunities from potential partners. To get in touch with the working group, please contact one of the member organizations:



National Settlement Depository, Russia Alexander Chekanov chekanov.as@nsd.ru
Strate, South Africa Tanya Knowles tanyak@strate.co.za
SIX Securities Services, Switzerland Urs Sauer urs.sauer@six-group.com
Nasdaq, Nordic Henri Bergström henri.bergstrom@nasdaq.com
Depósito Central de Valores, Chile Claudio Calderón claudio.calderon@dcv.cl




Strate: A Pioneer of Exchange-of-Value Settlement Solutions

All too often, good infrastructure goes unnoticed. This is probably one of the reasons why few South Africans know and understand the country’s Central Securities Depository, Strate, however, without it, investors would shy away from South Africa.
Prior to the implementation of Strate in 1999, SA was categorised as one of the worst emerging markets in terms of operational and settlement risk. Trading volumes on the stock exchange were averaging 4,000 trades daily, very thin when this is compared to the 350 000 on average during a month today.

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Infographic: Strate Fast facts

From a Thomas Murray AA- rating, to Strate being ranked among the top Central Securities Depositories globally, click here to view an infographic that tells you all the fast facts that you need to know about Strate.



Strate Processed Largest Corporate Action in its History



Strate successfully processed the electronic entries which enabled the conclusion of the acquisition of SABMiller by Belgian-Brazillian group, Anheuser-Busch InBev; the largest corporate action in its 18-year history. Shareholders received in excess of R116-billion in cash entitlements, executed through the South African Reserve Bank.


“Since the Competition Commission’s approval of the merger a few short months ago, we have been in consultation with both the listed entities’ legal teams, corporate advisors, and transfer secretaries to offer our guidance on how to best manage the process,” says Strate CEO, Monica Singer. “I am incredibly proud of my team and our partners for their dedication and hard work – this merger represents the largest, and probably one of the most historic equity corporate actions that we have ever executed.”


In order to successfully process the deal, and to operate within Belgian law, AB InBev was dissolved to create Newbelco, a Belgian incorporated company formed for the purpose of the transaction. This surviving entity, Newbelco, acquired all of the SABMiller shares. Newbelco will be the holding company for the combined group, and is also listed on the Johannesburg Stock Exchange. AB InBev announced that the combined group will retain the name “Anheuser-Busch InBev SA/NV”.


The R1.5 trillion merger between AB InBev and SABMiller has created the world’s biggest brewer.


Strate’s role in the successful processing of the African Bank event

In February 2016, the curator of African Bank Limited, Tom Winterboer, launched exchange offer documents to creditors of African Bank to exchange their claims in African Bank for new debt in the “Good Bank.”


We played an integral part in ensuring that communication of the proposed restructure by the Curator to funders of African Bank, through the CSD participants, was timely, clear and concise.


Head of Operations at Strate Iann Seymour-Smith:  “We achieved a major milestone as this communication proved highly effective and comprehensive. All funders accepted the proposed restructure in the Money Market environment as well as the Listed Bond Instruments with the result that no investors through inaction remain in a “Bad Bank” environment. We also proposed innovative solutions to encompass Euro Medium Term Note (EMTN) investors and funders outside of the Strate domain in order to create an electronic record of claims against the “Bad Bank” entity. The restructure went ahead on 4 April 2016. To enable this, Strate developed an automated process which was made possible via our new TCS BaNCS Money Market platform. This allowed us to bring functionality to the market in a very short period of time to facilitate this unique event in the South African markets.”


Tom Winterboer, head of Financial Services at PricewaterhouseCoopers and curator of African Bank:  “Strate provided exceptional service and dedication to the lengthy and complicated process. Their clearing and settlement was central in facilitating the exchange of debt instruments and the creation of the new bank instruments.”


Approximately R16.6 billion in senior debt and R4.2 billion in subordinated debt was exchanged for new African Bank Limited (ABL) securities Strate’s systems. The new debt securities are now tradable in the over-the-counter market, with all clearing and settlement done by Strate.


This is a significant milestone for African Bank and Strate has been committed to this complex project, the first such transaction of this nature to be processed in South Africa.


Strate’s CEO Monica Singer: “I would like to congratulate African Bank on this significant milestone. The implementation of Strate’s new TCS BaNCS Money Market system provided us with the flexibility to enable the successful processing of this transaction.”


Strate’s innovative solutions to processing complex corporate listings


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.


Equity Corporate Action Payments through the South African Reserve Bank (SARB)

After months of extensive testing, planning and market education around the enhanced payment process, it is with great excitement that we announce the successful implementation of this solution on 5 October 2015.


We are confident that this new model will achieve the desired goal of mitigating risk by reducing the dependency on commercial banks and improving efficiencies within the payment process.


In this new solution all corporate action payments for equities can now be processed through the SARB’s South African Multiple Options System (SAMOS), as opposed to the current process where the corporate action payments are processed through the Strate Trust account.


Strate would like to thank the issuers, banks, SARB and all other parties involved for making this milestone for the South African markets a huge success. Both the traditional and the new process will continue to be offered for the foreseeable future. Issuers are, however, encouraged to approach the Strate relationship team to explore the benefits that this new solution offers.



Corporate Actions Payments can Now be Processed through the South African Reserve Bank

On 5 October 2015, Strate implemented a new solution to process corporate action payments via the South African Reserve Bank (SARB). Strate has been working closely with issuers, local banks and the SARB to implement this new solution.


Strate is pleased to report that during the week of 12 October 2015, five corporate actions payments valued at R1.2 billion were processed seamlessly via the SARB.


The processing of payments via central bank funds improves liquidity management, mitigates certain risks in the market and provides numerous benefits. These include:

  • Improved cash flows through the elimination of unnecessary intermediate steps and the costs associated with this;
  • Greater stability within the financial market, as payments using central bank funds rather than commercial bank funds carry a much lower risk profile; and
  • Efficiencies within the payment process. Once the funds have been released into the SARB’s South African Multiple Option Settlement (SAMOS) system, there will no longer be timing differences in respect of the receipt of funds by each of the CSD Participants.


Strate would like to thank the issuers, banks, SARB and all other parties involved for making this milestone for the South African markets a huge success. Both the traditional and new processes will continue to be offered for the foreseeable future. Issuers are, however, encouraged to approach the Strate relationship team to explore the benefits that this new solution offers them.


Relationship Team Contacts:

Carol Otto Thato Moja Thembeka Khumalo
+27 (0)11 759 5325 +27 (0)11 759 5465 +27(0)11 759 5455
carolo@strate.co.za thatom@strate.co.za thembekak@strate.co.za