education Archives

You can now watch videos from the 2017 Strate GIBS Fintech Innovation Conference Online

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:

Please click on the respective topics to access the video directly, or visit Strate’s YouTube channel to watch our videos online.

featured

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.

featured

Strate from the Ground

For the past 18 years Strate, South Africa’s Central Securities Depository, has focused on settling securities transactions across South Africa’s financial markets. Today, the organisation is placing a core focus on financial literacy through its consumer education initiative, Strate from the Ground.

Dr Merrill Van Der Walt, with community members following the December Harvest

According to Dr Merrill van der Walt, Data Scientist at Strate, one of the key elements for Strate from the Ground is to educate communities on the basics of banking and financial matters (a knowledge area that is seriously lacking in marginalised areas), as well as meeting nutritional needs in a disadvantaged community that is food insecure. “The lack of food security is a huge problem for South Africans in rural areas and those of lower socio-economic standing.”

According to a report issued by Statistics South Africa on poverty trends in the country, poor households spend approximately a third (33%) of their income on food. Total food expenditure for poor households is given at R8 485 per annum or R707 per month. It is important to understand that this figure is the proportion that households are able to spend on food. Given current food prices, it is clear that this amount is not enough to secure a sufficient and nutritious variety of food.

“Adding to this harsh backdrop is the bleak reality of constantly rising food and fuel prices, high-energy tariffs and increasing interest rates. These conditions have placed severe pressure on ordinary South Africans who are already struggling to meet their basic household needs”, says Dr van der Walt. With projects such as these, people will be more empowered and educated to make better decisions in accessing basic needs as well as handling their finances.

“At Strate, we embrace innovation and change. The term ‘innovation’ is difficult to define, and although most models centre on technology driven innovation and competitive focus, there is a social dimension to innovation and the role of social interaction,” says Dr van der Walt. “Social innovations are new strategies, concepts, ideas and organisations that meet the social needs of different elements which can be from working conditions and education to community development and health.”

Strate has partnered with several organisations that will make it possible to provide nutritious and organic produce to approximately 50 labourers on a monthly basis while equipping farmers and schools in the area with the practical guidance on finance and banking.

Some pictures of the produce following the December Harvest:

featured

Winners of the Finance and Investment Management Olympiad Announced

The Finance and Investment Management Olympiad (FIMO) is an initiative of the Finance and Investment Management Department at the University of Johannesburg (UJ), focused on Grade 10, 11 and 12 learners in high schools across all nine provinces. Earlier today, a group of prestigious individuals were awarded as winners of the second annual FIMO.

This initiative, which was formed in partnership with Strate (Pty) Ltd, places emphasis on learners to unleash their potential in a dynamic field within the financial services industry. “Individuals who take part in the FIMO have a specific interest in the finance discipline and the Olympiad gives them the exposure to key financial concepts that will enable them to pursue a future in the financial markets,” says Monica Singer, Strate’s CEO. “It starts with the basic steps of debunking financial terminology and important concepts and further provides the necessary knowledge of the industry as a whole. Strate enjoys partnering on initiatives such as this, which create awareness of the financial markets at grass-root level. We are proud to be part of this initiative and the lives of the learners as they start their journey within the industry.”

This FIMO also provides more insight into the finance and investment industry and offers essential prizes to further allow the learners to further their studies in their respective field within the industry.

The final round of the Olympiad was written on 2 August 2016. The 2016 FIMO winners were:

Public Schools	Private Schools
Grade 12	Grade 12
1^st Place – M Banda, Wendywood	1^st Place – J Hart, Redhill High
2^nd Place – P Manyathela, Capricorn High	2^nd Place – R Trusler, Redhill High
Grade 11	Grade 11
1^st Place – P Visage, Huguenot High	1^st Place – M Francis, Hatfield Christian School
2^nd Place – L Mncube, Ladymsith High	2^nd Place – N Sithole, UJ Metropolitan High
Grade 10	Grade 10
P Ramotala, Thomas Mofolo	B Simelane, Horizon International High

The topic areas that form part of the FIMO include:

Economics
Financial Literacy: Saving and borrowing
Financial Markets and Instruments
Financial Math
- Interest Rates
- Risk and Return
Time value of money
Financial Statements
Financial System

“Encouraging finance and investment skills within students makes them empowered to contribute and increase the growth of the South African economy”, adds Singer. “Strate would like to congratulate all the winners and participants of the FIMO 2016 and wish you all the best of luck for the year ahead.”

Here are some pictures of the FIMO Awards ceremony:

featured

Strate Africa Blockchain Summit

On 13 October, Strate held its Africa Blockchain Summit in Johannesburg to educate the market about Blockchain and Distributed Ledger Technology. The event was a great success, attended by over 200 delegates. Below are some pictures from the Summit.

Ten blockchain experts, including four international speakers, presented at the event. The following presentations have been made available:

Blockchain 101 + Public vs Private Blockchains – Lorien Gamaroff, CEO Bankymoon

Exploring the Interledger Protocol – Adrian Hope-Bailie, Web Standards Officer, Ripple

The Blockchain landscape within the EU and practical use cases – Dennis de Vries, Lead of KPMG, Digital Ledger Services Netherlands, KPMG

Blockchain KYC and Perfecting Identity Validation – Llew Claasen, Executive Director, Civic / Bitcoin Foundation

Some pictures from the event:

featured

Women’s Month Spotlight: Education

Women represent approximately half of the global population, half of South Africa’s population, and half of the population of working age (15-64 years) in the country. That’s 18.5 million women that can add value in South Africa, yet the country still lags behind in unequal access to education. Read Monica Singer and Dr Merrill van Der Walt’s views on the importance of education.

featured

Expert from the Economist to Speak at Strate’s International Roadshow

Strate’s International Roadshow taking place in London next month is expected to receive a major draw card in the form of the Economists Editorial and Regional Director, Middle East and Africa, who will be sharing her insights at the event.

Pratibha Thaker (Pat), who leads The Economist Intelligence Unit’s Middle East and Africa team and is also the overall manager of the other regional teams, will use her mindshare to provide thought-provoking intelligence on South Africa. Pat’s extensive experience in the region will provide keys insights into the South African economic outlook and crucial issues, such as the impact of Brexit on the region. The conversation will wrap up some of the future trends that can be expected during the year ahead.

Strate is pleased to be able to secure a keynote speaker of such high calibre at its international roadshow. The presentation will provide an independent and in depth view of the current macro-economic environment in South Africa and the region, which is of value to the international investment community.

Should you wish to attend the event, more information can be found by clicking here.

Account Segregation Q&A

Account Segregation at a CSD level has been a long-standing topic in the post-trade environment since 2008, when asset protection and transparency came to the fore of regulatory requirements.

Strate recently interviewed Aleksander Nervik, the Head of Investor & Issuer Services at Norwegian CSD, VPS to discuss the account structure used at VPS, as well as his views on the benefits of account segregation.

Q. Please describe VPS’ account structure.

A. All local legal entities and citizens are required to hold accounts at the CSD level for public equity companies. They need to appoint at local account operator with a license to operate the account in VPS (the CSD). They can also hold any other securities through omnibus accounts/ nominee / custodians, although that’s not normal as it is most practical for investors to hold any securities holdings on the same accounts.

When companies register in VPS, they are no longer required to hold an electronic shareholder register anymore, as that’s the role of the CSD of Norway, making VPS the legal share owner register. The direct holdings at CSD level are protected by law and the assets are protected at a CSD level.

Q. Are there any restrictions for foreigners to hold segregated accounts at the CSD?

A. There is no restrictions for foreign investors. They are however required by tax law to get a Norwegian ID, should they want to hold securities on accounts at a CSD level, which is the requirement for Norwegians as well. As in many other markets, foreigners hold securities mostly through custody chains, omnibus or nominee accounts.

Q. With the share register held at CSD level, and the CSD running a share ownership register model, what are the benefits?

A. By holding the legal share register and having the issuers and most investors directly in our systems, we require all investors to record a cash account (any bank account) at their securities accounts so that the paying agents can distribute benefits directly to the investors through the CSD. This means that there are no intermediaries, resulting in very little delays, and the account operators do not have to do anything. This is very cost effective and secure. It enables an efficient, standardised and secure cash distribution. Everyone gets paid at the same time – every time.

Q. What value-added services can be developed as a result?

A. An online service to Issuers can be developed so that they can access their shareholder register at any time, look at who is trading what shares and see sellers and buyers, as well as run various reports. Due to the high-quality register, the portal also enables the creation of other value-added solutions for general meetings, share saving schemes, or electronic communications with investors, as examples. This reduces costs for many companies and enables transparency for any local ownership.

An online safe and secure self-service interface for holders of accounts at the CSD level can also be created, which will enable them to look at their personal data, accounts, holdings, transactions, etc. A secure electronic mailbox can be incorporated to receive notifications and enable them to send instructions in voluntary corporate events and general meetings. This solution is cost-efficient for all participants, as there is no need for IT development. It will also enable the CSD to process events safely and efficiently in a standardised manner for all participants. This enables transparency for any direct holder, giving them full insight to their securities holdings and it enables investors to get information so as to exercise their rights.

The CSD can then offer tax reporting services, as it has all the data. In Norway, tax reporting is done on behalf of the market by the CSD, who has a team of highly skilled securities professionals to ensure correct reporting takes place every year. We delivered 99,96 % correct reporting last year and have a great collaboration with the local tax authorities, who are happy because they get the data from the CSD in a format that is ready to be processed and they know it’s correct. This enables centralised tax processing with high-quality reporting, ensuring correct tax revenues are processed. Local tax authorities favour the end investor accounts structure due to this and they do not experience the same quality from the custodian/ nominee tax reporting side.

An extended service for corporate actions can also be offered.

Q. In conclusion, what are the benefits of this model for your market?

A. At a high level, the benefits are that:

The assets are protected at a CSD level
There are huge operational benefits, as well as risk and cost reduction for the market, as CSD can build value-added services that are centralised and standardised.
There is transparency for issuers and investors.
Tax reporting is offered at the CSD level.
The centralised shareowner register is of high quality.

featured

Inaugural Finance and Investment Management Olympiad a Success

The first annual Finance and Investment Management Olympiad (FIMO) kicked off this year with 825 students, most of whom came from public schools.

The initiative, sponsored as a consumer education project by Strate, was run out of the Finance and Investment Management Department at the University of Johannesburg (UJ) and focused on Grade 11 and 12 learners in Gauteng.

According to Leigh Bevis, Strate’s Head of Stakeholder Relations, the participation by students played an important role in developing critical financial skills and educating the youth, with the ultimate intention of growing South Africa’s investment base. “South Africa’s economic growth is dependent on its investment profile. By nurturing students’ finance and investment skills, we’re empowering them to be educated so that they can contribute to the future success of our economy.”

Looking ahead, the national roll-out of FIMO to Grade 11 and 12 learners is being considered following the success of Olympiad in Gauteng.

The first round of the Olympiad was written on 6 May 2015, and the final round on 12 August 2015. The 2015 winners were:

Public Schools		Private Schools
First Place: Tie between T Sethshedi from Sutherland High School and S Bhana from King Edward VII School		First Place: RI Trusler from Redhill High School

Second Place: N Ambrose from Zakariyya Park Combined School		Second Place: VT Rakgotho from Vuleka Secondary School

Third Place: GJ Dreyer from Pretoria Boys High School		Third Place: LGN Novello from Redhill High School

Fourth Place: NT Nemaungani from Sutherland High School		Fourth Place: KK Mosupyoe from Princess Park College

Fifth Place: AC Mkhontwana from Cosmo City Secondary School		Fifth Place: Dylan Nlzetich from Reddam House

Strate would like to congratulate the winners, as well as all students who participated in the 2015 FIMO. It also wishes to express its gratitude to the educators at the University of Johannesburg as well as to the organiser, Proverto.

Monica Singer speaking at the awards ceremony

Monica Singer and UJ Professor Amanda Dempsey, Faculty Dean, with students and representatives from FIMO. — Monica Singer and UJ Faculty Dean, Professor Amanda Dempsey, with students and representatives from FIMO.

featured

The Benefits of Strate for Listed Companies, Chartered Secretaries and the Financial Markets

Governance. Compliance. Risk. Three words that are well known to any chartered secretary. So when it comes to the post-trade environment and the processing of corporate actions, why should someone in the profession settle for anything less?

For close to two decades, Strate has provided the local market with the highest governance standards, compliance and effective management of risk. With transactions in excess of R130 billion daily, Strate is responsible for the settlement of money market securities, as well as equities and bonds for the Johannesburg Stock Exchange. It also provides settlement for a range of derivative products, such as warrants, exchange-traded funds, retail notes and tracker funds and it has recently added collateral management services to its portfolio.

The importance of a country’s clearing and settlement infrastructure cannot be undermined, as it supports the overall stability of the financial system as well as the implementation of monetary policy and efficient processing of transactions.

For CSD Participants, Strate offers Simultaneous Final Irrevocable Delivery versus Payment (SFIDvP) in central bank funds via the South African Reserve Bank (SARB), an accolade that eludes many CSDs – even in developed markets around the world. It also maintains the official legal register of securities ownership in South Africa.

Today, in excess of 98% of the issued shares of all JSE-listed companies are in dematerialised form in Strate. It is this portion of the share register where Strate plays an integral role in the processing of corporate actions. These are executed electronically via straight through processing protocols that have dramatically increased the level of efficiency and mitigated risks in this space. From an equities perspective, this equates to some 160 events a month with an average cumulative value of more than R20 billion.

Corporate actions announcements represent a high-risk part of the securities processing business and the intricacies associated with such events continues to make the corporate actions arena one of the most complex post-trade activities to manage.

Strate attends to all the activities throughout the life cycle of the event, from the time the event is announced until payment is processed. Strate ensures that funds and shares are distributed to the CSD Participants, who in turn ensure that their clients receive their entitlements. From an issuer perspective this process is seamless and gives issuers the comfort of knowing that corporate actions are processed timeously and accurately to their shareholders thereby eliminating risk from the market. Since the inception of Strate, dividend claims have practically been eliminated.

Strate has also embarked on a new solution that is looking to enhance the current model even further so that corporate action payments are processed via central bank funds, i.e. via the SARB. The process, which went live during early October 2015, required very little change by the issuers who opted to use this solution. The new solution improves liquidity management and mitigates certain identified risks in the market.

Technology is evolving at a rapid pace and Strate wants the best-of-the-best technology for the market so that it can enhance the profile of South Africa’s financial markets, boost liquidity and align with global best practice. Strate is investing in the TCS BaNCS Market Infrastructure (MI) solution to replace its current settlement technology, consolidating three settlement systems into one. In line with global trends, the solution will also provide comprehensive support for both nominee and beneficial ownership account structures.

Strate has already begun the migration of money market securities into the new technology. This will be followed by a bonds and equities infrastructure replacement respectively. With regard to the new TCS BaNCS MI platform for bonds, it will bring a number of exciting benefits to the market other than those of the current UNEXCor system inherited by Strate. One such benefit is the provision of a securities ownership register (SOR) model, which will provide issuers real time access to information in the Beneficial Ownership Download, or shareholder register. (This is also something that is being explored for the BaNCS MI for equities).

The new bonds settlement infrastructure will also offer numerous settlement runs and no settlement exclusions, high-level straight-through-processing across all aspects of the bond market and additional functionality to accommodate complex structured products.

While the introduction of Strate over 17 years ago led to an adoption of a modern electronic-based settlement and clearing model, which has eliminated a number of associated risks, the use of Strate’s value-added services cannot be overlooked. When investing in South Africa, there is no doubt that one should never settle for anything less than Strate in the post-trade environment.

featured