IMASA
21 October 2005
Terms and Definitions
Member Settled Client:- A client that holds their assets, cash and securities, with a
trading member.
Non-member Settled:- A client that holds their assets, cash and securities with a CSDP.
UNEXCor Account Code:- Account code supplied through the UNEXCor system linked
to the account on the UNEXCor system.
UNEXCor Settlement Reference:- Settlement Reference associated with the settlement
account
Service Provider:- The party that supplies the front end to the UNEXCor system.
Official ID:- Code supplied by Service Provider to identify the trading member for the
trade legs generated to the UNEXCor system
Password:- Password to log onto the UNEXCor system when generating trade legs.
Super user password:- Super user password of the front end to the UNEXCor system.
New Yield-X Members requirements
•
STRATE Service Level Agreement (SLA)
•
Letter authorizing the Service Provider to create an Official ID and to release the system
passwords to the JSE
•
Custody Account
•
Cash Settlement Account
Service Provider Requirements
Existing Member (already exists on BESA)
•
STRATE SLA must refer to the existing Service Provider (If they are an existing Member
on BESA they have to have a Service Provider)
•
Letter must be addressed to the applicable Service Provider authorizing them to create a
“new” Official ID and password and supply same to the JSE
•
STRATE loads SLA and advises Service Provider
•
Service Provider loads and supplies Official ID and password to the JSE
•
CSDP loads the custody and cash accounts and supplies the UNEXCor Account code
and Settlement reference to the JSE
Service Provider Requirements (cont.)
New Member (not existing member on BESA) and wants to use an existing Service
Provider
•
STRATE SLA must refer to the required Service Provider
•
Letter must be addressed to the applicable Service Provider authorizing them to create a
“new” Official ID and password and supply same to the JSE
•
STRATE loads SLA and advises Service Provider
•
Service Provider loads and supplies Official ID and password to the JSE
•
CSDP loads the custody and cash accounts and supplies the UNEXCor Account code
and Settlement reference to the JSE
Service Provider Requirements (cont.)
New Member (not existing member on BESA) with JSE as Service Provider
•
STRATE SLA must refer to the JSE as the Service Provider
•
Letter must be addressed to STRATE authorizing them to create a “new” Official ID and
password and supply same to the JSE
•
STRATE loads and supplies details to the JSE
•
STRATE advises Settlement Agent to load cash account and custody account against the
details loaded as first choice account
•
CSDP loads the custody and cash accounts and supplies the UNEXCor Account code
and Settlement reference to the JSE
Loading of Clients Accounts
•
Member Settled accounts are loaded by the CSDP and linked to the Trading Members
General Purpose Account (GPA) on the UNEXCor system and the UNEXCor Account
code and Settlement Reference are supplied to the Trading Member to load on the
Yield-X system. The Yield-X system generates a message to the UNEXCor system to
verify account details.
•
Non-member Settled accounts are loaded by the CSDP on the UNEXCor system and the
custody account, cash account, UNEXCor Account code and Settlement Reference are
supplied to the Trading Member to load on the Yield-X system. The Yield-X system
generates a message to the UNEXCor system to verify account details.
Requirement for Custody and Cash Account
for Trading Members
•
Mandatory Requirements on the UNEXCor system when loading a new Trading Member
•
Trading Members may “house” trades in the account until the end of the day and then
allocate (referred to as bulking, averaging and allocating)
•
There are settlement charges charged by the CSDPs per leg that settles.
•
The Yield-X system uses the accounts for allocation corrections
•
Used as a suspense account. If utilized correctly will come back to zero daily
Allocation Corrections example
S
P
TRADING MEMBER
1M R153
1M R153
0.00
S
CLIENT A
1M R153
P
1M R153
0.00
S
CLIENT B
1M R153
1M R153
- AUTOMATICALLY PROCESSED BY THE SYSTEM
P
Late Allocations or Allocation
Corrections
• All trades are to be allocated on trade date
• In the case of late allocations or allocation corrections the Trading
Member must apply before 10h00 on T+1
• JSE Settlement Authority grants permission subject to the payment of a
penalty
• JSE Settlement Authority books the late allocation or allocation
correction before 12h00 on T+1
Cancellation of Trades
• Trading Member must approach the JSE Market Controller before
10h00 on T+1
• JSE Market Controller must approach the other member to the trade
and approve the cancellation of trades
• JSE Settlement Authority cancels trades via equal and opposites before
12h00 on T+1
Guarantees
• SAFCOM guarantees performance of the parties to a trade through the
Clearing Members;
• SAFCOM has appointed the JSE Settlement Authority to monitor and
manage settlement of spot bond trades; and
• The Trading Member that introduced the trade is responsible to ensure
settlement takes place
Which trades are guaranteed?
• All trades done on the central order book. These include:-Main Board trades (T+3 settlement cycle)
-T+3 COB Carry
-T+2 COB Carry
• Reported transactions where terms and/or price are agreed OffExchange and transaction is booked for reporting and settlement
purposes, where the Clearing Member/s accept the transaction for risk
management purposes (minimum T+3 settlement cycle)
Mitigate Risk Sales
In respect of a sale order booked on Yield-X:•
the loan stock to be sold is lodged with a settlement agent as uncertificated
financial instruments; or
•
another transaction has been concluded through the Yield-X trading system which
provides for an equivalent amount of loan stock being available for settlement on
settlement date; or
•
a satisfactory borrowing arrangement reported through the Yield-X lending and
borrowing system is in place which provides for an equivalent amount of STRATE
settled loan stock being available for settlement on settlement
Unconditional Commits by CSDP
•
The CSDPs commits on both central order books trades and Reported
Transactions becomes unconditional from 12h00 on T+2;
•
The only time that a CSDP may lift their unconditional commit after 12h00 on T+2
will be in the case of provisional sequestration or in the case of fails management
by the JSE Settlement Authority;
•
In the case where a CSDP wants to lift their commit after 12h00 on T+2 for
provisional sequestration a letter has to be sent to the JSE Settlement Authority
advising that party is being placed in provisional sequestration;
•
A copy of the application stamped by the court has to be supplied within 2
business days
Process flows
CLEARING
MEMBER
JSE
SETTLEMENT
AUTHORITY
TRADING
MEMBER
CLIENT
YIELD-X
TRADING
ENGINE
CLEARING
ENGINE
(NEW
SAFEMS)
(RECONCILES TRADES
WITH MATCH ORDERS
RECEIVED FROM
STRATE
STRATE
SETTLEMENT
AGENT
Timelines
T
T1
12H00
TRADE
TRADE TO STRATE
NET SETTLEMENT POSITION TO CSDP's
MARGIN POSITION
BILLING REPORT
MARGIN PAYMENT
COMMIT BY CSDP
MONITOR FOR COMMIT
REVALUE MARGIN POSITION
BILLING REPORT
TOP-UP MARGIN
TRADE MEMBER MANAGEMENT
JSE SETTLEMENT AUTHORITY MANAGEMENT
FAILS MANAGEMENT (GIVE-UPS)
SETTLEMENT
T2
12H00
14H00
T3
16H00
Questions