1. What is Granite CSD licensed to do?
Granite has been licensed by the South African Financial Services Board to act as a Central Securities Depository under the Financial Markets Act to perform custody and settlement services for (Listed and Unlisted) Bond and Money Market Instruments and will apply for an amendment of our license conditions to also hold Equities.
2. What is the purpose of Granite’s Central Trade Matching Engine (CTME)?
Granite’s licence application included the establishment of a CTME for OTC and other type of instruments. The CTME will offer Electronic Trade Reporting and Confirmation Matching to exchange members and other trading parties, e.g. Asset Managers, International non-member institutions, etc.
3. When will Granite CSD become operational?
Granite CSD is currently in consultation with various market players as well as Strate to ensure Interoperability between the two CSDs.
Target date will only be announced once these discussions have been concluded.
4. Who are the owners of Granite CSD?
Granite is currently privately owned with the intention of allowing a broad representation from the market to participate and own Granite. Shareholding will be in accordance with the requirements of section 67 of the FMA.
5. What technology is Granite CSD using for settlement services?
Granite has developed the CSD system in conjunction with a local software house, Securities and Trading Technology (STT). The STT CSD system is already operational in other African countries, e.g. Kenya, Tanzania and Uganda and some Caribbean countries. STT has got a very good understanding of the financial markets and an equally good track record in both South Africa and other African countries, with a big focus on financial markets infrastructure development.
Granite, as part of its licence requirements will have in place professional indemnity insurance.
7. Will settlement be Nett or Gross?
Granite CSD will facilitate settlements on the BIS models (Gross securities and Nett cash), or Gross securities and Gross cash.
8. Frequency of settlements?
Granite CSD will have multiple settlements run throughout the day. Hourly settlement runs has been discussed with the relevant stakeholders. Free-of-Value transactions will be able to settle real-time depending on the availability of securities by the delivering party.
9. Can a client have an account with both Strate and Granite CSD?
Yes, a client (institution) can have settlements accounts in both Granite CSD as well as Strate.
10. Will the securities held at Granite be newly issued bonds or already listed bonds?
Both! Securities held by Granite CSD could be newly issued securities or existing securities trading in the secondary market.
11. How will participants determine the place of settlement and safekeeping?
It is the Investors choice to select a CSD as well as a settlement / custodian bank (participant).
Investors (or agents) can instruct its Participant in which CSD account (PSET) securities must be deposited / settled.
12. Has Granite been assigned a Depository PSET BIC for SWIFT messaging?
Granite CSD is in the process of applying for a BIC and will inform the market once this process has been completed
13. Will Granite CSD integrate into the National Payment System?
Yes, Granite has been granted conditional approval by PASA to become an independent Payment System Operator (PSO) to facilitate its cash settlements in Central Bank Funds using SAMOS.
14. Is Granite compliant with IOSCO principals?
Yes, as part of its licensing conditions, Granite CSD was required to satisfy the FSB that it is in compliance with IOSCO principals for CSD’s.
15. Will Granite CSD perform any surveillance/regulatory functions for its participants, issuers and clients?
Yes, Granite CSD is mandated by the FSB to perform certain regulatory functions including surveillance.
16. What types of Account structure are available in Granite CSD?
Granite CSD has a very flexible Central Securities accounts structure and can be summarise as follows:
“Beneficial Holder Account (BHA)” means a Central Securities Account that a Client can instruct its Participant to open in the name of a Beneficial Holder at the Central Securities Depository and Registered in the name of the Beneficial Holder. Only the same Beneficial Holder’s Securities can be kept in a single Beneficial Holder Account
“Nominee Omnibus Account (NOA)” means a Central Securities Account that a Client can instruct its Participant to open in the name of an approved Nominee at the Central Securities Depository and Registered in the name of the Nominee. More than one Beneficial Holder’s Securities can be kept in the same Nominee Omnibus Account
“Registered Holder Account (RHA)” means a Central Securities Account that a Client can instruct its Participant to open in the name of a Beneficial Holder at the Central Securities Depository and Registered in the name of an approved Nominee. Only the same Beneficial Holder Securities can be kept in a single Registered Holder Account.
17. How will Granite monitor compliance?
Granite will work with participant banks and issuers to develop efficient and effective compliance monitoring and surveillance processes.
18. Who maintains the official securities’ register?
Please find below extract from FMA with regards the uncertificated register.
“Duties of issuer of uncertificated securities
34. An issuer of uncertificated securities must—
(a) record in its securities register the total number and, where applicable, the nominal value of each kind of uncertificated securities issued by it;
(b) maintain separate records for each central securities depository holding uncertificated securities unless all those securities are held by one central securities depository;” As seen from above, the Issuer must maintain separate uncertificated registers for each CSD and Granite CSD can assist Issuers in consolidating these registers.
19. What is the main reason to have another depository licensed in the market?
– Choice of settlement
– Cost efficiencies
– Address Client (CSDP, Investors, Issuers) needs
– Operational efficiencies
– Regional and Continental integration