Introducing Bond Repo reporting and matching platform

Introducing Bond Repo reporting and matching platform

Introducing Bond Repo reporting and matching platform

Granite CSD is launching it’s Bond reporting platform into the South African market.

The Fortress CSD platform will allow customers to manually capture bond repo transactions or electronically upload bigger volume transactions onto the platform.

Legal nature of Repos and sell/buy backs

Repos are widely used in capital markets financing transactions and is a key source of liquidity

In essence a repo is a bi-lateral agreement between the Lender (buyer) and Borrower (seller).

‘Repos’ can be viewed as the generic term for

  • >Repurchase Agreements, “classic repos” or ICMA repos
  • >Sell/buy backs

Global Master Repurchase Agreement or GMRA are commonly used to govern these transactions

A repo  is a loan secured against collateral

South Africa

Repo and sell/buy back transactions:

  • >Are not securities as defined in terms of section 1 of the FMA
  • >Are not regarded as a financial instrument for the purposes of the  FSRA
  • >Are not required to be reported to an exchange  as a financial instrument not classified as securities in terms of the FMA
  • >Not covered under the exchange Guarantee Fund

Our Model

The Fortress CSD platform is a web based solution

Access the front-end to manually capture repo transactions

File upload functionality to electronically report repos

SWIFT MT5XX reporting to be released in next phase Gives direct access to all trading parties to accurately match the repo transactions

What’s the cost

Granite CSD will only charge:

  • >A system access fee
  • >A trade reporting and matching fee
  • >No reporting and matching fees for Clients trading with exchange members

Who can report Repo transactions

Trading parties can:

Directly report onto the platform

Instruct their Administrators to report repos

Instruct their CSDP’s to report on their behalf

Instruct their Issuer Agent to report repos

What would I save in cost

  • >No exchange fees of R0.45 – R0.63 per million
  • >No CSD Ad Valorem fee of R0.53 per million (capped)

How to register

Contact Granite CSD Support Centre on and request an On-boarding Pack which includes a registration form and a list of document requirements

Praise for Treasury as it issues new $1.25bn bond

Praise for Treasury as it issues new $1.25bn bond

Cape Town – National Treasury was praised for managing to attract interest in its new $1.25bn 10-year bond issuance on the international capital market on Friday.

South Africa issued its first international bond in two years on Thursday to fund its budget deficit that has increased to about 4% of gross domestic product in the last four years, Treasury announced on Friday.

The US dollar bond was priced at a coupon (interest rate) of 4.875%, which represents a spread of 335 basis points above the 10-year US Treasury’s benchmark bond, it said in a statement.

“That is down from about 350 bps (basis points) when it started marketing deal. At close of local trade, R203 was marked-to-market at 8.145% – down two bps,” NKC African Economics said in a note on Friday.

“The global investor base was primarily located in Europe and the United States,” National Treasury said.

“The transaction was more than two times oversubscribed,” it said. “The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management.”

“In good times, the bond could have been four or five times oversubscribed,” said Umkhulu Consulting’s Adam Phillips. “However, to be over two times oversubscribed is a pretty good sign taking into consideration all the local political issues.

“We should take our hats off to Finance Minister Pravin Gordhan and Treasury for getting that much interest into that.”

The rand improved quickly on the news, trading at R15.09/$ by 10:40. “It has come down in the last half hour,” Phillips explained. “Since 9:00 it has been edging down on the news.

“Operators who are long the rand might play on it, but I think that the news will draw out importers as we nudge to 15.00,” he said. “Expect a quiet afternoon (in currency trading). Given what we have experienced over the last couple of weeks politically, I think Pravin Gordhan will be relieved.”

Phillips said SA bonds yields have edged up all week, so the yield players have been on the fence there. “But you have to watch the Yen and the EUR,” he said.

This issuance forms part of South Africa’s 2016/17 financing programme.

Government’s borrowing requirement over the medium term amounts to $5.5bn equivalent, which includes $1bn carried over from 2015/16.

The proceeds of the bond will partially finance the government’s foreign currency commitments of $6.4bn over the medium term, it said.

“During the remainder of 2015/16, government plans to raise the equivalent of $1bn in global capital markets,” Treasury said in its budget review in February.

“Over the medium term, government intends to borrow the equivalent of about $4.5bn to cover its total foreign currency commitments of $6.4bn in global markets. The rest will be financed through foreign exchange purchases,” it added.

Treasury said in the review that government’s foreign debt as a percentage of gross loan debt remains low, averaging 10% over the medium term.

“The current account deficit has swollen back to above 5% of GDP most recently, driving concern about how well South Africa will be able to stand up to sudden swings in capital flows that could be triggered by accelerated US monetary policy tightening,” NKC said.

“The rand has rebounded somewhat since hitting all-time lows in thin liquidity during mid-January, aided by hawkish action from the Sarb (South African Reserve Bank) and generally calmer emerging markets. However, further gains will be difficult given the heightened political risks environment,” it said.

Read the article here.

Research-Proven Tricks That Make You Seem Smarter Than You Are

Research-Proven Tricks That Make You Seem Smarter Than You Are

It’s great to be smart, but intelligence is a hard thing to pin down. In many cases, how smart people think you are is just as important as how smart you actually are.

“I not only use all the brains that I have, but all that I can borrow.” -Woodrow Wilson

As it turns out, intelligence only explains about 20% of how you do in life; much of the other 80% comes down to emotional intelligence (EQ). EQ is a skill that’s so important that 90% of top performers in the workplace have high EQs and people with high EQs make $28,000 more annually than those with low EQs.

The hallmark of emotional intelligence is self-awareness, which involves not just knowing how you are but also how other people perceive you. People with high emotional intelligence are masters of influence—they’re skilled at altering their behavior to make the most of a given situation.

You might not be able to alter your genetics, but there are some proven strategies that can help you appear to be smarter. Some of these strategies seem arbitrary, but research shows they make a massive difference. That makes this good information to have, especially when you need to sway someone to your way of thinking.

Use a middle initial. John F. Kennedy. Franklin D. Roosevelt. It turns out there might be a reason that so many people who hold a prominent place in history used a middle initial. Not only does using a middle initial enhance your perceived social status, it also boosts expectations of intelligence capacity and performance. In one study, participants were asked to read and rate Einstein’s essay on the theory of relativity, with authorship being attributed to either David Clark, David F. Clark, David F. P. Clark, or David F. P. R. Clark. Not only did David F. Clark get higher ratings than David Clark, David F. P. R. Clark outdid them all. In another study, participants were asked to choose team members. For academic competitions, people who used middle initials were selected more frequently than those who didn’t. (It was quite a different story for athletic competitions.) So, if you want a quick perceived IQ boost, start using that middle initial.

Make graphs. Research conducted at Cornell suggests that people are more likely to trust a source if it contains graphs. In one of the Cornell studies, participants read a document on the effectiveness of a new cold medication. One report contained a graph; the other didn’t. Other than that, they were exactly the same. Still, 96% of the participants who read the report with a graph believed the claims, while only 67% percent of those who read the document without a graph thought the same. So, next time you create a document, stick in a graph. It doesn’t have to be complex; it just has to be accurate.

Skip that drink. And that’s not just because people tend to do stupid things when they’ve been drinking. A joint study conducted by the University of Michigan and the University of Pennsylvania revealed that merely seeing someone hold a drink is enough to make them seem less intelligent. It’s not that we assume less intelligent people are more likely to drink; it’s that the perceived correlation between drinking and cognitive impairment is so strong that we assume impairment even if there isn’t any. For example, although job candidates frequently think that ordering a glass of wine over a dinner interview will make them appear intelligent and worldly, it actually makes them come across as less intelligent and less hirable. There’s even a name for it: the “imbibing idiot bias.”

Believe in yourself. Nothing projects intelligence quite like confidence. When you believe in yourself, it shows, and research shows that believing in yourself improves your performance on cognitive tasks. Self-doubt, on the other hand, impairs your performance. What’s worse is that other people pick up on this doubt, which makes you appear less intelligent to them. If you want people to believe in you, you have to believe in yourself.

Write simply. If you’re really smart, you shouldn’t have to use big words to broadcast it. True intelligence speaks for itself, so you don’t have to show off your impressive vocabulary. In addition, you always run the chance of being wrong. Using a big word incorrectly makes you look, well, not so smart. So, if you want to appear more intelligent, stop studying the dictionary and just focus on communicating effectively.

Speak expressively. Communication expert Leonard Mlodinow makes the case that even if two people say exactly the same thing, the one who says it most expressively will be perceived as being smarter. “If two speakers utter exactly the same words, but one speaks a little faster and louder and with fewer pauses and greater variation in volume, that speaker will be judged to be more energetic, knowledgeable, and intelligent,” Mlodinow said. If you want to come across as more intelligent, modulate your speech by varying your pitch, volume, speed, and energy level.

Look ’em in the eye. We know we’re supposed to do this anyway—it’s good manners, right? That’s true, but it also makes you look smarter. In a study conducted at Loyola University, participants who intentionally managed their eye contact scored significantly higher on perceived intelligence.

Wear nerd glasses. Did your mom ever tell you to be nice to the nerds, because you’ll probably be working for them someday? As usual, mom was onto something. Research shows that people wearing glasses—especially thick, full-framed ones—are perceived as being more intelligent. So, if you want to seem smarter (when you’re giving a presentation, perhaps?), leave the contacts at home and wear your glasses.

Keep pace with the crowd. I mean this one literally. I know it may sound silly, but research conducted at Boston University shows that it’s true. It’s called the “timescale bias,” and it refers to our tendency to attribute greater intelligence—based on mental attributes like consciousness, awareness, and intention—to people who do things at about the same speed as everyone else. If you want to look smarter, you need to stop dawdling, but you also need to stop scurrying around like some crazed robot.

Dress for success. This one should be no surprise. Extensive research shows that how you dress affects how people see you. Dressing well makes you seem more intelligent, and showing skin makes you seem less intelligent, as it directs people’s attention to your body rather than to your mind. But did you know that how you dress also affects your performance? A recent study by Northwestern University found that making people wear lab coats improved their performance in tasks that required intelligence and concentration.

Bringing It All Together

Intelligence (IQ) is fixed at an early age. You might not be able to change your IQ, but you can definitely alter the way people perceive you. When it comes to succeeding in the real world, perception is half the battle.

What are some other things that make people seem intelligent? Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

Read the article here.

ZAR X given go-ahead to launch first stock exchange in SA in over 100 years

ZAR X given go-ahead to launch first stock exchange in SA in over 100 years

ZAR X (Pty) Ltd announced today (Wed. March 30) that it has been granted a stock exchange licence by the Financial Service Board (FSB). The licence enables the company to operate a fully-fledged, independent stock exchange and provides an exciting alternative to companies that want to list their securities on a licensed exchange.

Investors are able to trade securities across a state of the art technology platform that permits transactions to be executed on a T+0 or same day settlement of trades, said ZAR X CEO Etienne Nel. The current timeframe is T+5 or five days between matched trade and settlement and clearing into an investor’s account. The ZAR X model is world leading and significantly reduces settlement risk as all transactions are pre-funded.

“We also make investing simpler and affordable for the public – especially the lower income groups,” Nel added. The innovative technology enables investors to undertrake trading via their mobile devices.


Read the full article here.

IFC Issues First Namib Bond to Support Local Capital Market Development in Namibia

IFC Issues First Namib Bond to Support Local Capital Market Development in Namibia

Washington D.C., March 30, 2016—IFC, a member of the World Bank Group, has launched the first bond by a non-resident issuer in the Namibian capital markets, raising 180 million Namibia dollars—equivalent to $12 million—for private sector development in the country.

The five year bond is named “Namib” after the world’s oldest desert. Namib means “vast space” in the Nama language and gave rise to the name of the country. The bond is part of a medium term note program registered with the Namibian Stock Exchange that allows IFC to issue up to 10 billion Namibia dollars, or approximately $650 million, in bonds in the domestic market.

Read the full article on here.

Whisky tasting event

Whisky tasting event

Granite CSD invited guests to an evening of whisky tasting with The Macallan & Highland Park Whisky’s. It was hosted by Candice Baker, brand ambassador and sommelier for The Macallan. The event took place on 10th November 2015 at Granite CSD’s offices in Rivonia. A professional and informative presentation was given by Candice, sharing interesting facts about these fine whisky’s and their outstanding quality, natural colours and distinctive aromas and flavours. Whether a whisky expert or a newbie, the Whisky tasting gave everyone the opportunity to spend a sophisticated evening in the company of some of the finest spirits in the market. A great time was had by all, thank you to all who attended.

Kenya to issue Sh5bn bond via M-PESA

Kenya to issue Sh5bn bond via M-PESA

NAIROBI, Kenya, Sept 28 – The Treasury has announced the first-ever Government Bond that will be offered exclusively via mobile phone, pointing to the growing relevance of mobile money solutions in the evolving payments space.

The bond will be open from October 16.

The solution, known as M-Akiba, will be delivered in partnership with Safaricom’s M-PESA to continue a push that seeks to deepen access for retail bond trading, which was previously only accessible to commercial banks or traders.

The Treasury has lowered the cost of government bonds from Sh50,000 to Sh3,000 and through this mobile-phone based M-Akiba solution; trades can reach an upper limit of Sh140,000 per day until the bond offering period closes.

“In three weeks over 23 million Kenyans will have the potential to participate in a Sh5 billion Government Infrastructure Bond. This historical development is testament of our commitment to embrace innovation to democratize the uptake of government securities,” National Treasury Cabinet Secretary Henry Rotich said.

“Over the years, 98 percent uptake in government bonds has been by institutional investors, with only two percent going to individual investors- and this has left out many Kenyans from participating in raising funds for nation building,” he added.

To invest in the upcoming Sh5 billion which has been dubbed “Save Money, Make Money, Build Kenya” bond, potential customers will only need to have a valid ID, dial *889# and follow the prompts.

Upon maturity of the bond, the principle amount and coupons (interest from the bond) that will be paid through M-PESA.

Previously, it took an average of two days to buy a government bond in a process that required customers to apply for a Bond CDS Account, take forms to Central Bank of Kenya, and deposit funds with a broker. M-Akiba however makes the process instantaneous.

“This development signals the continuing transformation that mobile money can deliver to boost efficiency in government revenue collection while providing more access for Kenyans. M-Akiba is yet another innovative application that will help more people save and invest, while making it faster for the government to raise funds,” said Stephen Chege, Director – Corporate Affairs, Safaricom.

He noted the need to enhance the savings culture among Kenyans adding that currently, only 11percent of Kenyans save on a regular basis as compared to 22percent in Rwanda and Uganda, while in Qatar this figure stands at 60percent.

View article here

Sands to shift on JSE’s monopoly

Sands to shift on JSE’s monopoly

South Africa’s financial market amounts to one name: the JSE. But very soon the local stock exchange is likely to have competition on its home turf, with a number of licence applications for new exchanges pending.

The country’s central securities depository, Strate – of which the JSE owns almost 45% – is also set to face its first competitor.

Strate provides all the electronic settlement of the equities and bonds bought and sold on the JSE. Though it has publicly shrugged off the arrival of newcomers, those developing the new trading arenas believe the competition that they will bring will be a boon for investors.

The vertical integration of the local market – where the trading of securities, as well as their clearing and settlement, is done for the most part through one dominant channel – is something that needs changing, they argue.

The advent of the Financial Markets Act of 2012, which repealed the old Securities Services Act, paved the way for the introduction of new exchanges.

One of the new hopefuls is A2X. Unlike other newcomers, A2X will go head to head with the JSE, competing on trade in equities, the firm’s chief executive, Kevin Brady, told the Mail & Guardian.

Nevertheless, Brady believes this venture is not just about going after a portion of the JSE’s existing pie. It is also about the growth of the South African market. “We want to provide an alternative platform to buy and sell shares,” said Brady.

The company has applied for a licence to operate an exchange, as required by the Financial Markets Act of 2012, but will be styled on the European multilateral trading facility model.

Secondary market
According to A2X, a multilateral trading facility model is a regulated trading venue that creates a second market for trading securities, with a primary listing on another exchange. These facilities were provided for under changes to European regulations in 2007 with the aim of increasing competition in financial markets.

In the case of A2X, it will not offer primary listings, but will instead provide a secondary market to trade in equities listed on the JSE, with the aim of bringing the costs of trading down. Settlement, however, will still be done through Strate, Brady said. “Although the JSE does have a big stake in [Strate], it is open for business,” he added.

Brady explains how having another exchange in South Africa will work by drawing parallels to the currency market. Much like a central bank issues currency, which can then be bought and sold at a number of venues like banks and foreign exchange companies, A2X will be a place to buy shares that are listed and regulated on the primary exchange. It will feed all the records of its trades into Strate, which will record the ultimate ownership of the shares.

The company aims to reduce transaction costs, specifically trading and clearing costs. According to Brady, A2X expects cost reductions to be in the order of 30% to 50%. It will also offer a T+3 service – meaning trades will be made and settled in the space of three days. Currently the JSE operates on a T+5 model, but is in the process of moving to a T+3 model.

The company is partnering with United Kingdom-based Aquis Exchange, which will be providing its technology. Aquis already operates a pan-European multilateral trading facility.

With no legacy costs and the use of leading technology, Brady believes that A2X will achieve its aim of ultimately saving investors money. International experience has shown that competition reduces direct and indirect costs, increases market efficiencies, deepens liquidity and encourages innovation, he said.

Brady is keenly aware that the barriers to entry in South Africa are high, and acknowledges questions over whether South Africa is large enough to sustain a competitor to the JSE. But given the JSE’s well-publicised profitability, he believes this is a sign that there is ample room for new entrants. “That is [a] big profitable pool,” he said.

The company aims to “go live” by mid-2016, provided that variables, such as its licence being granted, do not slow the process down. However, Brady said the Financial Services Board has been responsive to A2X’s application and it has had constructive interactions with the regulator.

Guard against market fragmentation
The realities of how a new exchange will get off the ground remain to be seen, however. Although competition would help drive down costs and benefit consumers, the Financial Services Board has to guard against market fragmentation, said Solly Keetse, head of the department for market abuse at the regulator.

In making decisions, the board will be guided by the objectives of the Act, he said, including ensuring a stable financial markets environment, reducing systemic risk and promoting the international competitiveness of South African financial markets.

The United States, which has more than a dozen exchanges, has a market large enough to support them, he pointed out. Australia, like South Africa, was in the past dominated by a single stock exchange, the ASX. The arrival of alternative exchange Chi-X in 2011 shook things up: it has grown its market share to between 15% and 20% in value traded on most trading days, according to a recent media release.

Not all of the new exchanges will take on the JSE directly, however. Some of the applicants, such as ZAR?X, will initially be focused on creating a platform to trade restricted shares, formerly bought and sold over the counter, particularly black economic empowerment shares and those of agriculture co-operatives.

Etienne Nel, the founder of ZAR?X, said that the Financial Services Board’s efforts in 2014 to regulate over-the-counter trading partly informed the decision to start ZAR?X. He estimated the existing value of the over-the-counter market to be between R30-billion and R35-billion.

According to Nel, the arrival of new trading platforms will, “if anything, strengthen capital markets in South Africa” rather than fragment them. “Currently, we have a large pool of investors’ capital chasing a small pool of investment opportunities on one exchange,” Nel said.

Like the JSE, Strate has had a monopoly on settlement as South Africa’s sole central securities depository. This looks set to change after Granite CSD was recently granted a licence by the Financial Services Board.

Granite, which is expected to launch in the first quarter of 2016, will focus on the bond market, with money market and other instruments to be introduced in the future. “It will offer choice to the investor and issuer,” said Leon Rossouw, Granite’s chief executive.

The company also aims to address some “operational inefficiency” that currently exists in the system, said Rossouw, by offering more frequent settlement runs during the day, running as often as hourly.

A greater say
Granite is targeting a “user-owned, user-governed” model, inviting market participants such as asset managers, international banks and other financial market institutions to invest in the central securities depository.

This will allow the players who generate the bulk of revenue for this institution to have a greater say in its strategy and governance, Rossouw said. He added that it is important for market infrastructure to be owned by the market. Strate is currently owned by the JSE, which holds just less than 45%, and by the four major banks: Absa, FirstRand, Nedbank and Standard Bank.

Granite will also be looking to the rest of the continent, beginning with the Southern African Development Community countries, to help provide much-needed support for trading, Rossouw said.

View article here

SA’s settlement market to be disrupted

SA’s settlement market to be disrupted

South Africa’s settlement market is set to be disrupted following the issue of a Financial Market Infrastructure licence to Granite.

The licence issued by the Financial Services Board (FSB) is the first of its kind under the Financial Markets Act of 2012 and will provide competition to Strate Central Securities Depository (CSD).

Strate currently is the only operator in South Africa to provide electronic settlement of equities and bonds transactions concluded on the Johannesburg Stock Exchange (JSE). It also settles transactions in money market securities.

Granite CSD, which launched Thursday, will initially settle debt securities with a focus on the bond market.

It plans to commence operations in early 2016, and will move into the money market later down the line.

“In the very near to medium future we will look to expand our product range to collateral management and equities,” said Leon Rossouw, founder and CEO of Granite.

The CEO also expressed the company’s interest in expanding further into other African countries.

The securities settlement service in a statement said that it saw the need to introduce competition to offer the debt market “a streamlined efficient and cost effective service with shorter settlement intervals and a stronger focus on innovation and settlement risk reduction”.

Rossouw told CNBC Africa, “we are of the opinion that if you introduce competition to the market, you clearly are keeping the opposition on their toes.”

The alternative securities settlement service comes at a time when at least three companies have applied to the FSB for stock exchange licences to compete with Africa’s largest bourse – the JSE.

The three are: 4 Africa Exchange (4AX), formed by a consortium of stakeholders including Bravura Capital and agricultural business NWK; ZAR X established by Etienne Nel, who headed Equity Express, which provided trading technology for over the counter trading; and A2X headed by Kevin Brady, a former stockbroker.

View the original article here.

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