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A COMPETITOR to Strate, called Granite, has been licensed to act as a central securities depository (CSD) by the Financial Services Board.

“We have a licence to facilitate the deposit of uncertificated securities and to offer settlements and custody for uncertified securities. Our licence mandate is for bonds and money market instruments,” Granite CEO Leon Rossouw said on Wednesday.

“For now we are going to do bonds and later we will be in a position to do money market instruments.”

Mr Rossouw said that with the emergence of applicants for exchange licences to compete against the JSE, it made sense to add equities products to its CSD licence in the near future.

The plan is to be operational in the first quarter of next year.

Mr Rossouw said Granite had identified shortcomings in the bond settlement process. Granite aimed to introduce more settlement windows to avoid congestion at the liquidity desks of the settlement banks.

The settlement window is the time when delivery on payment takes place and value is exchanged in the form of cash for securities.

If a buyer of securities misses the last window the trade will probably fail to settle and will be rolled over to the next business day for settlement.

“Our intention is to have more frequent settlement windows, hourly if possible, and our intention is to keep the CSD system open until 6pm,” Mr Rossouw said.

Granite said it was introducing a more inclusive ownership model than Strate, which is owned by the JSE and the big four banks.

Granite intends inviting a number of local and international banks, black economic empowerment companies, asset managers, dealer brokers and listed companies to take an equity stake in the business. The company is privately owned.

Strate, SA’s sole CSD, said it welcomed the arrival of a competitor.

Strate CEO Monica Singer said the company had played a significant role in achieving the international ratings applied to the South African securities market and this had helped to make the market an attractive international investment destination.

Ms Singer said it was important these ratings were not jeopardised should a new entrant be unable to operate at the equivalent level.

On the issue of Granite beating Strate on costs she said: “Pricing reflects the level of the products and services offered and should be compared on a like-for-like basis. Strate is unable to comment on Granite’s pricing model.

“Strate has a strong, existing client base who have been using Strate’s services for many years. Their continued support is, we believe, based on the quality and value of the service and the risk mitigation that we offer.”

It is expected that Granite’s arrival will reduce after-trade costs such as custody and settlement fees.

Should the costs come down it is hoped institutions such as pension fund managers will pass on the cuts to the consumer.

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Johannesburg – The Financial Services Board (FSB South Africa) has granted Granite Central Securities Depository a financial market infrastructure license.

It is the first of its kind under the Financial Markets Act. Granite CSD is, therefore, South Africa’s first independent central securities depository (CSD) to settle securities, specifically in the debt securities market in the country.

Granite CSD plans to commence operations in the first quarter of 2016, and will initially be focused on the bond market, with money market and other products tabled for introduction in the near future, it said on Thursday.

The emphasis will be on providing efficient and cost effective service with shorter settlement intervals and a stronger focus on innovation and settlement risk reduction.

“This marks a significant challenge to the status quo which has until now operated in a monopoly scenario, with investors compelled to settle securities through a single service provider.,” said Granite.

Granite’s CSD model will allow for investment opportunities from the various financial market institutions, including debt issuers, authorised users, international banks, South African banks, asset managers, dealer brokers, and other parties for whom greater involvement in the
strategy of a CSD would be beneficial to the market.

“Our model, and entry into the market, is intended to provide people with an alternative to the status quo, from our operations to our strategy, through a user-owned model,” said Leon Rossouw, founder and CEO of Granite CSD.

“It will give access to all market participants, with a representative governance structure that will fulfil shareholder objectives. Furthermore, it will support liquidity in the South African debt market by providing more frequent settlement cycles and settlement stability.”

He said of particular interest to banks’ liquidity desks is that, while Granite CSD will launch with two settlement cycles each day, set to coincide with the status quo, it plans to introduce more frequent settlement runs during the day, running as often as hourly, and as late as 18:00 for internal settlements.

Transactions due for settlement on the same day can be reported for settlement at any time during that trade day, with settlement happening on the same day provided the seller can deliver the assets and payment can be secured.

Granite CSD believes that repurchase agreements should be seen as money market instruments, and that these types of agreements are recognised as collateralised loans, and as such should not be treated in the same way as spot bond transactions. It believes that these transactions can be reported directly to Granite CSD for settlement purposes, lessening the reporting burden and costs associated with the current system of reporting and settling these transactions.

View the original article here. 

A new player in South Africa’s settlement market. The Financial Services Board has issued an infrastructure licence to Granite, an institution that settles debt securities with a focus on the bond market. It is the first licence of its kind, Leon Rossouw, Chief Executive Officer at Granite joins CNBC Africa for more. Watch the video here. 

Buys and sales of shares will totally take place on line and will be seen by the rest of the world in real time.

Better trading volumes and activity is expected at the Uganda Securities exchange following the coming into operation of the Automated Trading System. Buys and sales of shares will totally take place on line and will be seen by the rest of the world in real time.

Read the full article here: www.ntv.co.ug