Page 18 - PROJECT KHOKHA 2

THE CURRENT DEBENTURES OPERATING ENVIRONMENT
Incumbents and market infrastructures
Although the debentures market is an OTC market, the JSE still plays a role as the National Numbering Agency (NNA) in South Africa and issues the International Securities Identification Number (ISIN) which uniquely identifies each debenture. Debentures may also be used for liquidity at the JSE.
The South African Multiple Option Settlement system
The SARB implements RTGS through the SAMOS system to effect final settlement of interbank funds transfers on a continuous, transaction-by-transaction basis throughout the processing day. The SAMOS system facilitates the settlement of domestic individual high-value payment transactions, retail transaction batches as well as bond and equity market settlement obligations. At a wholesale settlement level, each settlement participant has an account with the SARB, from which interbank settlement obligations are settled.
Settlement accounts held at SAMOS are pre- funded to ensure that their transactions are settled. The pre-funded rule ensures that the participant is fully responsible for its liquidity positions. Transactions that are settled are
final and irrevocable. Therefore, the point of settlement finality is the point at which both relevant accounts have been appropriately debited and credited. Payment for interbank securities settlement makes use of the real-time line (RTL) option to settle transactions in real time, on a gross basis. Collateral reserved in a separate loan account in the SAMOS system may be used for an automatic loan facility. However, all settlement happens from the settlement account and a settlement instruction is rejected if there are insufficient funds or liquidity.
The central securities depository
A CSD is the market’s formal record or so-called ‘source of truth’ for the ownership of securities. This entity performs the role of creating, storing and recording the ownership of securities. CSD Participants (CSDPs) – normally the central bank and large commercial banks – have accounts with the CSD, which is responsible for ensuring that changes in ownership of securities are recorded accurately and timeously. In the South African market, this role is mainly performed by Strate, which is also the CSD in the debentures market. DvP is achieved by coordinating the payment leg of a transaction through the SAMOS system and the settlement (delivery)
leg through the CSD’s SSS. The settlement of
3 debentures happens on a T+0 basis .
“A CSD is the market’s formal record or so-called ‘source of truth’
for the ownership
of securities. This entity performs the role of creating, storing and recording the ownership of securities.”
3 The depiction indicates how many days after the transaction (T) settlement takes place, with T+0 representing same-day settlement.
18 PROJECT KHOKHA 2