Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	The STRATE CSD is electronically linked with all market players on a real time basis. Market players include the JSE, CSDPs, Share Registrars and Lending Desk Business Partners. Due to the electronic link, all modifications or new transactions are communicated immediately between the respective parties. In the event of systems failure of any participant, the back up facility at the participant's offices is utilised. This guarantees continuous communication between all the parties.
2.	Is there one or more depository or settlement system in the market?	There are currently two depositories, STRATE Ltd and CD Ltd, the former settling all equity and warrants trades, the latter settling all fixed interest transactions.
3.	If there are several, has a consolidation been considered? If yes, by when?	Three years ago, the consolidation of the JSE (JSE Securities Exchange South Africa), SAFEX (Futures Market) and BESA (Bond Exchange of South Africa) was discussed. The proposal was not accepted by the market participants concerned and each market went its own way. Last year, SAFEX was taken over by the JSE and now forms a division of the JSE. STRATE has made overtures to settle the bond business of BESA but, to date, no real progress has been made.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	The STRATE system operates an extremely open architecture, which would enable direct links between domestic and foreign systems. This is especially so with SECOM (the Swiss settlement system which forms the base of the STRATE system) and CREST. This would be from a settlement system point of view. Foreign participants would be linked via SWIFT. However, all access to the system is controlled and subject to authorisation by STRATE.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	South Africa still has Exchange Control Regulation. This limits access. Foreign market participants currently participate via their South African branches or subsidiaries. As long as the foreign participant complied with the STRATE entry criteria, it would be allowed to act in the capacity for which it qualified.