Electronic settlement of JSE trades under the Strate umbrella achieve a 57% saving per trade over the costs incurred in a paper-based settlement environment, according to Strate CE Monica Singer.
She said at the Strate phase two implementation conference in Johannesburg yesterday that the figure had been calculated by accounting firm KPMG after an exhaustive investigation into the cost structures of a range of stockbroking firms.
Singer quoted Templeton International's Mark Mobius as saying that the implementation of Strate at the JSE will provide a modern settlement system with greater speed and security.
State Street Bank's Andrew Taylor was quoted as saying: "The security engendered by the Strate system will undoubtedly lead to a significant re-rating of the South African market, resulting in an increased flow of investment dollars into the JSE."
Singer noted that in the Strate environment settlement fees, excluding message costs, would average R6.40, compared with R90 in Hong Kong, R45 in China, R44.75 in Malaysia and R6.30 in the UK.
"Strate is committed to cheaper settlement fees, which, in line with international experience, decrease as volumes increase and once write-off periods of capital investment have been passed. Indicatively, Strate's break-even is projected for 2004."
She said international experience indicates that the system should result in increased trading volumes.
This is a view echoed by Angela Hardwick, who heads FNB Corporate Custody Services.
Hardwick said at the conference that in readiness for Strate, FNB has implemented far-reaching system and process upgrades and has conducted an extensive training programme.
Further system upgrades are to take place this year as the dematerialisation process gets into full swing.
Hardwick said the change from manual to electronic settlement prompted widespread feedback from FNB's international client base, which was seeking clarification on issues like the legal framework, day-to-day processes, time to implementation, settlement authority guarantees and failed trade procedures.
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