Warrants will soon follow equities into the electronic settlement environment, and central securities depository and settlement service Strate is hoping that it will be able to get a contract to settle money market instruments too.
Strate CEO Monica Singer, speaking at a Strate conference in Sandton yesterday, said the system underlying Strate, Safires, has the ability to handle all instruments, including bonds, private placements, mutual offshore bonds and Eurobonds.
"Can we afford not to use it?" she asks. "Do we say we will use it only for equities, and can we afford to spend money on building other silos?"
One of Strate's missions is to be a technologically advanced company with open architecture, use of ISO 15022 data field dictionary and achieving straight-through processing and applying international delivery disciplines.
Among other things, the role of IT is to utilise all functionality within the Swiss-designed Safires system, as well as to develop new functionality.
Singer says Strate's global vision is in line with the European consolidation of central securities depositories.
The idea of a Johannesburg broker trading in the UK and settling on Strate, or even a Swiss broker trading in Switzerland and settling on Strate because it is cheaper, is achievable through the use of ISO 15022 standards as well as the use of the interbank messaging system, Swift.
Brian Balking, head of issuer and investor services at Strate, says that on 15 October, 410 counters out of the 631 JSE counters were settling electronically. Of these, 39 have more than 90% of their share capital dematerialised (converted from paper scrip to electronic records).
To date, there has been no failed settlement, and no case of tainted scrip. Tainted scrip arises in a paper-based settlement system when share certificates are stolen or lost and then negotiated with a forged transfer document. As a result, someone may hold a genuine share certificate but is not reflected in the register as the owner of the securities.
Singer says the R92.3 million Dispossessed Members' Fund, an insurance against tainted scrip, expires in September 2002. She is hoping to return contributions when it expires, with the exception of the R15.5 million contributed by shareholders.
This will be put into a fund to cover settlement risk.
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