IMASA

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IMASA 21 October 2005
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Terms and Definitions

• Member Settled Client- A client that holds
  their assets, cash and securities, with a trading
  member.
• Non-member Settled- A client that holds their
  assets, cash and securities with a CSDP.
• UNEXCor Account Code- Account code supplied
  through the UNEXCor system linked to the account
  on the UNEXCor system.
• UNEXCor Settlement Reference- Settlement
  Reference associated with the settlement account
• Service Provider- The party that supplies the
  front end to the UNEXCor system.
• Official ID- Code supplied by Service Provider
  to identify the trading member for the trade legs
  generated to the UNEXCor system
• Password- Password to log onto the UNEXCor
  system when generating trade legs.
• Super user password- Super user password of
  the front end to the UNEXCor system.

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New Yield-X Members requirements

• STRATE Service Level Agreement (SLA)
• Letter authorizing the Service Provider to create
  an Official ID and to release the system
  passwords to the JSE
• Custody Account
• Cash Settlement Account

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Service Provider Requirements

• Existing Member (already exists on BESA)
• STRATE SLA must refer to the existing Service
  Provider (If they are an existing Member on BESA
  they have to have a Service Provider)
• Letter must be addressed to the applicable
  Service Provider authorizing them to create a
  new Official ID and password and supply same to
  the JSE
• STRATE loads SLA and advises Service Provider
• Service Provider loads and supplies Official ID
  and password to the JSE
• CSDP loads the custody and cash accounts and
  supplies the UNEXCor Account code and Settlement
  reference to the JSE

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Service Provider Requirements (cont.)

• New Member (not existing member on BESA) and
  wants to use an existing Service Provider
• STRATE SLA must refer to the required Service
  Provider
• Letter must be addressed to the applicable
  Service Provider authorizing them to create a
  new Official ID and password and supply same to
  the JSE
• STRATE loads SLA and advises Service Provider
• Service Provider loads and supplies Official ID
  and password to the JSE
• CSDP loads the custody and cash accounts and
  supplies the UNEXCor Account code and Settlement
  reference to the JSE

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Service Provider Requirements (cont.)

• New Member (not existing member on BESA) with JSE
  as Service Provider
• STRATE SLA must refer to the JSE as the Service
  Provider
• Letter must be addressed to STRATE authorizing
  them to create a new Official ID and password
  and supply same to the JSE
• STRATE loads and supplies details to the JSE
• STRATE advises Settlement Agent to load cash
  account and custody account against the details
  loaded as first choice account
• CSDP loads the custody and cash accounts and
  supplies the UNEXCor Account code and Settlement
  reference to the JSE

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Loading of Clients Accounts

• Member Settled accounts are loaded by the CSDP
  and linked to the Trading Members General Purpose
  Account (GPA) on the UNEXCor system and the
  UNEXCor Account code and Settlement Reference are
  supplied to the Trading Member to load on
  theYield-X system. The Yield-X system generates
  a message to the UNEXCor system to verify account
  details.
• Non-member Settled accounts are loaded by the
  CSDP on the UNEXCor system and the custody
  account, cash account, UNEXCor Account code and
  Settlement Reference are supplied to the Trading
  Member to load on the Yield-X system. The
  Yield-X system generates a message to the UNEXCor
  system to verify account details.

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Requirement for Custody and Cash Account for
Trading Members

• Mandatory Requirements on the UNEXCor system when
  loading a new Trading Member
• Trading Members may house trades in the account
  until the end of the day and then allocate
  (referred to as bulking, averaging and
  allocating)
• There are settlement charges charged by the CSDPs
  per leg that settles.
• The Yield-X system uses the accounts for
  allocation corrections
• Used as a suspense account. If utilized
  correctly will come back to zero daily

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Allocation Corrections example
S TRADING MEMBER P
1M R153
1M R153
0.00
S CLIENT B P
S CLIENT A P
1M R153
1M R153
1M R153
1M R153
0.00
- AUTOMATICALLY PROCESSED BY THE SYSTEM
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Late Allocations or Allocation Corrections

• All trades are to be allocated on trade date
• In the case of late allocations or allocation
  corrections the Trading Member must apply before
  10h00 on T1
• JSE Settlement Authority grants permission
  subject to the payment of a penalty
• JSE Settlement Authority books the late
  allocation or allocation correction before 12h00
  on T1

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Cancellation of Trades

• Trading Member must approach the JSE Market
  Controller before 10h00 on T1
• JSE Market Controller must approach the other
  member to the trade and approve the cancellation
  of trades
• JSE Settlement Authority cancels trades via equal
  and opposites before 12h00 on T1

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Guarantees

• SAFCOM guarantees performance of the parties to a
  trade through the Clearing Members
• SAFCOM has appointed the JSE Settlement Authority
  to monitor and manage settlement of spot bond
  trades and
• The Trading Member that introduced the trade is
  responsible to ensure settlement takes place

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Which trades are guaranteed?

• All trades done on the central order book. These
  include-
• Main Board trades (T3 settlement cycle)
• T3 COB Carry
• T2 COB Carry
• Reported transactions where terms and/or price
  are agreed Off-Exchange and transaction is booked
  for reporting and settlement purposes, where the
  Clearing Member/s accept the transaction for risk
  management purposes (minimum T3 settlement
  cycle)

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Mitigate Risk Sales

• In respect of a sale order booked on Yield-X-
• the loan stock to be sold is lodged with a
  settlement agent as uncertificated financial
  instruments or
• another transaction has been concluded through
  the Yield-X trading system which provides for an
  equivalent amount of loan stock being available
  for settlement on settlement date or
• a satisfactory borrowing arrangement reported
  through the Yield-X lending and borrowing system
  is in place which provides for an equivalent
  amount of STRATE settled loan stock being
  available for settlement on settlement

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Unconditional Commits by CSDP

• The CSDPs commits on both central order books
  trades and Reported Transactions becomes
  unconditional from 12h00 on T2
• The only time that a CSDP may lift their
  unconditional commit after 12h00 on T2 will be
  in the case of provisional sequestration or in
  the case of fails management by the JSE
  Settlement Authority
• In the case where a CSDP wants to lift their
  commit after 12h00 on T2 for provisional
  sequestration a letter has to be sent to the JSE
  Settlement Authority advising that party is being
  placed in provisional sequestration
• A copy of the application stamped by the court
  has to be supplied within 2 business days

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Process flows

CLEARING MEMBER
COMMUNICATION
JSE SETTLEMENT AUTHORITY
COMMUNICATION
MONITOR COMMITS
MARGIN REQUIREMENT
ENTERS CORRECTIVE TRADES
PENALTIES
CLEARING ENGINE (NEW SAFEMS)
(RECONCILES TRADES WITH MATCH ORDERS RECEIVED
FROM STRATE
TRADE FOR MARGIN
TRADING ENGINE
TRADING MEMBER
YIELD-X
COMMIT INTIMA- TIONS
MATCH ORDER NO
MATCHED TRADE
STRATE
CLIENT
TRADE AFFIRMATION
TRADE AFFIRMATION
Net SETTLE- MENT POSITION
COMMIT
SETTLEMENT AGENT
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Timelines
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Questions