The Johannesburg Stock Exchange’s (JSE’s) clearinghouse, JSE Clear, has been granted a licence to act as an independent intermediary between buyers and sellers of stocks.
The JSE said that Clear will remain a wholly owned subsidiary but will operate as an Independent Clearing House and Central Counterparty (CCP). The licence was approved by the Financial Sector Conduct Authority (FSCA), in agreement with the Prudential Authority (PA) and the South African Reserve Bank (SARB).
According to the FSCA, the function of a clearing house that is a CCP is to guarantee the conclusion of trades and minimize any risks that may arise.
“We are extremely pleased to have been granted this licence as we continue our excellent track record of delivering robust post-trade services to the listed derivatives markets and as we execute our plans to expand to new markets,” said Alicia Greenwood, chief executive officer of JSE Clear.
“We pride ourselves in making markets safer by providing unique and sophisticated risk management capabilities and advanced clearing and settlement systems.”
The JSE said that Clear has been operating as a central counterparty and licensed clearing house as per the Financial Markets Act, and it will continue to do so; however, now, it will, under the new licence, go about doing its business on it own rules (having previously operated as an Associated Clearing House in terms of the JSE’s rules).
The JSE Clear will also manage its own fully capitalised balance sheet and will be governed by an independent board of directors.
JSE Clear will continue to act as a clearing house for JSE derivative markets, including:
- Commodity;
- Interest rate;
- Equity, and;
- Currency derivate markets.
JSE Clear is now the only licensed CCP and independent clearing house operating in South Africa.
CCP clearing is globally recognised by regulators as the preferred and most appropriate approach for risk management, clearing and settlement of capital markets, said the JSE.
JSE Clear has been formally recognised by various international regulatory bodies since 2016 as meeting the global standards set for CCPs.
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