It has been eight years in the coming but at last – on 11 July 2016 – South Africa moved to a shorter settlement cycle for equities, from five to three days.

This brings South Africa on a par with most international stock exchanges, providing increased liquidity and making the JSE more attractive generally. The main benefit for local fund managers is that they will instantly become more internationally competitive.

From an administrator's perspective, the shorter T+3 trade lifecycle has meant more time pressures and the need for even greater precision to support clients in the transition. The project has also led to proactive engagement on Maitland's part with all our stakeholders in order to get an optimal result in terms of straight-through-processing (STP) and this has been beneficial for the industry.

From an administrator's perspective, we have created the environment for fund managers to abide by the rules so that settlement can be guaranteed. We have:

  • Created more transparency throughout the trade lifecycle
  • Ensured more real time trade matching and automation to ensure we can meet the shorter lifecylce
  • Achieved overall general improvement of STP – from initiation to completion.

In fact, Maitland has been T+3 ready since 2007 already, on account of the high international trade activity that we administrate. What is more, looking ahead and in order to mitigate the risk of failed trades, our STP platform has been built for T+2.

Cooperation with the JSE

As the largest fund administrator in the South African market, Maitland has worked closely with the JSE over the past few years on many of the T+3 processes.

To minimise the risk of failed trades, the JSE has constructed a groundbreaking automated trade fail process. Instead of requiring participants to operate on margin, the JSE will create a secondary market in scrip lending so that the trade can be rolled over to T+6 and not fail. Therefore the risk will be managed by the JSE itself.

The JSE has been on a strong education drive ahead of T+3 implementation as behavioural change and efficient operations by all parties are vital to the process. We encourage ongoing behavioural change, so that the mindset fits the new system.

Go South Africa, go!

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