DEUTSCHE BOERSE'S CLEARSTREAM, STRATE COOPERATE (ENGLISH)

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News Release
Deutsche Boerse Group
31.10.13 
South Africa’s financial institutions come together to meet global
regulations through collateral optimisation 
* Some of South Africa’s largest financial institutions, including banks,
fund managers and the Johannesburg Stock Exchange (JSE), explore collateral
optimisation services to efficiently manage collateral within the South
African market;
* The service is offered by Strate, South Africa’s Central Securities
Depository (CSD), in partnership with Clearstream, the International CSD
(ICSD) and national CSD group; and
* The service looks to optimise the use of collateral to meet growing local
and international regulatory requirements, such as Basel III, Solvency II
and Regulation 28 of the Pension Funds Act. 
JOINT PRESS RELEASE OF STRATE (SOUTH AFRICA) AND CLEARSTREAM 
Strate, Africa’s leading Central Securities Depository (CSD), and
Clearstream,
the International CSD (ICSD) and national CSD that is part of Deutsche
Börse
Group, today announced the launch of a centralised collateral management
service for the South African financial market. Some of South Africa’s
largest
financial institutions*, including banks, a number of fund managers and the 
Johannesburg Stock Exchange (JSE), have committed to exploring the use of
these
services to more efficiently manage collateral and to mitigate operational
and
credit risk within the South African market. 
The introduction of new international regulations, such as Basel III and
Solvency II, which aim to protect the financial markets from systemic risk, 
will place pressure on the availability and funding costs associated with
holding high-quality liquid assets (HQLA). In addition, the G-20 Finance
Ministers have also recommended that all standardised
‘over-the-counter’ (OTC)
derivatives should be cleared with central counterparties (CCPs). This move 
will require initial margin – which has traditionally been in the form of
cash,
but may be expanded to include HQLA - to be placed with the CCPs.
Non-cleared
OTC derivatives will also have to be collateralised. 
Such regulations are set to affect the South African market as financial
institutions will need to hold greater regulatory and solvency capital with 
increased requirements for unencumbered HQLA. The cumulative effect of each
of
these changes, the need for greater transparency as well as the specific
South
African regulatory and legislative obligations stated in the Financial
Markets
Act and Regulation 28 of the Pension Funds Act, point to a re-think of
collateralisation in the industry. 
As a result, South Africa’s financial institutions, together with Strate,
have
formed a Collateral Management Industry Forum with a view to explore the
optimisation of collateral in the local market via Strate’s Collateral
Management Service. The service was initially developed by Clearstream who
have
offered this collateral management service on an outsourced basis to market 
infrastructures, like CSDs, outside Europe's borders since 2011. Along with 
South Africa, Brazil and Australia have been other non-European
frontrunners in
this initiative. 
Despite cash being a common form of collateral, many financial institutions
in
South Africa are investigating the use of securities (equities, bonds and
money
market instruments) in order to meet their regulatory obligations. The use
of
securities as collateral does, however, introduce certain complexities and
the
market is looking at Strate’s service to more efficiently and automatically 
manage their collateral. 
Strate’s Strategic Projects Director, Anthony van Eden, explains that there
has
been an overwhelming interest from the local market for the use of the
service.
“We are also in discussion with a number of other financial institutions,
in
addition to the ones named above, who are seeing the benefit of this
industry-wide initiative and exploring the use of the service.” 
Market-wide collateral optimisation is, to a large degree, a panacea for
collateral fragmentation, scarcity and shortages, which the service looks
to
overcome. 
Stefan Lepp, Head of Global Securities Financing and Member of the
Executive
Board of Clearstream, says, “We are delighted that we have partnered with
Strate in South Africa to assist financial institutions in managing their
domestic collateral more efficiently.” Lepp explains that it is a strategic 
priority of Deutsche Börse Group to make global markets more robust through 
risk and liquidity management solutions such as Clearstream’s collateral
management outsourcing service. “Collateral has become a very scarce
resource
and sourcing good quality collateral is increasingly expensive. The service 
looks to manage collateral holdings and exposures much more efficiently to
provide markets with access to much needed liquidity.” 
As part of its risk and liquidity management offering, Clearstream has
developed a collateral management outsourcing solution allowing its market
infrastructure partners like Strate to manage the collateral of their
underlying client base. The assets never leave the domestic environment and 
remain under local jurisdiction; hence contractual agreements between the
partner (Strate) and its domestic client base remain unchanged. The
initiative
has gained momentum, as upcoming regulatory changes require financial and
non-financial institutions to improve their capital management. 
Clearstream is the only collateral management services provider with a
proven
ability to manage collateral across time zones without transferring assets
out
of the respective domestic environment. The collateral management
outsourcing
service went live with Brazilian CSD Cetip in July 2011, with the ASX
Group,
Australia, in August 2013, with Spanish CSD Iberclear and Strate in October 
2013. SGX, Singapore, has signed a Letter of Intent with Clearstream and
Clearstream and Canadian CDS have announced that they are working together
towards a collateral management solution for the Canadian market. 
About Strate 
Strate is licensed as South Africa's Central Securities Depository (CSD)
providing post-trade products and services to the financial markets. As the 
trusted independent provider of innovative post-trade products and services
in
Africa, Strate offers state-of-the-art technology, international expertise
and
global best practice to the financial markets. 
Strate provides electronic settlement for securities - including equity,
bond
and derivative products, such as warrants, Exchange Traded Funds (ETFs),
retail
notes and tracker funds for Africa’s largest stock exchange, the
Johannesburg
Stock Exchange (JSE), as well as the settlement of money market securities
for
the South African market and equities for the Namibian Stock Exchange. It
has
recently added Collateral Management Services and new Asset Servicing
products
to its portfolio.  Strate provides services to issuers for their investors
in
terms of the Companies Act (2008) and Financial Markets Act (FMA) (2012). 
For more information, please visit www.strate.co.za 
About Clearstream 
Clearstream is the leading global provider in liquidity and collateral
management services with more than 20 years of experience in this field. 
As an international central securities depository (ICSD) headquartered in
Luxembourg, Clearstream provides the post-trade infrastructure for the
Eurobond
market and services for securities from 53 domestic markets worldwide.
Clearstream’s customers comprise approximately 2,500 financial institutions
in
more than 110 countries. Its services include the issuance, settlement and
custody of securities, as well as investment fund services and global
securities financing. With around EUR 11.7 trillion in assets under
custody,
Clearstream is one of the world’s largest settlement and custody firms for
domestic and international securities. 
As a central securities depository (CSD) based in Frankfurt, Clearstream
also
provides the post-trade infrastructure for the German securities industry,
offering access to a wide number of markets in Europe. 
For more information, please visit www.clearstream.com 
Media contact Clearstream: 
Nicolas Nonnenmacher
+352-243-36115
nicolas.nonnenmacher@clearstream.com 
Media contacts Strate: 
Tanya Knowles
+27 (0)11 759 5317
tanyak@strate.co.za 
Nicole De Matos
+27 (0)11 759 5405
nicoled@strate.co.za 
Further information from Deutsche Boerse Group
is available under http://deutsche-boerse.com/press
Mailto:Media-Relations@deutsche-boerse.com. 
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