S. Africa’s Treasury May Invite Tenders for Bond-Trading System

South Africa’s Treasury may call for tenders for a new electronic bond-trading system to improve transparency in the 1.45 trillion-rand ($170 billion) market, replacing one where prices are set mostly over the phone.

The National Treasury held discussions with World Bank consultants over the past couple of months on introducing electronic market trading, Roy Havemann, chief director in the department’s tax and financial sector policy unit, said by phone from Pretoria. JSE Ltd., operator of the country’s stock and bond exchanges, will be required to tender for the new system if it is adopted.

“The JSE is very well placed to operate this platform, but equally other providers would also be well placed,” Havemann said. “It will be a competitive process.”

The Treasury consulted with the JSE, bond traders, primary dealers and interbroker dealers and provided feedback on discussions held with the World Bank, Havemann said.

“We haven’t put out a paper yet, but we have had consultations with the industry as part of the Bond Market Development Committee,” he said.

JSE Ltd. (JSE) said it will be able to introduce electronic trading if required.

“Whichever way National Treasury decides to go, the JSE believes it will be able to cater for all the envisaged requirements that they require,” Warren Geers, general manager of trading for interest-rate products and derivatives, said in an e-mailed response to Bloomberg.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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