(Corrects from first paragraph to show default fund is in addition to existing margins.)
South African derivatives clearing members and the Johannesburg Stock Exchange will set aside 500 million rand ($54 million) for a fund aimed at protecting banks from possible defaults.
Safcom, the clearing house for derivative contracts such as single stock futures, will set up a default fund where clearing members and the JSE will contribute additional cash, the bourse said in a statement today. The exchange currently calls for about 14 billion rand in margin to cover trading of 350 billion rand a day, the JSE said.
“The new fund reduces systemic risk as well as clearing members’ exposure to counter-party credit risk when clearing through Safcom,” Leila Fourie, director for post-trade services at the stock exchange, said in an e-mailed statement.
The fund’s introduction follows the 2008 financial crisis when Dealstream Securities Ltd., a South African derivatives broker, collapsed and FirstRand Ltd. (FSR), the country’s second- largest bank, lost money.
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