JSE clearing house receives global recognition
By MTHULISI SIBANDA
JOHANNESBURG, (CAJ News) – IN a significant milestone for South Africa’s financial markets, the European Union’s Securities and Markets Authority (ESMA) has announced that JSE Clear, the Johannesburg Stock Exchange-owned derivative central counterparty (CCP), has been recognised as “equivalent” to CCPs in Europe.
Leila Fourie, Executive Director of the JSE, said the achievement was important for the JSE, its regulator the FSB and participants in South Africa’s financial markets.
“Today’s announcement means that EU-based market participants that clear trades through JSE Clear will be permitted to continue clearing for investors trading on the JSE.
“ESMA recognition strengthens our global credibility and fulfils a key requirement for multinational clearing members operating in the local market,” said Fourie.
“Participation from these multinationals helps to distribute the credit, liquidity, operational and legal risk on our market – instead of concentrating this risk in a smaller number of clearing members.”
Fourie said it was vital for South Africa that its rules are globally relevant and consistent with financial centres such as the European Union.
“This milestone demonstrates that our CCP is robust and meets global standards in promoting financial stability and reducing systemic risk. The recognition of equivalence is a significant indicator of the rigidity of SA’s market infrastructures, and will aid in attracting international flows to our emerging market.”
“Clearing” denotes all activities from the time a transaction is executed until it is settled. A CCP is an organization that helps to reduce risk and safeguard against losses that could be incurred by a default of a trading participant when trading on the JSE’s markets.
– CAJ News
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