JSE brings STP to bond confirmations
In an effort to reduce operational risk, improve automation and straight through processing the Johannesburg Stock Exchange (JSE) has been engaging with the investment management community and Swift to automate the bond confirmation process. A collaborative effort has resulted in the implementation of MT515 messages over Swift on behalf of the respective bond brokers.
A large investment management outsourcing operation in South Africa, Maitland Group, conducted thorough testing of the messages and went live in September with the receipt of MT515 contract notes for bonds. Paul Ferreira, senior ICT architect (STP) at Maitland Group said: “This is a great success. After the benefits we have seen, from the receipt of equity trade confirmations via MT515, it made logical sense that the same benefit should be achieved with bonds. With the shorter settlement cycle of bond trades this standardised receipt enables Maitland to match, confirm and instruct our settlements to our custodians in a quicker turnaround.”
South Africa has been at the global forefront of increasing automation and STP. Bett Kotze, head of operations: clearing and settlement at JSE, said the post-trade industry in South Africa works very closely together and in a spirit of collaboration. “There is a big drive for automation in the market,” he said.
The JSE offers a unique hosted Swift infrastructure for broking members. The model provides a scalable and standardised platform to enable all brokers, irrespective of size, to offer the same trade confirmation service to their clients both domestically and internationally. “The JSE has spent a significant effort overhauling and upgrading our IT infrastructure and the new systems have allowed us to extend the use of MT515 messages to bonds,” says Kotze. “In time the broking community will also have the ability to extend their Swift usage to cash management and corporate action messaging.”
Ian Bessarabia, business development manager at Swift in South Africa said it was not often that an exchange offered such services designed to benefit all members and provide a level playing field. “This gives the entire buyside in South Africa carte blanche for trading, knowing they will get electronic trade confirmation in a standard format over Swift.”