The inter-dependence of the world’s financial markets took centre stage with the failure of Lehman Brothers. As the significance of this event has rippled through the financial world, many financial institutions and Investors are calling for higher levels of transparency, increased regulation and improved protection of their Securities. Increasingly the co-mingling of Securities and legal certainty of title has come into question where Client’s Securities are placed under the management and custody of a Custodian.
In an effort to address these trends, the South African market, under the guidance of the Central Securities Depository (CSD), Strate Ltd, and the local Custodians, has created the concept of Segregated Depository Accounts (SDAs). The South African market operates nominee securities account structures for equities and fixed income securities. Currently Investors securities are held in Custodians nominee accounts at the CSD.
The SDA account allows Investors to open an account directly at the CSD level while maintaining all their existing relationships and services with their Custodian. Not only are Investors securities held in a separate account but they also benefit from increased protection in the event of an Insolvency Proceeding being instituted against one of the Custodians.
For more information on SDAs, please see the below documents.
SDA Concept Document
SDA FAQ Document
SDA Application Template
Placement of Pledge
Release of Pledge