Strate has entered into an agreement with REGIS-TR to licence their software to Strate in the development of a local Trade Repository in accordance with South African regulatory requirements. REGIS-TR is the European Trade Repository owned jointly by Clearstream, a subsidiary of the Deutsche Bourse, and Iberclear, Spain’s CSD.
Strate has made it public that it intends to apply for the Trade Repository licence once the Financial Markets Act is implemented. This Trade Repository specifically is a centralised database that maintains a secure and reliable electronic database of the records of open over-the-counter derivatives transactions.
According to Anthony van Eden, Strate’s Strategic Projects Director, Strate’s philosophy has always been to collaborate with partners with a sound track record who are able to provide the South African financial market with solutions that will enhance risk mitigation, improve transparency, bring market efficiencies and align the country to international best practice.
Benefitting the South African market
Strate is collaborating with REGIS-TR in order to provide a Trade Repository that will meet international standards. REGIS-TR already supports the European industry from the inception of the new reporting obligation derived from the European Market Infrastructure Regulation (EMIR), including the reporting of collateral against open exposures.
In South Africa, the Financial Markets Act provides a new framework to regulate the financial markets sector with enabling legislation for a Trade Repository for over-the-counter derivatives.
An approved Trade Repository will bring transparency to the market and greatly enhance regulator’s oversight and ability to respond to the build-up of market concentration risks,” says van Eden.
The primary benefit of a Trade Repository stems from the improved market transparency facilitated by its record keeping function, the integrity of information it maintains and effective access to this information by relevant authorities and the ‘general’ public in line with their respective information needs. It provides reporting to regulators as well as aggregated information to the public.
The benefits of a Trade Repository include quick and timely access to data in a time of crisis. Regulators globally have recognised the need to use a Trade Repository to reduce systemic risk, improve transparency and protect investors.
A Trade Repository is in line with recommendations set forth by the G-20 where all standardised over-the-counter derivative contracts should be traded on an exchange or electronic platform, where appropriate, and cleared through central counterparties. “This aims to enhance the stability of global financial markets and protect investors and financial institutions in the event of a crisis,” concludes van Eden.
As a member of the G-20, South Africa is committed to and acknowledges the need to conform to reporting of over-the- counter derivatives transactions to enhance regulatory oversight and improve transparency.