JSE Clear to accept securities as collateral to improve cash liquidity
TLDR
- JSE Clear introduces new service allowing securities as collateral for JSE derivative positions, expanding beyond cash requirements.
- Investors can now use ZAR cash and South African government bonds to meet margin collateral needs, with bonds covering up to 35%.
- This change frees up substantial cash for investors, enabling more trading activities and addressing financial requirements efficiently.
JSE Clear has recently launched a new service that allows investors to use securities as collateral for open JSE derivative positions, a departure from the previous practice of accepting only cash as collateral.
Investors holding listed JSE derivative exposures now have the option to fulfill their margin collateral requirements by offering a combination of ZAR cash and liquid South African fixed-rate government bonds.
Initially, JSE Clear will accept government bonds to cover up to 35% of the margin collateral. This translates to a significant amount of cash being released back to investors, providing them with the opportunity to engage in additional trading activities or address other financial needs.
Points clés à retenir
By expanding the acceptable collateral to include South African government bonds, investors gain flexibility in utilizing their cash for other purposes, thus mitigating cash liquidity pressures and reducing funding costs. This initiative reflects JSE Clear's proactive approach to supporting investors seeking to enhance operational efficiency. Furthermore, the reduction in the cash requirement for collateral substantially mitigates the risk of cash liquidity constraints, particularly during periods of market stress. JSE Clear is a wholly-owned subsidiary of Johannesburg Stock Exchange and the only licensed Central Counterparty (CCP) and Independent Clearing House operating in South Africa, with the license having been granted by the Financial Sector Conduct Authority (FSCA), in agreement with the Prudential Authority (PA) and the South African Reserve Bank (SARB) in September 2022.
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