JSE Clear, a private company, is a wholly owned subsidiary of the JSE Ltd (“JSE”). JSE Clear has recently been granted a licence to operate as an Independent Clearing House and a Central Counterparty (CCP) in terms of section 49 of the Financial Markets Act, 2012 (Act no. 19 of 2012) (FMA) by the Financial Sector Conduct Authority (FSCA). JSE Clear has been appointed as the clearing house and CCP of the JSE for all transactions in listed derivatives and listed cash bond securities concluded on the JSE’s markets.
The main objective of JSE Clear is to act as clearing house and central counterparty in transactions concluded on the JSE’s markets and, in this regard, JSE Clear (in accordance with its rules) takes the necessary and appropriate steps to clear and risk manage transactions in securities listed on the JSE’s Derivatives, Interest Rate and Currency markets. Currently the listed securities cleared by JSE Clear are options on futures contracts and futures contracts in the equity derivatives, commodity derivatives, currency derivatives, interest rate derivatives and spot bond markets of the JSE.
On 1 September 2022, the FSCA published a notice to the market confirming approval of JSE Clear’s rules, copies of which can be found here:
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Regulatory Compliance in Post-trade Services
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Over the past few years, there has been an upsurge in regulatory changes in post-trade services worldwide and the JSE, with their clearing house JSE Clear, have worked tirelessly to ensure that it adheres to these latest global standards and legislative requirements.
In December 2012, JSE Clear (then SAFCOM), became the first clearing house in the world to achieve CPSS-IOSCO (Committee on Payment and Settlement Systems - International Organisation of Securities Commissions) compliance (a global standard for risk management) with the support of our market and we are very proud of this achievement.
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CPSS-IOSCO Compliance
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JSE Clear, as part of its compliance obligations, is required to adhere to the requirements of the CPSS-IOSCO disclosure framework, where one of the stipulations of this framework, is that the outcomes of a (FMI’s) self-assessment should be structured for public disclosure.
This is briefly outlined below, with the summary of the self-assessment covered in the pdf under the heading “IOSCO disclosure framework”
As a member of the G-20, South Africa (and its respective FMIs) is committed to comply with the principles and provisions of the CPSS–IOSCO report, as it is an integral part of the G-20’s efforts to enhance the stability and integrity of financial markets.
Of the 24 principles that form part of the CPSS-IOSCO “Principles for Financial Market Infrastructures” (FMI’s) report, only 20 are considered to be relevant to JSE Clear due to the nature of its operations. Having completed the 2018 self-assessment exercise, JSE Clear is rated as “Observed” across 18 of these principles and “Broadly Observed” in terms of the remaining 2 applicable principles.JSE Clear is thereby considered to be fully compliant with the requirements put forth by IOSCO for Central Counter Parties (CCPs).
JSE Clear re-visits the self-assessment every two years to ensure alignment with the PFMIs.
IOSCO disclosure framework
JSE Clear IOSCO disclosure document
FSB approval of JSE Clear as a qualifying central counterparty for listed derivatives
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European Securities and Markets Authority (ESMA) recognition
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JSE Clear has been granted the status of a “third-county CCP” (TCCP), meaning that it has been authorised to provide clearing services to market participants based in the EU. This project was undertaken in close collaboration with our local regulator the Financial Services Board (FSB), now Financial Services Conduct Authority (FSCA), and we would like to thank them for the material role they played in the recognition process.
ESMA recognition strengthens the global relevance of JSE Clear, and more importantly, ensures that multinational banks can continue to clear in the SA market. We see this as an important part in ensuring our local financial market meets global benchmarks and continues to promote financial stability and reducing reduce risk. This milestone will contribute towards South Africa’s credibility and will help to attract flows from abroad to SA.