Moving to T+3

Report
JSE Equities - Moving to T+3
21 October 2010
London
www.jse.co.za
www.jse.co.za
Copyright© JSE Limited 2009
1
Moving to T+3 – Agenda
 Phases so far
 Outputs per Phase
 T+3 Settlement Cycle
 Timelines
 Phase 4
www.jse.co.za
2
Moving to T+3 – Phases so far
Phase 1
Producing a document detailing the potential barriers
and the high-level activities to overcome such barriers
(to accompany the JSE’s 2008 licence renewal
application)
Phase 2
Nomination of responsible parties to further the
investigations within their working groups, coordinated
by the JSE, with their combined outputs being the
creation of a “Blueprint for T+3” document
Phase 3
Impact analysis and agreeing an implementation plan
for T+3 with all market participants
www.jse.co.za
3
Phase 1 – Outputs

The JSE submitted the document detailing the
barriers and the high-level activities to
overcome such barriers to the FSB with the
JSE’s 2008 licence renewal

10 Barriers were raised with 58 action areas

The FSB accepted the document and
requested a quarterly update on the status of
the action items

The JSE initiated Phase 2 with the parties that
would address the 58 action items
www.jse.co.za
4
Phase 1 – Barriers and Action Areas
Off-market
transactions
9
Real-time trade
processing
2
Central
securities
register
Providing
0
settlement
assurance
5
Dematerialization
4
Straight-through
processing
6
Securities
lending &
borrowing
11
Moving shares
between
registers
4
Systems
availability
1
Corporate
actions
18
www.jse.co.za
5
Phase 1 – Key focus areas
6 key focus areas were identified 
High level of automation

Standardisation Pre-trade and Post-trade

Harmonisation

Corporate Actions

Securities Lending & Borrowing

Settlement Assurance – JSE guaranteeing of
settlement
These cover all the barriers and action items
www.jse.co.za
6
Phase 2 – Outputs
Phase 2 was about –

Getting the nominated parties to further
investigate the action items and identified
issues and define solutions (the “blueprints”)

Creating Business Requirement
Specifications that are signed off by the
market

Completing a Blueprint (by the JSE in May
2009)
www.jse.co.za
7
Phase 3 – Outputs
Phase 3 was about –

The Impact Analysis and Implementation Plan
for moving to T+3

Detailing how the transition from T+5 to T+3 is
going to be managed

Making changes immediately, where possible,
as opposed to waiting for implementation (this
has already started)

Development of systems changes for T+3 for
implementation after the JSE’s System
Replacement Programme goes live
The Impact Analysis and Implementation Plan
were completed in April 2010
www.jse.co.za
8
Phase 4
Phase 4 is about 
Focus on automation

Project Management

Systems Development

Management of Timelines

Changes to Listing Requirements

Changes to JSE, NSX and Strate Rules and
Directives

Marketing and Education

Making sure everyone is ready to go-live

Go-live
www.jse.co.za
9
New Settlement Cycles
Type
Settlement
Cycle
Reporting
Time
Commit/BTB
Time
BTB RM
Removal
Reverse
Subs
SAT/SLB
BP
Reporting
Commit for
SA/SLB BP
JSE Onmarket
T+3
15h00 (S-1)
15h15 (S-1)
16h00 (S-1)
17h00 (S-1)
18h00 (S-1)
JSE Same
Day (SLB)
T+0
10h00 (S)
11h00 (S)
JSE Same
Day (MLB)
T+0
10h00 (S)
11h00 (S)
JSE Rolling
of Settle
T+0
11h00 (S)
12h00 (S)
JSE Roll of
Settle new
legs
Min T+2
11h00 (S2)
15h00 (S-1)
15h15 (S-1)
16h00 (S-1)
17h00 (S-1)
18h00 (S-1)
JSE GiveUp
T+0
11h00 (S)
12h00 (S)
www.jse.co.za
10
New Settlement Cycles cont.
Type
Settlement
Cycle
Reporting
Time
Commit/BTB
Time
Depository
Receipts
Min T+1
11h00 (S1)
15h00 (S-1)
Off-markets
T+3
11h00 (S1)
15h00 (S-1)
Acct
Transfers
Min T+0
18h00 (S)
18h00 (S)
Portfolio
Moves
Min T+0
18h00 (S)
18h00 (S)
SLB
Min T+1
13h00 (S1)
14h00 (S-1)
SLB
Returns
Min T+1
17h00 (S1)
18h00 (S-1)
Acct Trfrs/
Portfolio
Moves RD
Min T+0
09h00 (S)
10h00 (S)
BTB RM
Removal
Reverse
Subs
SAT/SLB
BP
Reporting
Commit for
SA/SLB BP
www.jse.co.za
11
T+3 On-Market Settlement Cycle
www.jse.co.za
12
On-market Activities (current vs future)
Current Timings – T+5
Future Timings – T+3
T - Batch
T – Real-time
(after allocations)
Client Affirmation to
CSDP/Rejection to Broker
T+2 (12h00)
T+1 (18h00)
Deemed Affirmation Client
T+2 (12h00)
T+1 (18h00)
Broker re-allocation
T+2 (16h00)
T+1 (18h00)
Client affirmation of re-allocation
T+2 (16h00)
T+1 (18h00)
T+2 (EOD)
T+1 (EOD)
Action
Settlement Orders (non-controlled
clients)
Brokers nets
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13
On-market Activities (current vs future)
Current Timings – T+5
Future Timings – T+3
Non-controlled client breach
T+3 (12h00)
T+2 (12h00)
Principal Assumption
T+4 (10h00)
T+2 (16h00)
T+3 (EOD)
T+1 (EOD)
Broker borrowing on Principal
Assumption
T+4 (10h00 to 12h00)
T+2 (16h00 to 18h00)
Settlement Authority SLB
T+4 (12h00 to 16h00)
T+3 (08h00 to 10h00)
Failed Trade/Rolling Of Settlement
T+4 (16h00 to 18h00)
T+3 (10h00 to 12h00)
T+5
T+3
Action
Margining
Settlement
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14
Corporate Actions Mandatory Events
1 Day
1 Day
Matched ready for
10h00 Settlement for same day
returns
Declaration
Date
RD – 13
or earlier
Finalisation
Date
Last Day to
Trade
RD - 8
LDT
RD - 3
First Day to
Trade with New
Entitlement
Record Date
Payment Date
LDT + 3
RD +1
LDT + 2
LDT + 1
RD
RD - 2
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15
Mandatory Event Information
The minimum required information on Declaration Date for
Mandatory Events must be:

Last Day to Trade (Cum), Ex Date, Record Date and Expected
Pay Date

Cash Rates and Share Ratios can be announced no later than
Finalisation Date by 12h00

Exceptions to this will be dealt with on a case by case basis

If applicable (Mandatory Security or Mandatory Cash and
Security):

Delisting Date/Termination Date, Suspension Date,
Effective Date

New ISIN
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16
Mandatory Event Information cont.
The Market has agreed on the following:

Should not all information have been made available on
Declaration Date then the cut off date for the Event Finalisation
should be no later than 12h00 on Finalisation Date

Exceptions to this will be dealt with on a case by case basis

Record Date will always be a Friday. In the event of a Public
Holiday, Record Date will be the previous business day.
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17
Elective Events – Excluding DRIPs
1 Day
1 Day
15h00 Strate to send elections to TS
[
Declaration
Date
RD – 13
or earlier
Finalisation
Date
Last Day to
Trade
RD - 8
LDT
RD - 3
First Day to
Trade with New
Entitlement
LDT + 2
LDT + 1
RD - 2
14h00 Strate to send Pre-Advice
Amended elections may be submitted
13h00 Elections submitted to Strate (Projected
Holdings if settlement has not taken place)
12h00 Event Eligibility Calculated (where settlement
has taken place)
10h00 Broker submits elections to CSD Participants
10h00 Matched ready for Settlement for same day
returns
Cash Entitlements
paid
on receipt of Cash
Security
Entitlements
B.O.D Posted
Payment Date
Record Date
&
Election Deadline
Date
Withdrawal Date
(if applicable)
LDT + 3
RD + 1
www.jse.co.za
18
Elective Event Information
The minimum required information on Declaration Date for
Elective Events must be:

Last Day to Trade (Cum), Ex Date, Record Date, Expected
Election Deadline Date and Expected Pay Date

Cash Rates and Share Ratios can be announced no later than
Finalisation Date by 12h00

Exceptions to this will be dealt with on a case by case basis

Default Option and whether Part Elections and/or Restrictions
are applicable

Elections will be sent to Strate at 13h00 with amendments until
14h00
www.jse.co.za
19
Elective Events - DRIPs
E.O.D
Send Record Date
Positions
13h00 Elections submitted to Strate
10h00 Broker submits elections
to CSD Participant
10h00 Matched ready for
Settlement for same day
returns
Declaration Finalisation
Date
Date
RD – 13
or earlier
Last Day to
Trade
LDT + 1
RD - 2
RD – 8
LDT
Announcement
of SA Dividend
Rate
RD - 3
LDT + 2
Record Date
Record Date + 10
LDT +3
Election Deadline
Date
Cash
Entitlements
paid on receipt
of Cash
Share Ratio
advised by
Transfer
Secretary
Cash Payment RD + 39
Date
RD + 20
Security
Entitlements
processed by
Transfer
B.O.D Secretary
Securities and
Fractions
Payment Date
RD + 40
www.jse.co.za
20
Elective Event – DRIPs Information
The minimum required information on Declaration Date for
DRIPs must be:

Last Day to Trade (Cum), Ex Date, Record Date, Expected
Election Deadline Date and Expected Pay Date SA Rate
Conversion Rate

SA Rate Conversion Rate announced no later than 12h00
Finalisation date

Dividend Rate in foreign currency and whether Part Elections
are applicable

Restrictions

All announcements on Finalisation Date will be made by 12h00
www.jse.co.za
21
Fractions

It has been agreed by the market that for all
companies listed locally, the rounding
convention utilised will be to round down all
entitlements. Fractional payments will be paid
in cash, with a tolerance level to be decided
on at a later stage

Spreadsheets will still be required for IPO’s
and surplus rights

For Foreign and Dual Listed Companies –
their rounding conventions will apply
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22
High-level Timelines
Communication
3rd Quarter 2010 to 4th Quarter 2012
Internal Development
3rd Quarter 2010 to 2nd Quarter 2011
Internal System Testing
2nd Quarter 2011 to 3rd Quarter 2011
External System Testing
3rd Quarter 2011 to 2nd Quarter 2012
User Acceptance Testing
2nd Quarter 2012 to 4th Quarter 2012
Go-live
4th Quarter 2012
www.jse.co.za
23
Dependencies
 JSE’s System Replacement Programme (SRP)
– if pushed out will push out T+3
 Regulatory or legislative changes
 Market changes – SRG, etc
 SRG 2012 – decision has to be made in
April/May 2012 go or no-go for T+3
 Corporate Actions – decision has to be made in
April/May 2012 go or no-go for T+3
www.jse.co.za
24
Contact Details
Brett Kotze
General Manager: Clearing & Settlement
JSE Limited
One Exchange Square, 2 Gwen Lane
Sandown, South Africa
Tel:
+27 11 520 7587
Fax:
+27 11 520 8580
Email: [email protected]
Web:
www.jse.co.za
www.jse.co.za
25

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