Clearing & Settlement

• JSE Clear (Pty) Ltd guarantees all transactions trading on a formal exchange via the CCP becoming the counterparty.

Clearing and Settlement – Commodity Derivatives Market

• Price discovery is achieved in a transparent fashion via the derivatives clearing structure.
• Physically settled commodities depend on warehouse receipts for delivery.
• Derivative contracts enable institutions to fund input costs to producers who hedge their price risk and promote sustainable production.
• Cash settled commodities, like gold and crude oil, use highly liquid international markets for the final cash settlement value, ensuring the local settlement price is fair.

Clearing and Settlement – Equity Derivatives Market

• All transactions are cleared through JSE Clear, following management standards for transparent price discovery.
• JSE Clear's risk management aligns with international requirements for central counterparties.
• JSE Clear reduces counterparty credit risk in the South African exchange-traded derivative market.

Clearing and Settlement – Currency Derivatives Market

• JSE Clear guarantees the compliance of counterparties for all derivatives contracts.
• Currency derivatives contracts are cash settled in Rand without physical delivery of the underlying foreign currency.

Clearing and Settlement – Interest Rate Derivatives Market

• The Interest Rate derivatives market allows participants to book trades on- or off-screen.
• JSE Clear margins and guarantees all trades, mitigating counterparty credit risk.

Derivatives Risk Management

• JSE Clear, a JSE subsidiary, is the clearing house for all Exchange-Traded Derivatives in South Africa.
• JSE Clear novates matched trades transacted through the JSE.
• Clearing members clear for its members, through which clients' trade.
• Each member is responsible for its client's losses and the losses of the members for which it clears, should those members default.
• JSE Clear protects against clearing member defaults due to their or their members’ inability to pay.

Section 5 of the JSE Clear Rules – Clearing and Positions

• JSE Clear clears trades on the JSE Equity Derivatives, Interest Rate and Currency Derivatives, and Commodity Derivatives Markets (with prior approval for contract specifications).
• After a trade is cleared, JSE Clear becomes the counterparty to both the buyer and the seller via novation.
• JSE Clear can refuse to clear trades at prices substantially different from the current market price, based on the discretion of the CEO.

Mark-to-Market

• At 17h00 or another time determined by JSE Clear, positions in each exchange contract of all exchange members and their clients will be marked-to-market.
• JSE Clear may mark-to-market positions at any time if the risk or market conditions warrant it.

Clearing fees

• JSE Clear may levy fees on an exchange member and its clients in respect of the trades cleared by JSE Clear.
• These fees are recovered from the relevant clearing member on behalf of JSE Clear.
• Clearing members may levy their own fees and charges on exchange members with a clearing agreement, based on the schedule of fees.

Settlement procedures

• The clearing member must pay to or receive from JSE Clear the net amount of: the initial margin, the variation margin, any interest payable, and the fees.
• This applies to its proprietary positions, its clients' positions, and the positions of other exchange members with clearing agreements.
• Amounts due to JSE Clear must be paid by 12h00 on the next business day or as JSE Clear determines.
• JSE Clear marked-to-market amount of variation margin must be paid to JSE Clear when the clearing member is notified of the mark-to-market.
• The clearing member acts as a settlement agent for its clients, other exchange members, and their clients.
• An exchange member must pay the clearing member the amount of variation margin by the prescribed time.
• A client must pay to or receive from the exchange member: the total initial margin, additional margin, variation margins, any interest payable, and the fees.
• Payments between exchange members and clearing members must enable the clearing member to pay the clearing house by 12h00 the next day.

Trading and position limits

• JSE Clear may limit the aggregate exposure for all positions in a manner determined by JSE Clear.

Trading and position records

• Clearing members must maintain records of margin and other payments to and from JSE Clear, their clients, and other exchange members for at least five years.