Podcast
Questions and Answers
What is the primary method of settlement for Bond ETP securities?
What is the primary method of settlement for Bond ETP securities?
Which principle is NOT followed in the settlement of Bond ETP securities?
Which principle is NOT followed in the settlement of Bond ETP securities?
What risk management role does the Settlement Authority perform?
What risk management role does the Settlement Authority perform?
What is one of the obligations of members in regard to ETP trade settlements?
What is one of the obligations of members in regard to ETP trade settlements?
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What does the JSE Clearing and Settlement division specifically do regarding cash bonds?
What does the JSE Clearing and Settlement division specifically do regarding cash bonds?
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What time does a member's CSDP need to commit to settle a transaction in Bond ETP securities by the latest?
What time does a member's CSDP need to commit to settle a transaction in Bond ETP securities by the latest?
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Which action must a member take if their CSDP has not committed by 13h15 on the settlement date?
Which action must a member take if their CSDP has not committed by 13h15 on the settlement date?
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If a member's CSDP retracts a commitment to settle a sale transaction, what must the member do next?
If a member's CSDP retracts a commitment to settle a sale transaction, what must the member do next?
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What is the role of the Settlement Authority if notified of a member's inability to ensure CSDP commitment?
What is the role of the Settlement Authority if notified of a member's inability to ensure CSDP commitment?
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What must a member do to cover an uncommitted sale transaction if they fail to act by 14h00?
What must a member do to cover an uncommitted sale transaction if they fail to act by 14h00?
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Under which circumstance can a member's CSDP retract its commitment to settle a transaction?
Under which circumstance can a member's CSDP retract its commitment to settle a transaction?
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What is the initial time by which a member must notify the Settlement Authority of a commitment issue?
What is the initial time by which a member must notify the Settlement Authority of a commitment issue?
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What time becomes unconditional for a CSDP to settle a transaction in Bond ETP securities?
What time becomes unconditional for a CSDP to settle a transaction in Bond ETP securities?
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What action can the Settlement Authority take if a transaction in Bond ETP securities is unlikely to settle on the settlement date?
What action can the Settlement Authority take if a transaction in Bond ETP securities is unlikely to settle on the settlement date?
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Which of the following must a member ensure regarding the settlement of transactions in Bond ETP securities?
Which of the following must a member ensure regarding the settlement of transactions in Bond ETP securities?
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What is the commitment deadline for a member's CSDP to settle a transaction in Bond ETP securities?
What is the commitment deadline for a member's CSDP to settle a transaction in Bond ETP securities?
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What should the Settlement Authority do if it believes that a non-settlement could cause systemic risk?
What should the Settlement Authority do if it believes that a non-settlement could cause systemic risk?
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Which of the following options is not a role of the Settlement Authority regarding Bond ETP securities?
Which of the following options is not a role of the Settlement Authority regarding Bond ETP securities?
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How are all transactions in Bond ETP securities settled?
How are all transactions in Bond ETP securities settled?
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What is the consequence if a member instructs their CSDP to revoke a commitment without Settlement Authority consent?
What is the consequence if a member instructs their CSDP to revoke a commitment without Settlement Authority consent?
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What time must a member make arrangements with their CSDP to ensure settlement obligations are met?
What time must a member make arrangements with their CSDP to ensure settlement obligations are met?
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Which function does the JSE Clearing and Settlement division NOT perform in relation to Cash Bonds Market?
Which function does the JSE Clearing and Settlement division NOT perform in relation to Cash Bonds Market?
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Which of the following is a principle of the settlement of Bond ETP securities?
Which of the following is a principle of the settlement of Bond ETP securities?
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What is the role of the Settlement Authority in the context of Bond ETP securities?
What is the role of the Settlement Authority in the context of Bond ETP securities?
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What is NOT a responsibility of the Settlement Authority during the settlement process?
What is NOT a responsibility of the Settlement Authority during the settlement process?
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What mechanism does the Settlement Authority provide regarding settlement failures?
What mechanism does the Settlement Authority provide regarding settlement failures?
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What is the purpose of marking-to-market transactions in Bond ETP securities?
What is the purpose of marking-to-market transactions in Bond ETP securities?
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What primarily determines the initial margin amount required from a member?
What primarily determines the initial margin amount required from a member?
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What could happen if a member fails to pay the initial margin and adjustments as required?
What could happen if a member fails to pay the initial margin and adjustments as required?
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Under what condition might a member withdraw excess funds from their CPD margin account?
Under what condition might a member withdraw excess funds from their CPD margin account?
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When are mark-to-market adjustments to initial margin typically calculated?
When are mark-to-market adjustments to initial margin typically calculated?
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What could lead to the imposition of fees on members related to Bond ETP securities?
What could lead to the imposition of fees on members related to Bond ETP securities?
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What is the deadline for a member to pay any amount due as a result of mark-to-market adjustments?
What is the deadline for a member to pay any amount due as a result of mark-to-market adjustments?
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What is a possible consequence for members who delay or fail to settle their margin obligations?
What is a possible consequence for members who delay or fail to settle their margin obligations?
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Which action does the Settlement Authority take if a transaction is at risk of not settling on the settlement date?
Which action does the Settlement Authority take if a transaction is at risk of not settling on the settlement date?
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What must a member do if they believe a transaction will not settle on the settlement date?
What must a member do if they believe a transaction will not settle on the settlement date?
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What is the deadline for a member's CSDP to commit to a transaction in Bond ETP securities?
What is the deadline for a member's CSDP to commit to a transaction in Bond ETP securities?
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What should happen if a member's CSDP has committed but the member wants to revoke that commitment?
What should happen if a member's CSDP has committed but the member wants to revoke that commitment?
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What is one of the consequences if a member stops payment on the settlement date?
What is one of the consequences if a member stops payment on the settlement date?
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What does the Settlement Authority do in case of a potential systemic risk due to non-settlement?
What does the Settlement Authority do in case of a potential systemic risk due to non-settlement?
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When must a member make necessary arrangements with their CSDP for settlement?
When must a member make necessary arrangements with their CSDP for settlement?
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What happens if a transaction in Bond ETP securities is not settled on the agreed settlement date?
What happens if a transaction in Bond ETP securities is not settled on the agreed settlement date?
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What actions must a member take if their CSDP has not committed to settle by 15h00 on the settlement date?
What actions must a member take if their CSDP has not committed to settle by 15h00 on the settlement date?
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At what time becomes a commitment by a CSDP to settle a transaction in Bond ETP securities unconditional?
At what time becomes a commitment by a CSDP to settle a transaction in Bond ETP securities unconditional?
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What must a member do if the CSDP's commitment to settle is reliant on another transaction?
What must a member do if the CSDP's commitment to settle is reliant on another transaction?
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Which action is required of a member if they fail to act by 14h00 regarding an uncommitted sale transaction?
Which action is required of a member if they fail to act by 14h00 regarding an uncommitted sale transaction?
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What happens if a member's CSDP does not commit to settle a transaction by 13h15 on the settlement date?
What happens if a member's CSDP does not commit to settle a transaction by 13h15 on the settlement date?
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When must a member notify the Settlement Authority about their CSDP's inability to commit?
When must a member notify the Settlement Authority about their CSDP's inability to commit?
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If notified by a member, what is the primary role of the Settlement Authority regarding the transaction?
If notified by a member, what is the primary role of the Settlement Authority regarding the transaction?
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By which time must a member ensure that their CSDP is ready to settle a transaction if a commitment is still unmade?
By which time must a member ensure that their CSDP is ready to settle a transaction if a commitment is still unmade?
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What action does the Settlement Authority take upon receiving notification from a member about an inability to settle a transaction?
What action does the Settlement Authority take upon receiving notification from a member about an inability to settle a transaction?
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What is the first step the Settlement Authority takes after determining a transaction will be rolled?
What is the first step the Settlement Authority takes after determining a transaction will be rolled?
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What must failing and non-failing members do after being advised of a rolled settlement?
What must failing and non-failing members do after being advised of a rolled settlement?
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What occurs if a transaction does not settle on the revised date?
What occurs if a transaction does not settle on the revised date?
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What does the JSE consider if a member is unable to settle after being rolled to another revised settlement date?
What does the JSE consider if a member is unable to settle after being rolled to another revised settlement date?
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Upon notification from a failing member, what does the Settlement Authority NOT do?
Upon notification from a failing member, what does the Settlement Authority NOT do?
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What role does the failing member play in the management of a failed transaction?
What role does the failing member play in the management of a failed transaction?
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Which aspect is crucial for the Settlement Authority when deciding to roll a settlement?
Which aspect is crucial for the Settlement Authority when deciding to roll a settlement?
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The Settlement Authority is responsible for managing the settlement of Bond ETP securities on a trade-by-trade basis.
The Settlement Authority is responsible for managing the settlement of Bond ETP securities on a trade-by-trade basis.
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Settlement of Bond ETP securities happens in a single day without any rolling basis specified.
Settlement of Bond ETP securities happens in a single day without any rolling basis specified.
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The Clearing and Settlement division does not monitor Cash Bond settlements.
The Clearing and Settlement division does not monitor Cash Bond settlements.
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A member's CSDP commitment to settle a transaction in Bond ETP securities becomes unconditional at 15h00.
A member's CSDP commitment to settle a transaction in Bond ETP securities becomes unconditional at 15h00.
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The Settlement Authority performs the role of lender of last resort only for IRC members.
The Settlement Authority performs the role of lender of last resort only for IRC members.
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The JSE can only mark-to-market transactions in Bond ETP securities once a week.
The JSE can only mark-to-market transactions in Bond ETP securities once a week.
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Margin obligations must be settled daily according to standard practices of the JSE.
Margin obligations must be settled daily according to standard practices of the JSE.
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A member may withdraw any amount from their CPD margin account at any time without approval.
A member may withdraw any amount from their CPD margin account at any time without approval.
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Initial margin is determined based on the potential loss from member defaults in Bond ETP securities transactions.
Initial margin is determined based on the potential loss from member defaults in Bond ETP securities transactions.
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If a member fails to pay the initial margin, it may not be considered a default by the JSE.
If a member fails to pay the initial margin, it may not be considered a default by the JSE.
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The Settlement Authority has the power to charge fees associated with Bond ETP securities transactions.
The Settlement Authority has the power to charge fees associated with Bond ETP securities transactions.
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Mark-to-market calculations are performed solely based on the market value of Bond ETP securities.
Mark-to-market calculations are performed solely based on the market value of Bond ETP securities.
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Payments resulting from mark-to-market adjustments must be made by 12h00 on the next business day.
Payments resulting from mark-to-market adjustments must be made by 12h00 on the next business day.
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The Settlement Authority can defer the settlement of Bond ETP securities transactions if they believe it could cause systemic risk.
The Settlement Authority can defer the settlement of Bond ETP securities transactions if they believe it could cause systemic risk.
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A member's CSDP must commit to settling a transaction in Bond ETP securities by no later than 20h00 on the business day preceding the settlement date.
A member's CSDP must commit to settling a transaction in Bond ETP securities by no later than 20h00 on the business day preceding the settlement date.
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Members must inform the Settlement Authority of any transaction in Bond ETP securities that they believe will settle successfully.
Members must inform the Settlement Authority of any transaction in Bond ETP securities that they believe will settle successfully.
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If a member's CSDP has committed to settle a transaction, the member may revoke this commitment without any conditions.
If a member's CSDP has committed to settle a transaction, the member may revoke this commitment without any conditions.
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All transactions in Bond ETP securities are settled through a physical manual process.
All transactions in Bond ETP securities are settled through a physical manual process.
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A member is required to make arrangements with their CSDP to ensure transaction commitments by 17h30 on the business day before the settlement date.
A member is required to make arrangements with their CSDP to ensure transaction commitments by 17h30 on the business day before the settlement date.
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If a member believes a transaction is unlikely to settle, they must report it by no later than 15h00 on the settlement date.
If a member believes a transaction is unlikely to settle, they must report it by no later than 15h00 on the settlement date.
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The CSDP commitment to settle becomes unconditional after 18h00 on the business day preceding the settlement date.
The CSDP commitment to settle becomes unconditional after 18h00 on the business day preceding the settlement date.
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The Settlement Authority can determine the fate of a transaction settlement without assessing the circumstances of a member's inability to settle.
The Settlement Authority can determine the fate of a transaction settlement without assessing the circumstances of a member's inability to settle.
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Once a transaction is rolled to a revised settlement date, it is no longer required for members to report it to the ETP fails management trading system.
Once a transaction is rolled to a revised settlement date, it is no longer required for members to report it to the ETP fails management trading system.
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The Settlement Authority may roll the settlement to another date if the initial revised settlement date fails but only under exceptional circumstances.
The Settlement Authority may roll the settlement to another date if the initial revised settlement date fails but only under exceptional circumstances.
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A failing member is instructed to re-book the original transaction at a new yield for settlement on the revised settlement date.
A failing member is instructed to re-book the original transaction at a new yield for settlement on the revised settlement date.
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The Settlement Authority is responsible for providing a list of settlements that will not take place based solely on failing members' notifications.
The Settlement Authority is responsible for providing a list of settlements that will not take place based solely on failing members' notifications.
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If a member does not settle on the second revised date, the JSE will immediately consider the member to be in default.
If a member does not settle on the second revised date, the JSE will immediately consider the member to be in default.
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The failing member has no responsibilities once the settlement has been rolled to a later date.
The failing member has no responsibilities once the settlement has been rolled to a later date.
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The Settlement Authority acts solely in the interest of the non-failing members during the rolling of settlement.
The Settlement Authority acts solely in the interest of the non-failing members during the rolling of settlement.
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A member's CSDP must commit to settle a transaction in Bond ETP securities by 18h00 on the settlement date.
A member's CSDP must commit to settle a transaction in Bond ETP securities by 18h00 on the settlement date.
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If a member's CSDP fails to commit by 15h00 on the settlement date, the Settlement Authority will allow the transaction to continue without any further actions.
If a member's CSDP fails to commit by 15h00 on the settlement date, the Settlement Authority will allow the transaction to continue without any further actions.
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A member is required to notify the Settlement Authority immediately only if the CSDP has not committed to settling a transaction by 13h15 on the business day before the settlement date.
A member is required to notify the Settlement Authority immediately only if the CSDP has not committed to settling a transaction by 13h15 on the business day before the settlement date.
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The time at which a member must ensure their CSDP is ready to recommit to settle a transaction is 14h00 on the settlement date.
The time at which a member must ensure their CSDP is ready to recommit to settle a transaction is 14h00 on the settlement date.
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If a member's CSDP retracts a commitment to settle, the member must act in accordance with the instructions provided by the Settlement Authority.
If a member's CSDP retracts a commitment to settle, the member must act in accordance with the instructions provided by the Settlement Authority.
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A member must take all necessary steps to ensure their CSDP can recommit to settle a transaction by 15h00 on the settlement date only if the CSDP has not committed by 13h15.
A member must take all necessary steps to ensure their CSDP can recommit to settle a transaction by 15h00 on the settlement date only if the CSDP has not committed by 13h15.
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The member's CSDP can retract its commitment at any time before the settlement date without any consequences.
The member's CSDP can retract its commitment at any time before the settlement date without any consequences.
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Once a member's CSDP commits to settle a transaction in Bond ETP securities, it cannot be rescinded regardless of further dependencies.
Once a member's CSDP commits to settle a transaction in Bond ETP securities, it cannot be rescinded regardless of further dependencies.
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Study Notes
Settlement Procedures for Bond ETP Securities
- Commitment by a Central Securities Depository Participant (CSDP) to settle transactions in Bond Exchange Traded Products (ETPs) becomes unconditional at 8h30 on the settlement date.
- Members must ensure their CSDP commits to settling by 18h00 on the business day before the settlement date; failure to do so requires immediate notification to the Settlement Authority.
- If notified, the Settlement Authority may roll the transaction to a later date, and members must comply with further instructions.
CSDP Commitment and Dependencies
- A member may experience settlement issues on the settlement date due to dependencies on another transaction, even if their CSDP had committed earlier.
- In such cases, the CSDP may need to retract its commitment until the dependency is resolved.
- By 13h15 on the settlement date, if no commitment exists, members must act to enable their CSDP to recommit by 15h00.
Actions for Settlement Compliance
- Members must take necessary steps by 14h00 if their CSDP is uncommitted to ensure coverage, or risk being instructed by the Settlement Authority to borrow securities from the National Treasury via the South African Reserve Bank.
- Strict adherence to the 15h00 recommitment deadline is essential for members.
Role of the Settlement Authority
- The Settlement Authority can facilitate settlement rolling, handle defaults, defer transactions to avoid systemic risk, and extend necessary timeframes as per Bond ETP Rules.
- All transactions must be settled electronically through the CSD in accordance with established principles.
Member Settlement Obligations
- Members are obliged to ensure settlement of their executed transactions in Bond ETP securities.
- Immediate notification to the Settlement Authority is required if a member believes a transaction will not settle as planned.
- No member can stop payment on the settlement date unless directed by the Settlement Authority.
Timing and Communication Requirements
- By 17h30 on the business day before settlement, members must ensure their CSDP can commit to settling by 18h00.
- Once committed by the CSDP, members cannot instruct revocation unless directed by the Settlement Authority.
Functions of the JSE Clearing and Settlement Division
- The Bonds Clearing and Settlement team acts as the Settlement Authority, ensuring trades in Cash Bond Securities on the JSE are settled appropriately.
- Responsibilities include monitoring settlement, providing lender of last resort functions, balancing daily margins, and regulating member compliance.
Principles for Settlement of ETP Securities
- Settlement of Bond ETP securities occurs trade by trade between buyer and seller on a rolling contractual basis.
- Transactions are due to be settled a specified number of days after the trade date.
- Settlement Authority manages settlement risks and oversees transactions executed on trading and fails management systems.
Mark-to-Market for Bond ETP Securities
- The JSE may mark-to-market unsettled transactions in Bond ETP securities at any time when necessary for specific members or overall market conditions.
- Initial margin calculated by the JSE reflects potential losses from member defaults on settlement obligations related to Bond ETP transactions.
Margin Adjustments and Rules
- Mark-to-market adjustments for initial margin are typically calculated daily by the JSE.
- Members must pay adjusted amounts by 12h00 the following business day, or as per an agreement with the JSE.
- Failure to pay margins may result in default status for the member.
Fees and Settlement Responsibilities
- Members are charged fees by the Settlement Authority for the settlement of Bond ETP securities.
- Fees must be paid within five business days of notification.
Role of the Settlement Authority
- The Bonds Clearing and Settlement team acts as the Settlement Authority, overseeing trade settlements in Cash Bond Securities.
- Settlement Assurance for ETP Market trades and daily margin monitoring are key responsibilities.
Settlement Principles
- Bond ETP securities settlements occur trade by trade between buyer and seller, based on a rolling contract system.
- Settlement dates are set a prescribed number of days after the trade date.
Settlement Authority Actions
- The Settlement Authority manages transaction settlements and associated risks for Bond ETP securities.
- It may action when settlement is delayed, including rolling settlement dates and managing defaults.
Transactions and Commitments
- Transactions in Bond ETP securities must be electronically settled by the CSD within established deadlines.
- Members must ensure their CSDP commits to settling transactions by specified times before the settlement date.
Handling Settlement Failures
- Members must notify the Settlement Authority if a transaction is unlikely to settle as planned.
- Commitment from a CSDP becomes unconditional at 8h30 on the settlement date; cessation of payment is not permitted on this day.
Rolling Settlements
- If notified of non-settlement, the Settlement Authority assesses if circumstances allow for rolling the settlement to a later date.
- Steps for rolling transactions include notifying parties, re-booking at the original terms, and updating the ETP fails management system.
- Further rollovers may occur if the revision fails to settle, with potential default considerations by the JSE.
Mark-to-Market for Bond ETP Securities
- The JSE may mark-to-market unsettled transactions in Bond ETP securities at any time when necessary for specific members or overall market conditions.
- Initial margin calculated by the JSE reflects potential losses from member defaults on settlement obligations related to Bond ETP transactions.
Margin Adjustments and Rules
- Mark-to-market adjustments for initial margin are typically calculated daily by the JSE.
- Members must pay adjusted amounts by 12h00 the following business day, or as per an agreement with the JSE.
- Failure to pay margins may result in default status for the member.
Fees and Settlement Responsibilities
- Members are charged fees by the Settlement Authority for the settlement of Bond ETP securities.
- Fees must be paid within five business days of notification.
Role of the Settlement Authority
- The Bonds Clearing and Settlement team acts as the Settlement Authority, overseeing trade settlements in Cash Bond Securities.
- Settlement Assurance for ETP Market trades and daily margin monitoring are key responsibilities.
Settlement Principles
- Bond ETP securities settlements occur trade by trade between buyer and seller, based on a rolling contract system.
- Settlement dates are set a prescribed number of days after the trade date.
Settlement Authority Actions
- The Settlement Authority manages transaction settlements and associated risks for Bond ETP securities.
- It may action when settlement is delayed, including rolling settlement dates and managing defaults.
Transactions and Commitments
- Transactions in Bond ETP securities must be electronically settled by the CSD within established deadlines.
- Members must ensure their CSDP commits to settling transactions by specified times before the settlement date.
Handling Settlement Failures
- Members must notify the Settlement Authority if a transaction is unlikely to settle as planned.
- Commitment from a CSDP becomes unconditional at 8h30 on the settlement date; cessation of payment is not permitted on this day.
Rolling Settlements
- If notified of non-settlement, the Settlement Authority assesses if circumstances allow for rolling the settlement to a later date.
- Steps for rolling transactions include notifying parties, re-booking at the original terms, and updating the ETP fails management system.
- Further rollovers may occur if the revision fails to settle, with potential default considerations by the JSE.
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Description
Explore the essential processes involved in settling transactions for Bond Exchange Traded Products (ETPs). This quiz covers the commitments required from Central Securities Depository Participants (CSDPs), the importance of timely notifications, and the actions members must take when settlement issues arise. Test your understanding of settlement dynamics and responsibilities.
