IMASA21 October 2005

Terms and DefinitionsMember Settled Client:- A client that holds their assets, cash and securities, with a

trading member.

Non-member Settled:- A client that holds their assets, cash and securities with a CSDP.

UNEXCor Account Code:- Account code supplied through the UNEXCor system linked to the account on the UNEXCor system.

UNEXCor Settlement Reference:- Settlement Reference associated with the settlement account

Service Provider:- The party that supplies the front end to the UNEXCor system.

Official ID:- Code supplied by Service Provider to identify the trading member for the trade legs generated to the UNEXCor system

Password:- Password to log onto the UNEXCor system when generating trade legs.

Super user password:- Super user password of the front end to the UNEXCor system.

New Yield-X Members requirements

• STRATE Service Level Agreement (SLA)

• Letter authorizing the Service Provider to create an Official ID and to release the system passwords to the JSE

• Custody Account

• Cash Settlement Account

Service Provider RequirementsExisting Member (already exists on BESA)

• STRATE SLA must refer to the existing Service Provider (If they are an existing Member on BESA they have to have a Service Provider)

• Letter must be addressed to the applicable Service Provider authorizing them to create a “new” Official ID and password and supply same to the JSE

• STRATE loads SLA and advises Service Provider

• Service Provider loads and supplies Official ID and password to the JSE

• CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

Service Provider Requirements (cont.)

New Member (not existing member on BESA) and wants to use an existing Service Provider

• STRATE SLA must refer to the required Service Provider

• Letter must be addressed to the applicable Service Provider authorizing them to create a “new” Official ID and password and supply same to the JSE

• STRATE loads SLA and advises Service Provider

• Service Provider loads and supplies Official ID and password to the JSE

• CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

Service Provider Requirements (cont.)

New Member (not existing member on BESA) with JSE as Service Provider

• STRATE SLA must refer to the JSE as the Service Provider

• Letter must be addressed to STRATE authorizing them to create a “new” Official ID and password and supply same to the JSE

• STRATE loads and supplies details to the JSE

• STRATE advises Settlement Agent to load cash account and custody account against the details loaded as first choice account

• CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

• Member Settled accounts are loaded by the CSDP and linked to the Trading Members General Purpose Account (GPA) on the UNEXCor system and the UNEXCor Account code and Settlement Reference are supplied to the Trading Member to load on theYield-X system. The Yield-X system generates a message to the UNEXCor system to verify account details.

• Non-member Settled accounts are loaded by the CSDP on the UNEXCor system and the custody account, cash account, UNEXCor Account code and Settlement Reference are supplied to the Trading Member to load on the Yield-X system. The Yield-X system generates a message to the UNEXCor system to verify account details.

Loading of Clients Accounts

• Mandatory Requirements on the UNEXCor system when loading a new Trading Member

• Trading Members may “house” trades in the account until the end of the day and then allocate (referred to as bulking, averaging and allocating)

• There are settlement charges charged by the CSDPs per leg that settles.

• The Yield-X system uses the accounts for allocation corrections

• Used as a suspense account. If utilized correctly will come back to zero daily

Requirement for Custody and Cash Account for Trading Members

Allocation Corrections example

S TRADING MEMBER P

S CLIENT A PS CLIENT B P

1M R153

- AUTOMATICALLY PROCESSED BY THE SYSTEM

1M R153

0.00

1M R153 1M R1531M R153

1M R153

0.00

Late Allocations or Allocation Corrections

• All trades are to be allocated on trade date

• In the case of late allocations or allocation corrections the Trading

Member must apply before 10h00 on T+1

• JSE Settlement Authority grants permission subject to the payment of a

penalty

• JSE Settlement Authority books the late allocation or allocation

correction before 12h00 on T+1

Cancellation of Trades

• Trading Member must approach the JSE Market Controller before

10h00 on T+1

• JSE Market Controller must approach the other member to the trade

and approve the cancellation of trades

• JSE Settlement Authority cancels trades via equal and opposites before

12h00 on T+1

Guarantees

• SAFCOM guarantees performance of the parties to a trade through the

Clearing Members;

• SAFCOM has appointed the JSE Settlement Authority to monitor and

manage settlement of spot bond trades; and

• The Trading Member that introduced the trade is responsible to ensure

settlement takes place

Which trades are guaranteed?

• All trades done on the central order book. These include:-

-Main Board trades (T+3 settlement cycle)

-T+3 COB Carry

-T+2 COB Carry

• Reported transactions where terms and/or price are agreed Off-

Exchange and transaction is booked for reporting and settlement

purposes, where the Clearing Member/s accept the transaction for risk

management purposes (minimum T+3 settlement cycle)

Mitigate Risk Sales

In respect of a sale order booked on Yield-X:-

• the loan stock to be sold is lodged with a settlement agent as uncertificated financial instruments; or

• another transaction has been concluded through the Yield-X trading system which provides for an equivalent amount of loan stock being available for settlement on settlement date; or

• a satisfactory borrowing arrangement reported through the Yield-X lending and borrowing system is in place which provides for an equivalent amount of STRATE settled loan stock being available for settlement on settlement

Unconditional Commits by CSDP

• The CSDPs commits on both central order books trades and Reported

Transactions becomes unconditional from 12h00 on T+2;

• The only time that a CSDP may lift their unconditional commit after 12h00 on T+2

will be in the case of provisional sequestration or in the case of fails management

by the JSE Settlement Authority;

• In the case where a CSDP wants to lift their commit after 12h00 on T+2 for

provisional sequestration a letter has to be sent to the JSE Settlement Authority

advising that party is being placed in provisional sequestration;

• A copy of the application stamped by the court has to be supplied within 2

business days

Process flows

JSE SETTLEMENTAUTHORITY

YIELD-X TRADINGENGINE

TRADINGMEMBER

CLIENT

CLEARINGMEMBER

CLEARINGENGINE

(NEWSAFEMS)

STRATE

SETTLEMENTAGENT

TRADE AFFIRMATION

PENALTIES

(RECONCILES TRADESWITH MATCH ORDERSRECEIVED FROM STRATE

COMMUNICATION

MONITOR COMMITS

EN

TE

RS

C

OR

RE

CT

IVE

TR

AD

ES

TRADE FOR MARGIN

MATCHED TRADE

TRADE AFFIRMATION

MA

RG

INR

EQ

UIR

EM

EN

T

MA

TC

HO

RD

ER

NO

CO

MM

ITIN

TIM

A-

TI O

NS

CO

MM

IT

Net

SE

TT

LE

-M

EN

TP

OS

ITIO

N

COMMUNICATIO

N

T3

TRADE

TRADE TO STRATE

NET SETTLEMENT POSITION TO CSDP's

MARGIN POSITION

BILLING REPORT

MARGIN PAYMENT

COMMIT BY CSDP

MONITOR FOR COMMIT

REVALUE MARGIN POSITION

BILLING REPORT

TOP-UP MARGIN

TRADE MEMBER MANAGEMENT

JSE SETTLEMENT AUTHORITY MANAGEMENT

FAILS MANAGEMENT (GIVE-UPS)

SETTLEMENT

12H00

T2

12H00 14H00 16H00

T T1

Timelines

Questions