JSE first in world to be CPSS-IOSCO compliant

Safcom, the clearing house of Johannesburg Stock Exchange (JSE), is first in world to achieve CPSS-IOSCO compliance.

Basel III, the global regulatory standard on banking regulations including capital adequacy, imposes prohibitive capital penalties on banks which deal with clearing houses that aren’t CPSS-IOSCO compliant. As part of its preparation for Basel III (which comes into force from 2013), the JSE asked Bourse Consult to undertake an audit of JSE’s clearing house, Safcom, to determine its alignment with these CPSS-IOSCO principles. As a result of this work, several detailed recommendations were made to the JSE on how Safcom could become fully compliant.

JSE undertook the necessary work to achieve compliance throughout the latter part of 2012. Following these changes its regulator (the Financial Services Board, FSB) undertook a comprehensive review which resulted in Safcom now being certified as a “Qualifying Central Counterparty” (CCP). This achievement is very important to derivative traders because failure to comply means banks would have had to hold up to ten times more capital as surety, resulting in the derivatives market becoming increasingly expensive to trade in.

Safcom is the first Clearing House in the world to obtain this status. Bourse Consult congratulates JSE on this important achievement and is proud of its role in this exercise.

The full press release can be read here.

Posted in Bourse Consult Case Study, CCP, Clearing & Settlement, Rules & Regulation Tagged with: