JSE Clear is the Central Counterparty (CCP) for the JSE Derivatives Markets. The Derivatives Operations team within JSE Clear is responsible for the risk management, clearing and settlement of all transactions in the Equity, Currency, Interest Rate and Commodities Derivatives Markets.
The JSE Clear Derivatives Operations executes the daily operations in respect of these markets and ensures all activities required to facilitate the daily clearing and settlement of derivatives trades and positions are performed. These activities include the receipt of all trades from the respective matching engines into the clearing system, facilitation of post trade activities on all transactions as well as the end of day processes ensuring daily reconciliation to clearing members culminating in the daily settlement processes. Settlement in respect of derivatives transactions are done between JSE Clear and Clearing members and include margins, fees, dividend payments and other components in respect of derivatives transactions.
By trading on a formal exchange which connects buyers and sellers, not only is price discovery achieved in a transparent fashion, but all transactions are guaranteed by virtue of the CCP becoming the counterparty to all transactions.
By trading on a formal exchange which connects buyers and sellers, not only is price discovery achieved in a transparent fashion, but all transactions are guaranteed through the derivatives clearing structure.
The physically settled Commodities rely on warehouse receipts to facilitate the delivery process. The warehouse receipts are utilised by financial institutions which offer financing to clients who own the receipts.
Derivative Contracts also enable institutions to fund input costs to producers who hedge their price risk and in so doing encourage sustainable production.
The cash settled Commodities, like gold and crude oil, reference highly liquid international markets for the final cash
settlement value, thereby providing all participants with the assurance that the local settlement price is not open to any abuse.
All transactions are cleared through JSE Clear, which adheres to strict management standards and achieves transparent price discovery. JSE Clear’s risk management standards are in line with international requirements for central counterparties. The main function of JSE Clear is to reduce counterparty credit risk in the exchange- traded derivative market in South Africa.
Refer to Derivatives Risk Management.
The Interest Rate derivatives market offers participants the functionality and facilities to book either on- or off-screen trades. Irrespective of the method of execution, these trades are margined and guaranteed by JSE Clear which mitigates counterparty credit risk.
Compliance of the counterparties is guaranteed by JSE Clear (the JSE’s clearing house) for all derivatives contracts. Currency derivatives contracts are cash settled in Rand and there is no physical delivery of the underlying foreign currency.
JSE Clear Operations
[email protected]
