OWN CORRESPONDENT, Johannesburg | Monday 4.25pm
THE Johannesburg Stock Exchange on Monday settled share trades electronically for the first time, a crucial milestone that took three years to reach and key to its plans to remain globally competitive.
The bourse said in a statement that shares traded in Harmony Gold Mining Co Ltd on October 25 were settled electronically, as opposed to paper-based, under the new Strate — Share Transactions Totally Electronic — system.
”It symbolises the JSE’s entry onto an electronic settlement stage already occupied by the world’s major bourses,” Strate Chief Executive Monica Singer said.
Harmony is the first, and so far only, company to move to the electronic settlement environment. Electronic trading has been in place for over three years.
The JSE had planned to introduce a second company to its project to phase out paper-based deals, but put off these plans after dealing in Harmony – selected due to its low trading volume – surged when the gold price rallied unexpectedly.
Singer said the introduction of another company will depend on whether the number of deals in Harmony a day drops to below 75. This looked unlikely at present as between 90 and 150 trades were taking place daily.
The rest of the bourse is expected to start shifting onto the Strate system from April next year, as the JSE holds back from making any radical changes across the millennium due to possible snags originating from the Y2K computer bug.
The JSE said that settlement in Harmony’s shares will henceforth take place five days after trading, or T+5. ”On the rest of the market it is currently T+7 to forever. Under Strate settlement is contractually guaranteed five days after trading,” Singer said.
Ahead of the move to electronic settlement, Harmony’s paper share certificates had to be converted into electronic records. Singer said that nearly half of its issued share capital had already taken on a paperless form. — Reuters