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Bonds Settlement Services

On-Exchange and Off-Exchange Trades

  • On-Market Transactions

Ordinary and member-settled clients trade in bond securities reported to the Nutron System and are referred to as on-market transactions and settle on a nett basis. All such trades must be reported to the Nutron system within 30 minutes of the trade being concluded. JSE regulates all on-market transactions. The JSE and Strate, together with the individual Participants, have agreed on the “Operational Market Windows for Bonds” – Directive SD.1. The document clearly explains the procedures to be followed and the pertinent times.

  • Off-Market Transactions (OTS)

Off-Market transactions are also referred to as OTS trades (off-shore trade settlement). An OTS trade means an OTC (over-the-counter) transaction in bonds not concluded on an exchange trading system and which is reported by the seller and purchaser to the relevant Participant for settlement through the CSD.

All OTS bond settlements are regulated by Strate. Combining an OTC market, which settles on a gross trade-by-trade basis, with a formalised Exchange with nett settlement, creates numerous challenges and requires formal procedures to be followed to minimise the risk of settlement problems arising. The JSE and Strate, together with the individual Participants, have agreed on the “Best Practices for the Settlement of Off-Market Bonds Transactions” – Directive SD.2. The document clearly explains the procedures to be followed and the pertinent times.



In order to align South African settlement practices with international best practice, the Exchange adopted the G30 recommendations on clearing and settlement systems. In November 1997 the Exchange introduced T+3 continuous, rolling settlement. 

A standard trade means a trade that is to be settled on the third business day after trade date. This is also referred to as a “Spot” trade.

A non-standard trade means a trade that is to be settled less than three business days after trade date. Same day settlement (T+0) is permitted in the bonds environment.

A forward-dated trade means a trade that is to be settled at a future date more than three business days after trade date.


In 2001 the Exchange achieved full Simultaneous Final Irrevocable Delivery versus Payment (SFIDvP).

A delivery instruction is generated in parallel with the payment instruction. The delivery instruction will ensure that the required securities are available and reserved in the CSD. The payment instructions are submitted to the Central Bank on an individual Participant basis. Once all payment instructions are received, a settlement confirmation is sent out by the Central Bank. Upon receipt by Strate of the settlement confirmation, transfer of ownership (securities) will be affected in the CSD. The funds will be simultaneously transferred, thereby completing settlement in one step. The settlement cannot be reversed.


In 1990 the Exchange adopted the G30 standard of trade netting for the settlement of most types of transactions concluded on the Exchange. This netting procedure, which was implemented in 1995, dramatically reduces settlement risk and simplifies the settlement process.

For each member registered with the exchange, the exchange system determines the netted funds and securities movements for a particular settlement day by summing individual trades to be settled on the same day. This nett position, rather than the individual trades, is settled via the appointed Participants.

In the netting process, the exchange system calculates the amount of securities to be delivered or received by each buyer and seller as well as the amount of money to be exchanged across -

  • Settlement Date
  • Security
  • Broker/ Member who reported trade
  • Principal
  • Participants
  • Settlement Account

Nett Settlement Schedule

The nett settlement schedule can be downloaded by Participants from the Strate Bonds System at any time during a trading day for both member and client transactions. The schedule shows all the settlement positions, for every future settlement day. Given that these schedules can be requested daily, a Participant has from the morning following a trade being reported until the settlement day to prepare for the actual settlement. In other words, in a T+3 environment, the position at the end of a trading day will be the position to be settled three business days later, on the assumption that there are no further trades concluded on the intervening days and which will be settled, by agreement, on that settlement day.

As the settlement day approaches, the settlement positions reflected on the settlement schedule may change: settlement instructions may be changed or new trades may be struck. The settlement schedule contains not only the settlement positions, but also all of the settlement instructions from which the position is derived.

Having reference to the settlement schedule and depending on the arrangements with the client, the Participant may wish to confirm the settlement position, or he may simply ensure that the client is holding sufficient funds or securities to cover the position. The Participant may request some special arrangements prior to settlement day so that the Participant can commit (for example: the immobilisation of securities in the CSD or the depositing of funds with the Participant). The exchange strongly recommends that securities be immobilised in the CSD prior to trading.

At the end of the last trading day before settlement day, all settlement positions are frozen (except for those special circumstances, which apply in respect of the rectifying of settlement shortages). The settlement schedule drawn at the close of business then represents the settlements that are expected for each member or client.