African Exchanges

AFRICAN EXCHANGES

Dreadnought Capital aims to assist developing countries in implementing financial market infrastructure that creates opportunities that enhance cross border trade as well as up skill the workforce and create new opportunities for domestic employment and business ventures.

Dreadnought Capital has been instrumental in implementing much needed derivative exchanges and has been actively involved in the process of implementation – from meeting regulatory bodies, assisting to create favourable regulatory parameters driving awareness campaigns to banks and clearing members (training staff in management, traders, risk and compliance as well as back office functionality) assisting with testing of systems, developing products to be listed and actively traded, building tradable indices and assisting with hedging and risk modules.

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Dreadnought Capital is the primary driver behind the new Bond and Derivative Exchange of Zambia (BaDEx). Dreadnought Capital is responsible for providing BaDEx with their CEO (Allan Thomson) as well as all operational activities in the initial phase. BaDEx has the necessary license from the regulator – the Securities and Exchange commission of Zambia (SEC) – as well as approval from the Bank of Zambia to ensure that the regulatory framework in Zambia is compliant with global standard and encourages liquid and accessible markets for all participants.

Dreadnought Capital advised on the rules of the exchange (BaDEx), ensuring the implementation of a robust marketplace with world class risk management processes in line in international standards.

Dreadnought Capital trained and up-skilled local Zambian market participants – from the regulatory bodies, to the clearing member staff and risk/ compliance and back office personnel.

Dreadnought Capital is working in partnership with the Nairobi Securities Exchange in developing a full spectrum derivatives exchange in Kenya. In close collaboration with the Kenyan regulators and government, Dreadnought Capital was instrumental in the passing of the Financial Act 2013, allowing the formation of a new derivatives exchange.

Securities Trading and Technology (STT) has the contract to supply the Nairobi Securities Exchange (NSE) with derivatives and bond software. STT has subcontracted Dreadnought Capital to supply all facets surrounding the establishment of new markets. All technical installations plus regulations training and implementation have been completed.

The regulation amendments are being implemented and the NSE Derivatives Exchange is expected to go live in the second half of 2014

Dreadnought Capital, with STT and Computershare, is building a truly African Trade Repository solution to comply with international OTC regulation requirements and provide the South African and African market with a seamless world-class product offering.

The Trade Repository is being created as a direct result of the global financial crises of 2008, reflecting the fundamental regulatory changes in the derivatives landscape. The OTC derivative market is generally considered to be far larger in value and volume than the exchange traded market, but given its opaque nature, the exact size is difficult to estimate. It was the opaqueness that complicated international regulator’s responses to the global financial crisis, as the extent of the contagion from the OTC contracts between banks was not known. It was these OTC instruments that gave derivatives a bad name and were widely blamed for exacerbating the global financial crisis. The fallout from the crisis, and the inability to take effective corrective action was the catalyst to G20 regulators proposing new, far reaching measures to regulate and monitor OTC contracts on a global scale.

Central Clearing Solutions

Establishing an interim inter-agency Financial Stability Oversight Committee

In 2011, the South African Treasury issued a policy document for financial reform that included changes in the institutional arrangements for financial regulation and supervision. These changes can be categorized under three heading: instruction of a Twin Peaks regulatory structure; strengthening financial stability oversight and strengthening coordination and information exchange arrangements.

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