Archive: October 2014

SAIFM 2014 Regulatory Summit

27 October 2014|Comments Off on SAIFM 2014 Regulatory Summit

SAIFM’s inaugural Regulatory Summit held on 10 September 2014 was received with overwhelming acclaim. It provided much needed insight into new and proposed regulatory measures spanning the entire financial services area from the new Financial Sector Bill to the proposed hedge fund regulations. Compliance risk has been identified as the main risk that companies in the financial sector now face.

Foreword

24 October 2014|Comments Off on Foreword

Because the workings of markets are often seen as complex and inherently unstable, they can sometimes be described as chaotic. This characteristic renders markets susceptible to continuous and unpredictable change. Simba Manwere argues that technical analysis in fact provides some explanation of seemingly random price behaviour by capturing human behaviour and emotions in charts.

Colocation: reducing latency in financial market transactions and creating an ‘HFT and Algo trading friendly’ market environment

23 October 2014|Comments Off on Colocation: reducing latency in financial market transactions and creating an ‘HFT and Algo trading friendly’ market environment

The concept of colocation does not seem to have gained much popularity in African financial markets - at least not yet. As for now, the only stock exchange in Africa that has announced its intentions to offer colocation hosting services has been the Johannesburg Stock exchange (JSE).

Lawless behaviour governed by law: exploiting chaos in the financial markets

23 October 2014|Comments Off on Lawless behaviour governed by law: exploiting chaos in the financial markets

The seemingly erratic behaviour of prices in the financial markets is most frequently described by analogies to casinos and raw gambling where the outcome is purely determined by chance. Such street expressions like playing the stock market belie the claim that price behaviour can be subjected to systematic and scientific examination with the intent to discover patterns.

The role of capital markets in supplying long-term finance for economic development

23 October 2014|Comments Off on The role of capital markets in supplying long-term finance for economic development

Fixed capital formation in South Africa fell from an average of almost 30 percent of GDP in the early 1980s to about 16 percent of GDP by the early 2000s. Public infrastructure spending is also at low levels by historical standards. In effect, South Africa has missed a generation of capital investment in roads, rail, ports, electricity, water, sanitation, public transport and housing.

Millennials, money and the financial services industry: mysterious millennials?

23 October 2014|1 Comment

Generational effects are normally traced back to formative events in early years. Entering the workforce during a recession, for instance, is meant to inculcate conservatism, as is a financial crisis due primarily to malfeasance in the financial services industry. So, what are the views of the much discussed millennials? What insights, concerns and expectations does one group have to share about their engagement with the financial services sector in South Africa?

Implementing corporate governance

23 October 2014|Comments Off on Implementing corporate governance

The health or well-being of business entities depends on good corporate governance. There is a symbiotic relationship between societies and their economies, and this implies a mutual dependency on the global system. This is critical to the success of a stable economy and capitalism as well as the well-being of shareholders and employees.

Tax of share transactions: The Capstone 556 case

23 October 2014|Comments Off on Tax of share transactions: The Capstone 556 case

Wealth accumulated in the form of business owned by the companies in which the shares are held or merely from short-term speculation with shares is realised when shares are disposed of. The tax implications of such disposal of shares; in particular the nature of the proceeds on disposal, is often contentious.

Comparative costs of different index-tracking solutions

23 October 2014|1 Comment

The costs of investments have come under increasing scrutiny in recent times. Many attempts have been made to identify, justify, explain and expose investment costs, but it sometimes seems that the more we learn about these costs, the less we know and understand about the full impact of all costs associated with investment.

Developments at SAIFM

23 October 2014|Comments Off on Developments at SAIFM

The SAIFM inaugural Regulatory Summit was a huge success necessitating the hiring of a larger ball room to cope with demand. It was a privilege to bring together a number of speakers who are really the architects and prime implementers of the new regulatory dispensation.

The meaning of risk

9 October 2014|Comments Off on The meaning of risk

It is important that wealth managers ensure that all three aspects of risk – attitude, need and capacity – are taken into account when tailoring appropriate portfolios. Each individual has a different combination of these risks which will change over time and underscores the importance of partnering with a wealth manager attuned to these nuances.

De facto directors

8 October 2014|Comments Off on De facto directors

What is the status of a director where the election or appointment of a director to the board does not comply with the formal and/or procedural requirements of the Companies Act, the company's memorandum of incorporation or any rules of the company? What is the status of decisions taken by the board, who have been 'defectively' elected or appointed directors to the board?

Sloth

7 October 2014|Comments Off on Sloth

Procrastination is a devastating scourge in many human lives. Because of it, people wreck their health (I’ll start exercising tomorrow), their human capital (I’ll start studying on Monday), or their businesses (I’ll start that project next month). Also because of it, people live with constant depression and anxiety.

Impact of escalating regulatory costs on fund managers

6 October 2014|Comments Off on Impact of escalating regulatory costs on fund managers

Fund management fees are under scrutiny as the National Treasury looks to broaden the savings base, improve preservation and reduce the costs of saving. In addition, the focus on fees is amplified by the obligation compulsory to publish a total expense ratio (TER) on fund factsheets.

JSE launches new range of African currency futures

4 October 2014|Comments Off on JSE launches new range of African currency futures

The JSE listed three new currency futures contracts which track the exchange rate between the Rand and the Zambian Kwacha, Kenyan Shilling and Nigerian Naira. Currency futures allow investors, importers and exporters to protect themselves against the movement in the exchange rate through an agreement to buy or sell currency at a specified exchange rate at a specified date in the future.

TRP ruling highlights pyramid companies and issues around “control”

3 October 2014|Comments Off on TRP ruling highlights pyramid companies and issues around “control”

A recent ruling of the Takeover Regulation Panel (TRP) in the matter of Alert Steel Holdings Limited and Capitalworks Private Equity Fund has highlighted the need for acquirers of pyramid private companies to be wary of the applicability of the takeover laws, particularly those relating to mandatory offers, in the Companies Act.

Bringing sexy back – dividends capture investors’ imagination

3 October 2014|Comments Off on Bringing sexy back – dividends capture investors’ imagination

Investing in a well-chosen, diversified selection of dividend paying shares is an asset to any portfolio and this is especially valid in today’s yield-starved environment. Studies conducted over various time frames and markets have found that dividends are an important contributor to superior long-term investment results.

European financial markets move to a T+2 settlement cycle

3 October 2014|Comments Off on European financial markets move to a T+2 settlement cycle

On the 1st of January 2015, European markets will have completely moved from the traditional generally accepted T+3 settlement cycle to a new shorter T+2 cycle. One of the key facets of this transition will be an industry-wide drive to increase the levels of process automation in the post-trade landscape.

Private banking – the rising star of financial services in emerging markets

3 October 2014|Comments Off on Private banking – the rising star of financial services in emerging markets

Reminiscent of the colonial “Scramble for Africa” vying for territorial control, a considerable number of corporate boardrooms in the developed world’s financial institutions are engrossed in devising strategic manoeuvers to gain, consolidate or enlarge footholds in Africa’s growing private banking market.

Thomas Bayes

2 October 2014|Comments Off on Thomas Bayes

Picture a stock exchange in which 1% of the shares are delisted for bankruptcy every year. Clearly, it would be useful to be able to avoid catastrophic investment losses related to these failures. So let us assume that you have a test for bankruptcy which seems pretty accurate.

Collateral 101

1 October 2014|Comments Off on Collateral 101

The allocation of collateral is a complex process that involves defining which collateral is eligible to be received or placed and valuation mechanisms, both pre-agreed by counterparties. Efficient collateral management assists counterparties to mitigate credit risk, by identifying and allocating a similar valued asset in return for the loan/assets/cash that were lent.

Board’s power to refuse a transfer of shares: Visser Sitrus case

1 October 2014|Comments Off on Board’s power to refuse a transfer of shares: Visser Sitrus case

To be categorised as a private company there must be a provision in the company's memorandum of incorporation which restricts the transferability of the securities of the company and which prohibits the company from offering its securities to the public.

Sale of business agreements: the implied restraint on canvassing customers

1 October 2014|Comments Off on Sale of business agreements: the implied restraint on canvassing customers

A recent decision of the Western Cape High Court has highlighted some critical considerations to be borne in mind when dealing with restraint of trade and non-solicitation clauses contained in, for example, sale of business agreements, if such sales include the goodwill of the business.