Instruments and Investments
Enhanced passive equity investment
Equity hedge
ETFs: A good idea going bad?
Managing bond portfolios
Risk vs return
Technical global market events
JSE Welcomes the exhange industry
The Role of ideas and risk in encouraging entreperneurship
The new Companies Act
Financial stability's 2nd dimension
Conflicts of interest
Segregated depository accounts
Money Market dematerialisation
Shadow Banking - An Overview
14th Edition - October 2011
In this Edition . . . .
Enhanced passive equity investment
Passive equity investment aim to track the performance of a FTSE/JSE index (price or total return) as closely as possible but are rarely succesfull. A pssive manager's objective is not to outperform the index. The question arises why do asset managers genrally under-perform the equity index they have been mandated to track . . . . read full article
Equity hedge - Zero cost collar
When a client is holding a share for a particular time, their price expectations can be different from their original investment objectives. The client could just sell the share if they expect the price to fall, but what happens if they still want exposure to the company or it may not be the most suitable time to sell from a tax point of view? Utilising hedging strategies can alter the risk characteristics of a share holding without disposal . . . . read full article
Managing bond portfolios Risk vs return
It is evident that considerable opportunities exist in bonds for individual and institutional investors as to enhance the risk-return performance of their portfolios.This article focuses on the creation and management of bond portfolios – a subject that received more attention in the last 20 years than the management of equity portfolios . . . . read full article
The market turmoil of 2008/2009 again brought into question whether the Modern Postfolio Theory framework can still be utilised with confidence. In periods of distress – such as the one that we have just experienced – forced selling in both the equity and credit markets essentially pushed all correlations towards one. Many would argue that the simple and elegant mathematics of MPT requires some assumptions that may sometimes bear little resemblance to reality . . . . read full article
Technical global market events
The JSE welcomes the exchange industry
Every asset type, market and share has its own unique pattern. However, when the market displays a congruence of technical triggers using some simple indicators and correlations our experience shows 90% of the reason a share or stock goes up or down is because the global, country and sector is going up or down . . . . read full article
Rapid technological and regulatory change combined with competitive pressure from alternative marketplaces means that the exchange industry must evolve constantly to meet customer needs. These industry challenges have resulted in increased collaboration between exchanges, with the WFE central to these discussions . . . . read full article
The Role of ideas and risk in encouraging entrepreneurship JSE
What can be done to kick-start entrepreneurship? In this I present an alternate view of the issue, and propose that the key stumbling block to entrepreneurship is not necessarily funding, but the lack of recognition of the importance of the “idea” in the funding and development model, coupled with the consequences of failure . . . . read full article

The JSE, which is home to companies whose combined value makes up about three quarters of all those listed on exchanges across the African continent, believes that it can play a role in increasing investment to the region while contributing to the development of markets within their own economies . . . . read full article

The new Companies Act The new importance of financial stability's 2nd dimension
The new Companies Act, 2008 , which came into force in totality on 1 May 2011, has brought with it an extensive reform of South Africa's company laws.  The New Act will impact on a vast number of funding transactions, and financiers and finance lawyers alike will be required to have an acute understanding of the New Act . . . . read full article
Financial stability is commonly perceived as a negative concept and involves the absence of something unwanted[i]. Hans Christiansen (of the OECD) has put forward an unusual dual definition of financial stability as, “(1) financial stability is the absence of financial crises, and (2) a financial crises is defined as a sequence of events, or the risk thereof, that impairs credit intermediation or capital allocation . . . . read full article
Conflicts of interests
Segregated depostory accounts
All significant financial markets recognise conflicts of interest as a source of potential detriment to investors. These markets usually have rules aiming to eliminate or control conflicts to ensure investor protection and confidence . . . . read full article
Strate has introduced the concept of Segregated Depository Accounts(SDAs) to provide a safe-keeping account structure for invstors ahead of insolvency proceedings . . . . read full article
Money Market dematerialisation Out of the shadows: an overview of the shadow banking system
As from 29th August 2011, all Category 3 type money market securities, comprising those instruments with a variable/floating coupon rate and fixed maturity date, are issued, traded and settled electronically . . . . read full article
Prior to the 2007/8 financial crisis the shadow banking sector was not considered systemically important and as it was not subject to the same degree of regulation as the formal banking sector, authorities were unable to monitor the build-up of risk and leverage within the system, and were unaware of the potential spillover effects on the stability of the entire financial system. At the start of the crisis the size of the shadow system had grown almost as large as the formal banking system . . . . read full article


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