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DATE: September 2019

Dear member

One of the biggest hurdles facing black-owned stockbrokers is the JSE’s capital adequacy requirements. The JSE in collaboration with the ASISA Enterprise and Supplier Development initiative, therefore launched a Prefunded Settlement Guarantee (PFSG) instrument with the aim of removing this barrier for black-owned firms.

Instead of having to take on debt and have the capital on the stockbroker’s balance sheet, the firm receives capital adequacy support via the prefunded settlement guarantee. In exchange the firm pays a guarantee fee to the ASISA ESD initiative.

The ASISA ESD Investment Committee approved Lefika Securities as the first stockbroking firm to be granted access to this capital adequacy support to cover the counterparty risk requirement (CPR) for equity trades. Lefika Securities is a 60% black owned stockbroking firm with level 2 BEE status.

ASISA Enterprise and Supplier Development (ESD)

One of the first SMEs approved for investment by the ASISA ESD Investment Committee in 2014 was Waste Want, a 100% black owned waste management company based in Cape Town.

Selected from Sanlam’s supply chain in 2013, the company completed two years of business development support with the Sanlam Enterprise and Supplier Development (ESD) Programme, which is the ASISA ESD initiative’s longest standing partnership. Waste Want was included in the ASISA ESD initiative’s investment portfolio, because it showed a high potential for growth and job creation.

We would like to share the Waste Want story with you, because it showcases what can be achieved in partnership. Empowered by the business development support from the Sanlam programme and capital investments from the ASISA ESD initiative, made possible by the funding received from our members, Waste Want has grown from a small recycling business launched in a garage into a thriving business.

Today Waste Want is a successful recycling and waste management company that specialises in dry, non-hazardous waste. The business’s main clients are the City of Cape Town and the Western Cape Government. It has delivered average revenue growth of 47.5% year on year over the past five years since the first initial investment was made by the ASISA ESD initiative.

Between March and August this year the company showed a turnover growth of 186% and a net profit increase of 178% compared to the same period in 2018. In addition, 168 new jobs were created in 2019 alone. Waste Want currently supports 216 employees, many of whom were previously unemployed and reliant on shelters for their survival.

The business recently won a recycling tender for the Helderberg area with the City of Cape Town, which has necessitated the purchase and installation of a professional Materials Recovery Facility to handle recyclables from the Helderberg and surrounding areas. The ASISA ESD initiative provided Waste Want with additional funding to support this expansion drive.

Ikusasa Student Financial Aid Programme (ISFAP)

ASISA and various members have supported the ISFAP since its inception in 2017.
Sizwe Nxasana, the Chairman of ISFAP, has appealed to all funders still wanting to support the 2020 bursary programme to make their contributions before 30 November 2019.

“We urge our funders to contribute before December, while making use of the revisions in the B-BBEEE codes that gives them 4 additional points on their scorecard for the 2.5% leviable payroll spend on bursaries. This is now a ring-fenced category within the Skills Development element of the B-BBEEE codes.”

The online applications system for the 2020 academic year went live on 5 August 2019 and will close on 31 October 2019. This early application process allows ISFAP to select the best performing students. To be able to allocate bursaries towards shortlisted students together with provisional offers during the middle of December, the funding process will have to close at the end of November.

Focus on cyber security

ASISA was represented at the SWIFT Sibos Conference held from 23 to 26 September in London. The conference is held annually and brings together business leaders, decision makers and topic experts from financial institutions, market infrastructures, multinational corporations and technology partners.

The theme of this year’s conference was “Thriving in a hyper-connected world” and the focus was on new challenges facing the financial services industry worldwide. New business models often bring with them new risks as it becomes increasingly difficult to stop unlawful activities when transactions are processed in real time and settlement becomes irrevocable.

Discussions at the conference focused on:

  • Using data in a responsible way;
  • The importance of regularly reviewing control frameworks;
  • Cyber-crime must be seen as a business risk;
  • The importance of partnerships between business units, with service providers and business partners;
  • Building cyber teams that understand the business; and
  • Creating an intelligence unit at the heart of the business.

ASISA established the Cyber Security Incident Response Team (CSIRT) in 2016 to help member companies combat cybersecurity threats by encouraging and facilitating the sharing of cybercrime trends and other relevant information. The ASISA CSIRT is one of two industry response teams in existence in the financial sector; the other one is the South African Banking Risk Information Centre (SABRIC).

ASISA Hedge Fund Classification Standard

The ASISA Hedge Fund Classification Standard, which was approved by the ASISA Investments Board Committee, was ratified by the ASISA Board on 19 September 2019. The Hedge Fund Classification Standard comes into effect in January 2020.

South African hedge fund managers have therefore begun the process of categorising their hedge fund portfolios in line with the provisions of the new Hedge Fund Classification Standard.

The aim of classifying all hedge fund portfolios, including hedge fund of fund portfolios, into different categories is to make it easier for investors to assess and compare funds and to select hedge funds appropriate for their risk profiles and investment portfolios. The Standard is available here.

ASISA Long-term Insurance Statistics

The Insurance Act, which came into effect on 1 July 2018,  required changes to regulatory reporting by long-term insurance companies. As a result ASISA had to align its data collection formats and systems to the new requirements, causing a delay in collecting and publishing statistics. 

Statistics for the 6 month period from January to June 2019 will be published on the ASISA website during October 2019.  The next media release will be published in the first quarter of 2020 when the annual statistics for 2019 are published.

International Financial Reporting Standard (IFRS)

Draft amendments to the IFRS 17 Standard were published by the International Accounting Standards Board (IASB) for comment by 25 September 2019.  ASISA members submitted comments to the South African Institute of Chartered Accountants (SAICA) and the ASISA work group on IFRS 17 did not submit its own comments. 

ASISA was also a co-signatory with SAICA to a letter sent to the IASB highlighting some concerns.

Academy Newsflash

The Academy started the intern selection process for the 2020 Independent Financial Advisor (IFA) Internship Programme by hosting four "speed interview " sessions in Johannesburg, Durban, Bloemfontein and Cape Town. The interview sessions brought together representatives from some 40 IFA practices and potential interns.

The Academy received more than 300 applications for the internships from mostly BCom Financial Planning students from the University of the Western Cape, University of Johannesburg, Nelson Mandela University, University of KwaZulu-Natal and the University of the Free State.  

The host practices are now in the process of shortlisting their preferred candidates for formal interviews, which will take place in October and November.

The IFA Internship Programme was launched in 2016 with the aim of helping young black professionals interested in pursuing a career in financial planning with the opportunity to intern with established IFA practices for 12 months. Including the 2019 IFA interns, 109 black graduates have already benefitted from the IFA internship programme.

We are very grateful for the ongoing funding support from Allan Gray, Coronation, Investec and Prudential, which enables the Academy to continue growing this hugely successful programme.

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