Uncertificated Securities as Collateral in South African Securities Lending Transactions

The question how uncertificated securities can be provided as effective collateral in South African securities lending transactions has been such a hotly debated topic that, for many years, the majority of participants in the South African securities lending market only accepted cash as collateral for loaned securities. Therefore, the South African securities lending market called for an effective method to provide uncertificated securities as collateral in securities lending transactions.

Under South African law, a share in a company consists of a bundle of personal (incorporeal) rights entitling the holder of the share to an interest in the company, its assets and dividends. Similarly, debt securities consist of a bundle of personal rights against the issuer of such debt securities. Securities may have true (beneficial) owners and registered owners. The true owner of a security is the person to whom the security belongs, but it is only if the true owner has its name