IMASA 21 October 2005

Terms and Definitions Member Settled Client:- A client that holds their assets, cash and securities, with a trading member. Non-member Settled:- A client that holds their assets, cash and securities with a CSDP. UNEXCor Account Code:- Account code supplied through the UNEXCor system linked to the account on the UNEXCor system. UNEXCor Settlement Reference:- Settlement Reference associated with the settlement account Service Provider:- The party that supplies the front end to the UNEXCor system. Official ID:- Code supplied by Service Provider to identify the trading member for the trade legs generated to the UNEXCor system Password:- Password to log onto the UNEXCor system when generating trade legs. Super user password:- Super user password of the front end to the UNEXCor system.

New Yield-X Members requirements STRATE Service Level Agreement (SLA) Letter authorizing the Service Provider to create an Official ID and to release the system passwords to the JSE Custody Account Cash Settlement Account

Service Provider Requirements Existing Member (already exists on BESA) STRATE SLA must refer to the existing Service Provider (If they are an existing Member on BESA they have to have a Service Provider) Letter must be addressed to the applicable Service Provider authorizing them to create a “new” Official ID and password and supply same to the JSE STRATE loads SLA and advises Service Provider Service Provider loads and supplies Official ID and password to the JSE CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

Service Provider Requirements (cont.) New Member (not existing member on BESA) and wants to use an existing Service Provider STRATE SLA must refer to the required Service Provider Letter must be addressed to the applicable Service Provider authorizing them to create a “new” Official ID and password and supply same to the JSE STRATE loads SLA and advises Service Provider Service Provider loads and supplies Official ID and password to the JSE CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

Service Provider Requirements (cont.) New Member (not existing member on BESA) with JSE as Service Provider STRATE SLA must refer to the JSE as the Service Provider Letter must be addressed to STRATE authorizing them to create a “new” Official ID and password and supply same to the JSE STRATE loads and supplies details to the JSE STRATE advises Settlement Agent to load cash account and custody account against the details loaded as first choice account CSDP loads the custody and cash accounts and supplies the UNEXCor Account code and Settlement reference to the JSE

Member Settled accounts are loaded by the CSDP and linked to the Trading Members General Purpose Account (GPA) on the UNEXCor system and the UNEXCor Account code and Settlement Reference are supplied to the Trading Member to load on the Yield-X system. The Yield-X system generates a message to the UNEXCor system to verify account details. Non-member Settled accounts are loaded by the CSDP on the UNEXCor system and the custody account, cash account, UNEXCor Account code and Settlement Reference are supplied to the Trading Member to load on the Yield-X system. The Yield-X system generates a message to the UNEXCor system to verify account details. Loading of Clients Accounts

Mandatory Requirements on the UNEXCor system when loading a new Trading Member Trading Members may “house” trades in the account until the end of the day and then allocate (referred to as bulking, averaging and allocating) There are settlement charges charged by the CSDPs per leg that settles. The Yield-X system uses the accounts for allocation corrections Used as a suspense account. If utilized correctly will come back to zero daily Requirement for Custody and Cash Account for Trading Members

Allocation Corrections example S TRADING MEMBER P S CLIENT A P S CLIENT B P 1M R153 - AUTOMATICALLY PROCESSED BY THE SYSTEM 1M R M R

Late Allocations or Allocation Corrections All trades are to be allocated on trade date In the case of late allocations or allocation corrections the Trading Member must apply before 10h00 on T+1 JSE Settlement Authority grants permission subject to the payment of a penalty JSE Settlement Authority books the late allocation or allocation correction before 12h00 on T+1

Cancellation of Trades Trading Member must approach the JSE Market Controller before 10h00 on T+1 JSE Market Controller must approach the other member to the trade and approve the cancellation of trades JSE Settlement Authority cancels trades via equal and opposites before 12h00 on T+1

Guarantees SAFCOM guarantees performance of the parties to a trade through the Clearing Members; SAFCOM has appointed the JSE Settlement Authority to monitor and manage settlement of spot bond trades; and The Trading Member that introduced the trade is responsible to ensure settlement takes place

Which trades are guaranteed? All trades done on the central order book. These include:- -Main Board trades (T+3 settlement cycle) -T+3 COB Carry -T+2 COB Carry Reported transactions where terms and/or price are agreed Off- Exchange and transaction is booked for reporting and settlement purposes, where the Clearing Member/s accept the transaction for risk management purposes (minimum T+3 settlement cycle)

Mitigate Risk Sales In respect of a sale order booked on Yield-X:- the loan stock to be sold is lodged with a settlement agent as uncertificated financial instruments; or another transaction has been concluded through the Yield-X trading system which provides for an equivalent amount of loan stock being available for settlement on settlement date; or a satisfactory borrowing arrangement reported through the Yield-X lending and borrowing system is in place which provides for an equivalent amount of STRATE settled loan stock being available for settlement on settlement

Unconditional Commits by CSDP The CSDPs commits on both central order books trades and Reported Transactions becomes unconditional from 12h00 on T+2; The only time that a CSDP may lift their unconditional commit after 12h00 on T+2 will be in the case of provisional sequestration or in the case of fails management by the JSE Settlement Authority; In the case where a CSDP wants to lift their commit after 12h00 on T+2 for provisional sequestration a letter has to be sent to the JSE Settlement Authority advising that party is being placed in provisional sequestration; A copy of the application stamped by the court has to be supplied within 2 business days

Process flows JSE SETTLEMENT AUTHORITY YIELD-X TRADING ENGINE TRADING MEMBER CLIENT CLEARING MEMBER CLEARING ENGINE (NEW SAFEMS) STRATE SETTLEMENT AGENT TRADE AFFIRMATION PENALTIES (RECONCILES TRADES WITH MATCH ORDERS RECEIVED FROM STRATE COMMUNICATION MONITOR COMMITS ENTERS CORRECTIVE TRADES TRADE FOR MARGIN MATCHED TRADE TRADE AFFIRMATION MARGIN REQUIREMENT MATCH ORDER NO COMMIT INTIMA- TIONS COMMIT Net SETTLE- MENT POSITION COMMUNICATION

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Questions