The South African local stock exchange, ZAR X, has launched the first distributed settlement system in South Africa for unit trusts.
With a net worth of over R2.6 trillion (Approx. $175B) and roughly 1, 500 unit trusts, the South African unit trust industry is now expected to offer more product distribution with more efficiency.
ZAR X has been looking to pivot and focus on driving investment products.
In a statement, Etinne Nel, CEO, ZAR X, said:
“Unit trusts technically were defined as securities and could be traded. It was a natural fit for blockchain. We saw a distribution gap that is not available in South Africa.”
Currently, if you want to purchase unit trusts in South Africa, you have to go directly to a unit trust or adviser and then become their client.
The new ZAR X offering changes all this.
According to Neil:
“Using blockchain, it enables the public to purchase and settle unit trusts directly from fund managers in a secure environment.”
ZAR X will essentially become a wholesale platform for unit trusts with all the information needed for each asset. At present, you have to physically visit each asset website and downloaded the needed information.
Investors will now simply do the following:
- Visit the ZAR X website – www.zarx.co.za or ZAR X mobile app on Google Play Store (Android) or Apple AppStore (iOS)
- Pay a one-off transaction fee and start transacting unit trusts
- Transact through ZAR X brokers or on the ZAR X Mobi App
Using the ZAR X platform also comes with other advantages such as getting the market net asset value price and having access to asset manager books once you secure a contract.
While the Johannesburg Stock Exchange (JSE) usually takes four days to settle, ZAR X will settle in real time due to the full transparency and transaction history afforded to regulators and investors by the blockchain. This will be achievable by enabling tokenization of unit trusts and cash on the same ledger and on-chain while provides real-time development versus payment settlement.
According to an independent South African analyst:
“This surely is the development that I have been waiting for so many years [..] This is likely to be the future of financial markets settlement.”
The project is expected to go live in the latter part of 2019.
About Unit Trusts
Unit Trusts are collective investment schemes or mutual funds managed by fund managers where investors’ contributions are pooled together to purchase a portfolio of financial securities such as shares, bonds, cash, bank deposits, mortgages etc.
In Africa, unit trusts are found in Kenya, Namibia, South Africa, and Zimbabwe.
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