The Role CCP Clearing Will Play in Developing Markets in Africa and Elsewhere

By: Phuthuma Nhleko, Chairman, Johannesburg Stock Exchange Apr 2023

Phuthuma Nhleko, chairman of the Johannesburg Stock Exchange, provided the keynote address at the 40th World Federation of Exchanges Clearing and Derivatives Conference. It was the first time the conference was held at the JSE.

He spoke of the challenges and opportunities that developing markets in Africa and elsewhere face and the role CCP Clearing will play in coming years:

Notwithstanding our differentiated circumstances as developing markets, we share a common goal of attracting international investment. At the JSE we are keen to unlock the potential of both the African century and the recently signed African Continental Free Trade Agreement. To do so, we have to navigate some challenging terrain. Whilst the Asian century is advanced in the making, we believe that the African century is not too far behind.

African and many emerging markets face very different challenges to that of their developed world peers. Each market represented at the conference has a unique perspective on liquidity, risk, policy and regulatory frameworks. We operate in uncertain times, with investor sentiment continuously oscillating in not a dissimilar manner to the volatility of the markets in which they trade.

The challenge for all of us is how we continue to progress in tandem, connect and integrate with the world whilst we adapt and customise our respective markets as we learn from other markets.

With this in mind, we need to create something that has the flexibility to accommodate the variability in our participants and market dynamics in a manner that supports faster economic growth. We are of the view that the most productive and sustainable way to do this is through the application of global standards as the foundation blocks for local financial market infrastructure and regulatory policies.

CCP Clearing has become a vital part of this process. Its worth was self evident and manifest in 2008 following the collapse of Lehman Brothers. CCP Clearing effectively facilitated the isolating and containing of the financial contagion that ensued.

The establishment of CCPs in emerging markets has been found to improve market liquidity, boost transparency, reduce volatility, manage risk and fundamentally increase trust amongst the many stakeholders by a factor of up to 20%. The concomitant benefit to emerging economies has been an exponential growth in foreign investment.

Perhaps the biggest benefit of all is the increasing integration of emerging markets into global financial markets. CCP Clearing is without a doubt a cornerstone of market development.

We strongly encourage conversation and cross pollination between countries, between colleagues and between friends. There is so much we could learn from one another, regardless of whether we represent a developed, emerging, large or small exchange.

When we consider a wide scope of operational risks that could impact a clearing house, we tend to focus on technical issues such as bank defaults, etc.

In South Africa we have had to begin to consider more “purple risks”, for instance scenarios where there is a breakdown in telecommunication networks as a result of power failures, etc. There are other countries that may face similar challenges in future. Lessons can be learnt on what we are implementing and what is critically important. It may turn out to be useful to you in the future. In other regions, digital assets and disruptive technology are taking some exchanges and regulators into unchartered waters.

The Johannesburg Stock Exchange celebrated its 135th anniversary in 2022. The JSE has been a fine exemplar of South African excellence and professionalism that remains globally competitive on any metric. We have much to learn and a lot to share.

Africa is the continent of the future; home to the youngest population in the world and the largest working-age population on the globe. By the turn of the century 60% of the biggest cities on the planet will be in Africa. Approximately 30% of all humanity, about 2.5 billion, will be on this continent by the year 2050.

Even a casual study of the fundamental trends on many features of Africa point to the need for Africa to be integrated into the world order with respect to finance, security and a wide range of geopolitical matters. It is imperative. To not do so, is a luxury that nobody can afford.

Even a conference like the WFE Clearing and Derivatives conference is a important enabler in the broader and larger endeavour to achieve higher intra-African trade and Africa integration with the rest of the world. South Africa is one of the important countries expected to provide leadership to attain this vision.

South Africa is a country with a long history that is complicated and difficult. However South Africa has been characterized by resilience if anything. In its long history, at many junctures South Africa was an integral part of larger geopolitical strands, at times those strands being at high tension. Very little has changed in this regard.

We are a fledgling democracy that is often deemed to be excessively noisy, albeit a functioning democracy. We remain exceedingly proud that notwithstanding the country’s many trials and tribulations, we continue to be one of the few examples in the world of a country that chose a path of a peaceful transition in place of a number of other alternatives with dire consequences. We finally arrived at the rainbow nation status as coined by the late Arch Bishop Desmond Tutu. The rainbow nation remaining a rainbow nation is constantly being stress-tested.

In this context, we sincerely hope that whilst we acknowledge a number of challenges and difficulties that South Africa faces, some manifest and not worth regurgitating, it’s a democracy that continues to be supported by strong institutions and jurisprudence. These have been tested in many respects over the last 27 years and have been able to withstand those challenges. We believe this will continue to serve South Africa well into the future and enable South Africa to play its meaningful role in some of the global integration issues I referred to earlier.

The JSE, being an integral part and one of key South African institutions, will in turn play is role which amongst other things includes contributing to organizations such as WFE.

I wish to end by saying African proverbs are often short and pregnant with deeper subtle meaning that is powerful and teaches. One of my favourites which I believe is if you want to go fast go alone; if you want to go far go together.

For further information on WFEClear: The WFE’s Clearing and Derivatives Conference 2023, see


The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.