Strate in talks over data on investors
Depository’s interpretation of law challenged by Treasury
THE FINANCIAL Services Board, the National Treasury and Strate held discussions yesterday in a bid to address the legitimate needs of investors to get access to timeous information about shareholdings in companies listed on the JSE. Strate is the central securities depositary, which maintains and controls the electronic register of shareholders of listed companies.
In June Strate decided, on the basis of a conservative interpretation of the new Financial Markets Act (FMA), that it could no longer provide the information to data vendors such as I-Net Bridge, Ince and McGregor’s.
As a result of this decision the only way to get a list of the shareholders in any company is by approaching the company directly or by using a share transfer agent such as Compushare. These options are both slow and expensive and, say traders, make a mockery of the JSE’s claims to provide a worldclass service for users.
The share register of every listed company is updated once a month and the information is collected by Strate. Until the new act took effect in June, Strate sold the information to data vendors. The data vendors packaged the information so that users could easily identify changes in the shareholder profile of every listed company. The information enabled them to see who was buying and who was selling what shares.
This was in line with the levels of openness and transparency regarded as appropriate for a major stock exchange.
Strate’s refusal to supply the critical information is based on its interpretation of section 73 of the FMA.
This section states that “no market infrastructure or chief executive officer, other officer, employee… may disclose confidential information obtained in the performance of functions under this act”.
Strate has said that, while it believes the information should be in the public domain, the FMA does not allow Strate to supply the information to any other party.
Data vendors and traders, who are becoming increasingly frustrated, counter that the information they want from Strate is not confidential.
According to a letter sent to the Financial Mail in response to an interview with Strate’s Monica Singer, the National Treasury is challenging Strate’s conservative interpretation of the act.
In the letter, Katherine Gibson of the Treasury’s financial sector policy unit, stated that Strate, which is both an operator and a regulator, was misleading the public.
Gibson argued that the act clearly provided that information in the public domain, or information required by law to be made available to third parties, “as is the case of a public company’s share register”, was not confidential.
Traders said yesterday that while it was understandable that Strate did not want to be held liable for an unwitting contravention of the FMA, this issue had been flagged months ago and Strate did not appear to have addressed it.
A Strate spokesman said that it hoped to provide some clarity within days.