Rand Merchant Bank lists ‘US Dollar Custodial Certificates’ (South Africa)Monday, January 30, 2017
by Business Council for Africa
By Staff Writer | Africa Global Funds
Rand Merchant Bank (RMB), a division of FirstRand Bank, has listed a new product on the Johannesburg Stock Exchange (JSE), which will enable companies and individuals to hold unlimited quantities of cash in US dollars.
US Dollar Custodial Certificates (DCCs), listed on the Exchange Traded Funds sector of the JSE on January 24, are easily tradable, dollar-denominated investment instruments that have no exchange control implications.
RMB, which created, issued and listed the instruments, will act as the market maker providing liquidity in the product.
RMB said that investors earn the return of a US Treasury note, receiving an income stream in US dollars, which is settled in Rands.
DCCs represent the first inward listing of US Treasury notes on the JSE giving investors direct exposure to the Treasury notes.
Investors’ credit exposure will be to the US Federal Reserve, giving them protection from the possible insolvency of a bank.
Ebrahim Patel, RMB’s Alternative AssetSpecialist, said: “Investors are able to invest in a global currency, therefore avoiding the potential devaluation of their rand savings and working capital.”
“DCCs will therefore benefit investors who take the view that investing in dollars may preserve their assets, while businesses can take advantage of a dollarized working capital solution,” he added.