Futuregrowth Asset Management Ltd. accused JSE Ltd. of reneging on agreements to improve investor protection in South Africa’s 3.08 trillion rand ($204 billion) bond market. Photo: Leon Nicholas/African News Agency (ANA)
Futuregrowth Asset Management Ltd. accused JSE Ltd. of reneging on agreements to improve investor protection in South Africa’s 3.08 trillion rand ($204 billion) bond market. Photo: Leon Nicholas/African News Agency (ANA)

Futuregrowth attacks JSE over $204bn bond market rules

By Antony Sguazzin Time of article published Feb 27, 2020

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JOHANNESBURG - Futuregrowth Asset Management Ltd. accused JSE Ltd. of reneging on agreements to improve investor protection in South Africa’s 3.08 trillion rand ($204 billion) bond market.

Futuregrowth, which manages about 194 billion rand of investments, said the JSE scrapped agreements made in October to boost investors’ ability to negotiate the terms and conditions of loan documentation transparently with lenders, and a requirement that borrowers, not investors, pay for legal advice. This put the bourse out of step with other jurisdictions, the fixed-income unit of Old Mutual Ltd. said.

“Their exclusion violates every principle of sound lending,” Olga Constantatos, Futuregrowth’s head of credit, said in a note to clients on Wednesday. It “enables issuers to divide and conquer by not allowing the investors to properly negotiate in the interest of the individual and pension-fund investors we represent,” she said.

South Africa’s capital markets have been roiled by malfeasance at both state-owned companies and those owned by private investors in recent years, heightening demands for better protection for investors. The JSE, which also runs Africa’s biggest stock exchange, has been in talks with debt investors to improve regulation.

Pheliswa Mayekiso, a spokeswoman for the JSE, said the company will comment after considering Futuregrowth’s statement. The JSE took over the bond exchange in 2009. It traded about 900 billion rand worth of bonds a day.

Futuregrowth, which manages about 194 billion rand of investments, said the JSE scrapped agreements made in October to boost investors’ ability to negotiate the terms and conditions of loan documentation transparently with lenders, and a requirement that borrowers, not investors, pay for legal advice. This put the bourse out of step with other jurisdictions, the fixed-income unit of Old Mutual Ltd. said. File picture: Svilen Milev.

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