Rand Merchant Bank lists US Dollar Custodial Certificates on JSE

JOHANNESBURG (Capital Markets in Africa) – Rand Merchant Bank (RMB), has listed an innovative 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 24th January, are easily tradable, dollar-denominated investment instruments which have no exchange control implications.

Investors earn the return of a US Treasury note, receiving an income stream in US dollars, which is settled in rands. RMB, which created, issued and listed the instruments, will act as the market maker providing liquidity in the product.

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.

“Investors are able to invest in a global currency, therefore avoiding the potential devaluation of their rand savings and working capital,” says RMB alternative asset specialist Dr Ebrahim Patel. “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.”

Donna Nemer, Director of Capital Markets at the JSE, says, “This new EFT will offer both our institutional and individual investors offshore exposure to US Treasury Bonds and denominated in USD, offering investors liquid capital within flexible parameters.”

ETFs are investment products which track the value of a basket of shares or other assets like bonds and commodities.