Jacques Magliolo
THIS week saw a communication problem evolve at the Johannesburg Stock Exchange. A press release was sent to stockbroking members and to the press, stating that a “plan and timetable for the restructuring of the JSE to meet the changing needs of South Africa” was published in August 1994.
The purpose of the release was, therefore, to “keep market participants informed of progress to date and of subsequent developments within the JSE.”
The resultant confusion was astounding and is nothing short of bewildering.
“We are awaiting clarity on what these all mean,” was the most common reply from a number of stockbrokers. Executive president of the exchange Roy Andersen was surprised to hear that not all members understood the press statement.
Let’s try and bring clarity for all parties concerned:
* The automated trading system. While the JSE says its research included an international review of market floor support systems, screen trading and automated trading, “the committee recognised the advantages of a fully automated trading system.”
Asks one broker: “Does `fully automated’ mean that all shares will be traded via computer, or will only the top 20 shares fit the bill?” With resignation, Andersen responds: “We have said that testing of the system will commence this year and that all shares will, by 1996, be traded on the new system.”
Another broker asks: “Surely the JSE cannot know how many shares can be traded on a system until they have bought it?” Andersen answers: “We have already designed the system we want and have placed tenders for such a system.”
* Restructuring of the assets of the JSE. “Which assets?” asks yet another broker.
“Stockbrokers own the JSE building and Annex. Will these assets be sold, will it be to a fund or to an institution? Will the money be distributed to members, those holding rights or to membership firms? There is absolutely no clarity,” he says.
Andersen says that, in addition to the buildings, part of the computer system will be sold. “We are still deciding what the final structure will be, but the most probable will be to form a company and place the JSE assets in this company.”
The brokers will be offered shares in the new company, which they will, in turn, be able to trade freely. He adds that rights refer to a broker’s “right to trade and have nothing to do with ownership of JSE assets” and that shares in the company will be given to members and not membership firms.
* Corporate membership of the JSE. When the JSE refers to banks, does it mean all banks, commercial and merchant, or just the latter?
“Banks are banks. All brokers will be entitled to sell up to 30 percent of their business to non-brokers,” says Andersen, indicating that this stake will increase to 100 percent “12 months after the amendment of the