Lynda Loxton
Sharp differences remain between the Johannesburg Stock Exchange (JSE) and the Financial Services Board (FSB) over the planned restructuring of the JSE in January next year.
JSE president Roy Andersen, backed up by chairman Francois Tolken and legal adviser Peter Leon, made it clear to the parliamentary finance committee that they thought the FSB was trying to collar too much policy- making power that rightly belonged to the finance
The main bones of contention between the two, who have long been at loggerheads, include the fact that the FSB wants to amend the Act governing the JSE to ensure that the JSE itself does not have the last say over who can become a member. In terms of the proposed changes, non- brokers will, for the first time, be allowed to become members of the JSE and the FSB wants to ensure they will have the right to appeal to an outside body should applications be turned down.
Leon argued that the JSE was self-regulated and believed that, as happened in London and New York, it should have the right to appoint an internal committee of people familiar with the workings of the JSE to hear appeals. The JSE has also questioned the constitutionality of some of the FSB’s suggestions for the new JSE legislation.
One of the main features of the amended Act will be that the capital requirements for brokers will be harmonised with those of the European Union, but that negotiations are under way to pitch this at R200 000 rather than the EU’s R3-million.
“We are conscious that we must not pitch entry barriers too high as we do not want a pale, male stock exchange,” Andersen said.
ANC senator Cheryl Lausberg was somewhat concerned this might undermine the confidence of foreign investors in the JSE, but Andersen said several other major markets, including New York, did not stick to the R3-million
Investors should be comforted by the JSE’s insistence that potential new members should be able to cover 13 weeks’ costs and that they would be covered by the JSE’s unique guarantee fund.
Lausberg asked whether the fund was sustainable and able to withstand one or two major defaults.
Andersen said the fund now stood at R83-million and generated between R10-million and R12-million in income a year.
The JSE planned an acturial valuation of the fund to determine whether the fund was big enough, and if not, it would make plans to increase it. The fund was started when a levy was imposed on brokerage, which fell away when the fund hit R83-million, which was thought big enough.