MONDAY, 10.30AM
ROUTINE changes to indices on the Johannesburg Stock Exchange on Friday led to hard feelings when brokerages firms RMB and UBS bought and sold stock to match the new indices, causing huge rises in some shares and massive falls in others.
The JSE makes changes to its size-based indices twice a year, and Friday’s controversial trades involved shares which entered or fell from the top-25 industrial and top-40 all-share indices. Funds which trade particular indices then change their stockholdings to suit the new composition of the indices. RMB and UBS offended with the size and lateness in the day of their trades.
The result, according to the JSE’s head of surveillance Bill Urmson, is that the JSE may change the way in which it introduces index changes to avoid a recurrence. But not all traders were unhappy, with some reporting they had taken advantage of the situation.
According to Urmson: “When you trade a curve, it doesn’t matter what prices you pay; you just have to mirror the index.” As a result, stocks such as Amcoal and Premier, which fell off the Alsi-40 index, were big losers, while winners included Persetel and NBS-Boland.