Since my last column, our country has been under immense scrutiny. We face the very real risk of credit-rating downgrades to sub-investment grade, notwithstanding the fierce defence of SA’s fundamentals by a cross-sectional and very senior team led by the Minister of Finance, and to which both senior business and labour leaders have contributed.

Two things have struck me since I last wrote. First, we are not the only emerging market experiencing challenges. The world is a painful place for many economies – both developed and developing. So, while we have our own challenges, we are not unique in our battles.

Second, we can take pride in the many strong institutions that underpin our democracy. National Treasury and the Reserve Bank lead a financial system regularly ranked among the most sound and trusted financial market systems in the world, as affirmed by the World Economic Forum. The Constitutional Court, in its recent judgement on the binding nature of the powers of the Public Protector, set a high water mark for judicial clarity and robustness. At the same time, the independence, courage and grace shown by the Public Protector and by her office during this period has been an example to us all.

As a key part of the SA ecosystem, the JSE is as committed to ensuring that we do all we can to promote a positive investment environment for local and foreign investors alike.

Operating in an emerging market, we have known for years that investors – whether seeking to buy sovereign debt or invest in equities – have a choice as to where to invest. So too do issuers have a choice as to the venue and manner in which they raise capital. That is why we have continued to invest in world-class technology to give our clients the best possible service.

In turbulent times, our clients place a premium on tools that enable them to manage risk appropriately. This is a key priority for us, as we believe it is absolutely vital for exchanges and their derivative central counterparties to maintain high standards of risk mitigation and levels of capital adequacy.

In July 2016, we will complete our move to T+3 settlement. The benefits of a shorter settlement cycle range from a reduction in the value of unsettled trades to improved liquidity. The successful introduction of T+3 relies on collaboration from all market participants and has been implemented in a deliberate and considered way to ensure that all stakeholders are ready for the eventual migration. I am grateful to all the stakeholders who have worked with us through the extensive and complex process of transforming both the market operating practices and technology to enable us to complete the move to T+3.

Another milestone approaching on our constant innovation journey is the implementation of the first phase of our integrated trading and clearing (ITaC) project, which aims to harmonise the trading and clearing functions across the various JSE markets. During this project, we will migrate all trading on our derivatives markets – commencing with equity derivatives – to MillenniumIT Exchange technology, which we successfully deployed for equities trading during 2013. We believe this faster, more stable and robust technology system will enable the JSE to offer trading technology in line with the largest exchanges globally. Likewise, we will be implementing world-leading new clearing technology for our derivatives markets, enabling us to offer our derivatives clients some of the most advanced risk-management tools deployed by exchanges.

While discussion continues about new entrants to the exchange market, we remain focused on the job at hand: ensuring we give our clients the service they need, and to do so as well as we possibly can. It is easy to forget that we already have local non-exchange competitors in most products we trade, and compete with international exchanges for trade in many of our biggest companies. We have striven to be world-class in everything we do. The JSE has a long track record and we are proud of our ability to continue to attract local champions, as well as international issuers and clients that contribute to the growth of our economy. We will continue to do this.

I echo the sentiment of Finance Minister Pravin Gordhan when he implored all South Africans that this is the time to get down and work, to ensure that we are able to grow this economy. SA has been through dark times before, but our strong spirit and can-do attitude have always seen us through. We will weather this storm too. And when we do, the JSE will be there – ready, willing and able to serve our stakeholders even better than before.

Nicky Newton-King
Chief Executive Officer, JSE

April 2016
Image: Hanlie Huisamen