OPEN MARKETS - JSE MAGAZINE

OPEN MARKETS

The JSE is actively encouraging the development of a community of emerging stockbrokers

OPEN MARKETS

‘We truly believe that the main driver of economic growth in the country is going to come from small to medium enterprises across all industries,’ says Donna Nemer, Director of Capital Markets at the JSE. ‘Therefore it is imperative that we support black businesses as they grow and begin to compete with traditional players across all industries, including our own.’

The JSE has launched an Enterprise Development Programme aimed at stimulating the growth of emerging brokers and to demonstrate its commitment to the transformation of SA’s capital markets. The programme will provide quarterly cash disbursements to small- and medium-sized black brokerages, equal to 33% of the equity trading and membership fees that the broker paid to the JSE during that quarter. This financial assistance must be used to develop and grow their business.

‘We have been engaging with the Black Brokers Forum [BBF] and through that dialogue, which lasted the course of a year, we now better understand their challenges in terms of trying to compete with the large local and international brokers in the market,’ says Nemer. ‘It became clear to us that we share common goals. We just had to find a solution that would be consistent with our business model and in the spirit of transformation.’

In order to qualify for enterprise development, a company needs to have a turnover of less than R35 million per annum and be more than 50% black owned, using the definitions as published in the Financial Sector Code.

Currently, less than 6% of JSE members are black stockbrokers but according to Nemer they form a very significant community and need to be supported on their transformation journey towards sustainable growth and competitiveness.

Speaking on behalf of the BBF, Saleem Symallin, CEO of Thebe Stockbroking, says: ‘Black-owned stockbroking firms are latecomers to the capital markets industry and therefore have not yet had time to build up the competitive resources that the more established firms have had. The JSE programme allows black firms to do that by providing some financial relief on transaction and membership costs.

‘All our members have committed their firms to use the funds to improve capacity in key areas that matter to our clients – areas where black firms have traditionally not had the resources and support to build economies of scale such as research output, product development and skills training.

OPen-Markets-PQ

‘We believe these areas, once improved, will go a long way to enhancing the competitiveness and ultimately the sustainability of black firms,’ says Symallin. And it’s not only the emerging brokers who are set to reap the rewards of the Enterprise Development Programme.

‘Our entire ecosystem will benefit from the JSE support of black stockbrokers. It positions them to become stronger contenders within the industry, providing investors and their brokers with more choice regarding the service providers they can use,’ says Nemer. ‘Furthermore, our programme will contribute towards increasing competition in our markets for services while training more people in the skills that surround stockbroking as well as research and trading.’

The JSE Enterprise Development Programme fits into broader transformation efforts within the financial services industry, as major industry players are aiming to increase the participation of black stockbrokers in their supply chains.

According to Nemer: ‘The JSE acts as an incubator and a pipeline. Ultimately, we aspire to see the small black-owned brokerages become so successful that they outgrow the category that qualifies them for enterprise development.

‘We’re currently in a place that’s good for the black brokers, the JSE and our entire industry.’

By Silke Colquhoun
Image: Gallo/Getty Images