IN THE MARKET - JSE MAGAZINE

IN THE MARKET

A round-up of the latest news

IN THE MARKET

April 2020
Delivering growth
‘We are well-positioned to execute the JSE’s 2020 strategy to deliver sustainable growth, operate trusted markets and drive inorganic growth while maintaining disciplined cost control as we stay competitive and retain market share.’ These were the words of JSE Group CEO Leila Fourie in February, when the JSE announced its results for 2019. It was a challenging and constrained capital market last year, compounded by the JSE experiencing an increase in operating expenditure, resulting in total headline earnings of –23%. Yet the group maintained a healthy capital structure with a strong cash position at year-end of R2.6 billion, and no debt. The cash generated from operations was down from R913 million in 2018 to R880 million, yet the bourse was able to grow the ordinary dividend by 5% to 690 cents per share, up from 2018’s 655 cents per share. This is in line with the JSE’s progressive dividend policy, and the declaration of a special dividend of 150 cents per share. As a result, the group maintained the total dividend payment of 2018 at R730 million, which is reflected in the total dividend yield of 7.1% and is ahead of the average dividend yield in SA (3.4%) and that of emerging markets (2.9%).

The JSE explains the decline in earnings as attributable to a planned rise in costs off an abnormally low base, including the amortisation of new trading and clearing system costs; headcount adjustments to planned levels and to establish a platform for growth; and one-off costs relating to the leadership transition. But by diversifying its revenue streams – and despite muted activity in the primary and secondary markets – the decline in revenue was limited to just 1%, at R2.19 billion versus R2.2 billion in 2018. As part of a broader drive to focus on its clients, the exchange reduced equity-trading fees for clients by 12% (a pro-rated impact of R31 million) following the introduction of a tiered billing model in August 2018. Together, the responsive pricing and deep liquidity pools at the JSE have ensured that the group retains a 99.32% market share.

‘Our economy faces deep structural challenges, and we are facing headwinds, the impact of which we see reflected in our bottom line,’ according to Fourie. ‘This difficult operating environment demands an innovative response from us, and provides an opportunity to partner with our market participants to co-create solutions for inclusive and sustainable growth.’

Virtual reality
The JSE’s initiative to launch virtual AGMs in April, during the lockdown, responds to the needs of clients who are obliged to engage with their shareholders regardless of their location and, particularly, when business-as-usual is disrupted, such as was experienced during the COVID-19 pandemic. Seen as an essential service, this the first virtual AGM platform in SA, and it comes at a time ‘when businesses need to be agile and innovative to ensure the continued running of the SA economy’, says Ursula du Plooy, JSE Head of Issuer Relations and Company Services.

The platform has been enabled through a JSE partnership with the Meeting Specialist (TMS) and allows  for AGMs and electronic voting processes to take place, regardless of the number of participants and their locations across the world, provided they have access to a smart device. The TMS ensures a concise record of all attendees and it securely audits, while also providing technical support. It is a cost-effective solution when physical meetings are not possible, or a mixture of both physical and electronic is required.

Scales of Balance
International Women’s Day on 9 March saw the JSE unite with 75 other exchanges around the world in embracing the theme ‘Ring the Bell for Gender Equality’. Now in its sixth consecutive year, the event raises awareness of the role that the private sector can – and indeed does – play in advancing gender equality and female empowerment, and makes a case for the sustainable development of women in the workplace and the broader economy. The initiative is a partnership involving the UN Global Compact Network South Africa, the Sustainable Stock Exchanges Initiative, UN Women, the IFC, the World Federation of Exchanges and the Women in Exchange Traded Funds. The JSE has championed gender-equality issues for some years now and, in 2015, introduced a listing regulation requiring all listed companies to have a policy promoting gender diversity at board level and to disclose their performance against it.

‘To date, all JSE-listed companies have a gender-equality policy in place,’ says Zanele Morrison, JSE Director of Marketing and Corporate Affairs. The JSE believes it has a huge role to play in promoting equality and diversity, and it encourages the fight for fairness across the country’s capital markets, public and private enterprises and civil society. Men are a particular focus. ‘Gender equality is not an issue that only women should fight for,’ adds Morrison. ‘It is one that requires society as a whole to work together to achieve.’

Youth investment
The annual JSE Investment Challenge officially opened in February. Now in its 47th year, this fun financial literacy programme has become synonymous with developing SA learners’ and students’ understanding of investing on the stock exchange, and it deepens the development of financial literacy. A virtual R1 million per team of four is provided to participants from schools or higher-learning institutions, who trade real JSE-listed shares on a simulated trading platform. They learn how to make informed market-investment decisions and to spot trends, and they are guided and encouraged by mentors and teachers.

Open to school learners between Grades 8 and 12 in one category, and students from universities and other higher-learning institutions in the second category, the teams compete for monthly and annual prizes. The overall top-performing school team wins R21 000, which the JSE deposits into a Satrix investment account. The winning university team wins an all-expenses paid trip to an international stock exchange and R25 000. There are also prizes for the top competing schools, teachers and mentors.

According to Ralph Speirs, JSE Corporate Social Investment Officer, the year-on-year impact the challenge has had on participants is phenomenal. ‘It does not only equip participants with life-long lessons that can be applied in building a strong financial future for themselves, but this knowledge also trickles into the communities in which they live. Last year we had more than 23 000 participants, predominantly from rural areas, which addresses our objective of building financially literate communities. There is no other tool in the financial-services sector that can match the level at which the challenge addresses financial education and the practical transfer of those skills on the participant’s life.’

January 2020
Solid links
In collaboration with the AfDB and the African Securities Exchanges Association (ASEA), the JSE, along with six African partner exchanges, has introduced the African Exchange Linkage Project (AELP) Stakeholder Engagement Forum, which aims to strengthen investment flows across African countries. The AELP is a joint initiative between the JSE, Bourse Régionale des Valeurs Mobiliéres SA (Regional Securities Exchange SA) in West Africa, the Egyptian Exchange, Stock Exchange of Mauritius, the Casablanca Stock Exchange, the Nairobi Securities Exchange and the Nigerian Stock Exchange, with the intention of enhancing liquidity among African capital markets by harmonising rules, jurisdicdictional laws and trading, as well as clearing and settlement on the various exchanges.

The AELP has aligned its goals to include the creation of a central trading platform linked to exchange trading systems; the free flow of trading information between linked exchanges; broker access to the linked trading platform; and the creation of products based on securities from the linked exchanges. Anne Clayton, Head of Public Policy at the JSE, says the AELP will support the ease of doing business and driving investment into Africa. ‘The JSE is focused on creating enabling sustainable and inclusive growth and development, not only in South Africa but across the continent. There is great interest within Africa for investment, and the AELP provides an opportunity for alignment of exchanges within the continent. Therefore collaborations with key stakeholders will continue to be at the centre of ensuring and securing a growth path for Africa.’

By the book
The recently introduced amendments to the JSE’s listing requirements are set to strengthen the listing entry criteria for primary and secondary listings. The amendments are in response to the 2017/18 corporate scandals, speculation and innuendo, and the need to ensure that investors are protected through enhanced disclosures. This is in the best interests of corporate governance, as well as improving the integrity of financial information. Following a transition period that started on 2 December last year, listed companies will be provided with a guidance letter from the JSE on the implementation of certain amendments before they become effective. This affords companies time to adhere to the amendments.

‘Our role as the regulator of companies listed on the JSE is to ensure that we continue to build trust and confidence in our market,’ says Andre Visser, General Manager of Issuer Regulation at the JSE. ‘We do this through the protection of investors by ensuring continuous enhancement in the level of disclosures by listed companies so that investors can make informed investment decisions.’ According to Visser, the JSE believes ‘that the amendments we have made to the listing requirements will be enabling for listing companies and investors, taking into account the ever-changing and evolving local and global financial markets framework’.

Easy trade
With the introduction of the JSE’s Iceberg orders, which form part of the exchange’s Dark Functionality Suite, traders can now display only small portions of their larger order trades, without the need to disclose the full order size. This is offered within a secure and regulated environment that services the larger-in-size, non-visible equity market orders. Once a trader participant has displayed part of a larger order, the visible size of the remaining order is replenished based on a randomised replenishment methodology. The order will rest in the order book as a passive order and the process continues until the entire order is executed, or until the order expires. ‘This innovative and globally competitive functionality is an exciting addition to our products,’ says Valdene Reddy, Acting Director of Capital Markets at the JSE. ‘We are pleased to provide a platform that is not only user-friendly but also responds to our clients with an alternative to improve executions in this tough economic environment.’

Driven alliance
JSE Group CEO Leila Fourie joined Oliver Bäte, the CEO of Allianz, as co-chair of a UN platform to launch the Global Investors for Sustainable Development (GISD) Alliance, which aims to leverage finance and investment know-how, in a bid to free up trillions of dollars from the private sector to finance the UN’s Sustainable Development Goals (SDGs). ‘The establishment of the GISD Alliance acknowledges the scale of the challenges we face collectively and the role that the finance sector has to play in meeting these challenges. It is a great honour for me to build on the JSE’s legacy in promoting a more sustainable financial system by taking on the role of co-chair of the Alliance,’ said Fourie. The JSE has been a major driver of the SDGs in Africa, including issues such as gender equality, environmental degradation, peace, justice and strong institutions, and it is the only African exchange involved in the GISD Alliance. The exchange has been joined by Investec and 29 other CEOs of financial institutions, manufacturing corporations and technology service providers, which include asset owners, managers and non-financial corporations from both developed and developing countries.

‘Exchanges are a vital part of the financing ecosystem – promoting relevant disclosure, enabling effective price discovery, and ultimately mobilising funds to productive ends. Ensuring this is calibrated to the attainment of inclusive and sustainable growth and development is part of our vision at the JSE and our commitment to the GISD Alliance,’ according to Fourie. ‘We have much work to do, and the time to start is now.’

October 2019
End of an Era
After 23 years of service with the exchange in various roles, CEO Nicky Newton-King has retired. Under her stewardship, the JSE achieved significant milestones, among them the demutualisation and listing of the bourse (when she was deputy CEO); the acquisition of the SA Futures Exchange and the Bond Exchange of South Africa; and the joint venture with FTSE Russell. She guided the increased role of technology, which fundamentally transformed the exchange’s trading and clearing service offerings. Newton-King also championed the importance of business as a socially responsible participant in matters critical to the national agenda.

Newton-King says it was not an easy decision to make, yet she felt it was time to step back and allow the institution to be led by new energy. ‘That time, for me, is now,’ she says. ‘It has been the privilege of a lifetime to lead the JSE. Having been involved in so many of the JSE’s key strategic initiatives over the last 23 years, my fingerprints are on much of the DNA of the JSE today.’  Her decision was accepted by the board with regret, with Chairman Nonkululeko Nyembezi recognising how much of Newton-King’s heart and soul was vested in the exchange’s growth in becoming a leading, multi-asset class exchange. ‘She leaves the JSE stronger, more diverse, more technologically advanced, commercially savvy and client-focused; well-positioned to continue building on its successes in the current landscape,’ she says.

 Replacing Newton-King, is Leila Fourie, who is a former executive of the JSE with extensive experience in the financial industry.

Role models
Business leadership has been called on to entrench real change in core business strategies in order to attract investment and retain their social licence to operate, according to Aarti Takoordeen, the JSE’s Chief Financial Officer, who was speaking at a recent event, hosted by the exchange with the Shared Value Africa Initiative. 
This sentiment is echoed by Tiekie Barnard, CEO of the initiative. ‘Globally, the role of business in society is being questioned,’ she says. ‘Once seen as the generators of society’s wealth, companies are increasingly being seen as having caused harm to people and the planet. ‘Maintaining consumer trust and attracting investment hinges on companies making a strategic shift.’

Investing demystified
The second annual #JSESheInvests conference proved yet again to be one of the most comprehensive platforms in highlighting how women can invest in themselves and one another – and make their money work for them and their families. The event, which brings together powerful and motivational women, was established to improve gender representation among investors and to empower, educate and support those who want to achieve financial freedom by investing in the stock market.

This year, under the theme ‘Let’s Invest in Each Other’, various speakers explored women’s investment journeys. As Zanele Morrison, the JSE’s Director of Marketing and Corporate Affairs, points out, this is crucial for enabling women to take charge of their lives and make bold decisions. ‘Women need to understand that they do not have to earn a large sum of money before they start investing. They can start small with what they currently have,’ says Morrison. ‘The value that this event has delivered for women requires us to ensure that we continue to have the dialogues that financially empower women and share information on how to get in the game and invest. This event is really a platform that makes talking investments and wealth accessible, and connects in a construct that works for women through social connections.’

March 2019
Clarion call for equality
International Women’s Day, in March, saw the JSE participate in the annual Ring the Bell for Gender Equality ceremony, joining more than 70 stock exchanges in raising awareness of women empowerment and gender equality in the workplace, marketplace and communities.

This year the JSE collaborated with Women in Exchange-Traded Funds, the Motsepe Foundation, Rand Merchant Bank, UN Women and UN Global Compact – all of which have implemented successful empowerment strategies, and continue to play pivotal roles in the advancement of gender equality.

Zanele Morrison, Director of Marketing and Corporate Affairs at the JSE, says the exchange takes gender inclusion seriously. ‘There are 421 employees at the JSE, 229 of whom are women. Five of nine executives are women and eight of 12 board members are female. Our chairman, CEO and CFO are women, and it is the most vibrant and fulfilling workplace to be in.’

The event encourages women to take part in economic stock markets and become active stakeholders in industries that supply them with goods and services. ‘We need to create a space for women to participate in leadership and executive positions,’ says Morrison. ‘Diversity and inclusion leads to more sustainable and vibrant business in the long term.’

Gains despite challenges
The JSE has reported group earnings growth of 8% to R904 million, a 1% increase in revenue to R2.28 billion, and a further 1% contraction in operating costs for the year ending 31 December 2018.

The exchange has achieved this despite macroeconomic challenges across the globe and a year characterised by inter-quarter disparity in market activity, which had an impact on most of the JSE’s asset classes.

Primary markets revenue for example, declined by 15% to R155 million compared to the R181 million recorded in 2017, due to the significantly lower additional capital-raising activity. At R499 million, equity markets also recorded lower than the R507 million of 2017, a result of the flat billable value traded for the full year.

Equity derivatives value-traded also struggled, declining by 3%, owing to the main index losing appeal as an effective hedge in current market conditions, while the currency derivatives market remained flat at R48 million.

The JSE, however, continued to decrease its operating costs for a second consecutive year (down to R1.35 billion) and was able to introduce cost-optimisation initiatives within the technology environment.

CEO Nicky Newton-King says there is a focus on the JSE’s tactical and strategic choices in 2019. ‘We are looking forward to the delivery of our integrated trading and clearing (ITaC) platform, for example. We are directing more of our corporate resources to new and innovative initiatives that strengthen our operating platform to deliver better to our clients, while simultaneously allowing us to grow across the value chain.’

Investing in their future
The annual JSE Investment Challenge, now in its 46th year, has officially opened for registration. The challenge plays an integral role in helping to improve the financial literacy of school learners and university students with an interest in investment and stock markets. It is highly regarded as an instrument that introduces the country’s youth to investing and the stock exchange.

Last year the challenge attracted more than 22 000 entries, a 19% and 27% increase in school and university students respectively. This year, says Idris Seedat, the JSE’s Head of Corporate Social Investment, the challenge is also likely to continue to attract more entries, sowing the seeds in young minds for the concept of making money work for an individual. ‘This in turn is an opportunity to alleviate poverty and entrenches a different outlook around money, which in the future could change the narrative of the country’s saving and investment habits,’ he adds.

‘As the JSE we are committed to making a difference in the lives of South Africans by investing time, effort and funds in educating the youth.’

The competition, which sees teams trade with a virtual start-up capital of R1 million, runs from March to September, and is open to all students no matter their field of study. ‘This challenge is definitely helping to develop a culture of saving and investment, and adds to the appeal of investment and finance as a career choice,’ says Seedat, who adds that the value of the challenge ‘has certainly manifested in a more financially literate society’.

An ‘elegant  solution’
Naspers, the most heavily traded share on the JSE, is proposing to unbundle its internet interests outside of SA and, through the formation of Newco, list them separately on Euronext Amsterdam as a primary listing, with an inward secondary listing on the JSE.

This potential move does not impact on Naspers’ primary listing on the JSE. CEO of the JSE Nicky Newton-King says the Newco listings will provide local investors with a choice in how to access the holding company’s full potential. ‘This is a positive for investment diversification and trading activity on the JSE.’

The transaction, still subject to regulatory and shareholder approval, addresses the heavy weighting of Naspers on the FTSE/JSE indices. By unbundling, Naspers will still be included in the indices but its reduction in index weight will be offset by the inclusion of Newco.

The JSE views this as an ‘elegant’ way to address Naspers’ dominant position in the FTSE/JSE indices because it will allow investors discrete access to its offshore internet assets through the inward secondary listing of Newco. Investors can still access Naspers’ local assets and interest in Newco through its primary listing. It also means SA investors can buy these shares on the JSE without using their foreign allowances.

January 2019
Tomorrow is here
JSE representatives who participated in the New York-hosted SA Tomorrow Investor Conference in November were in good company. They were joined by Minister of Finance Tito Mboweni and Reserve Bank governor Lesetja Kganyago, as well as other SA Cabinet ministers and business community members.

This, the sixth iteration of the conference, which aimed to boost investor confidence and attract new investment, followed Mboweni’s Medium-term Budget Policy Statement and focused on creating an environment supportive of inclusive growth. Policy and regulation issues, including the Mining Charter, expropriation of land without compensation, and the restructuring of state-owned enterprises, also dominated the dialogue.

JSE Chairman Nonkululeko Nyembezi welcomed President Cyril Ramaphosa’s economic stimulus package, saying it was ‘an important stepping stone to revive Africa’s most industrialised economy’. She added that implementation ‘coupled with a legislative and regulatory environment that is more business and investor-friendly’ will unlock the country’s full potential. This was something that the ‘current political leadership is keenly aware of’, she said.

Spire showcase
In 2018, JSE’s annual Spire Awards, acknowledged as the benchmark of SA’s capital markets, recognised Rand Merchant Bank and Absa Capital with 12 and 11 awards respectively. Also celebrated were Tradition with four awards; Legae Peresec and CJS Securities, with three each; and Nedbank Capital and Avior Capital with two each.

Donna Nemer, JSE’s Director of Capital Markets, said the event enabled the exchange ‘to inform investors of the achievements of the strongest players in the industry’. The 17th edition of the awards – managed by Intellidex – included two new categories for both the commodities, and the equity and equity derivatives markets, the latter seeing an 8% increase for January to September 2018.

Overall the nominal bond market turnover was 13% up over 2017, totalling R22.9 trillion. The repo nominal turnover was R15.4 trillion, with the standard nominal turnover R7 trillion. The number of contracts in currency derivatives and interest rate derivatives markets traded up, by 28% and 8% respectively. ‘By working together we demonstrate that the SA financial ecosystem is in good hands,’ said Nemer. ‘We have the expertise to be recognised among the best in the world.’

Regulation under review
The response to the release of the Regulatory Review Consultation paper has been so positive that the JSE extended the deadline to ensure inclusion of all the input. The paper was issued in September, on the back of corporate scandals, speculation and innuendo that characterised the SA financial markets last year. The JSE believed it was important to seek the opinions of private individuals, public interest groups, listing sponsors, issuers and fellow regulatory bodies, to ensure the strengthening of any new regulation around primary and secondary listings.

John Burke, Head of Issuer Regulation at the JSE, says that concerns raised included practical implementation issues, such as with the non-binding vote on corporate governance, and the composition of the board of directors.

Another concern is that proposals for secondary listings may have an impact on the country being viewed as a favourable secondary listing destination. ‘We are carefully considering all reservations expressed to ensure we formulate a balanced approach that accounts for both regulatory and market conditions,’ according to Burke. ‘Our amendments, when ready, will however be subject to further public consultation in accordance [with] the provisions of the JSE Listings Requirements and the Financial Markets Act No 19 of 2012.’

Although the items under Part II, which covers short selling and market abuse investigations, fall outside its regulatory ambit, the JSE has committed to ensure that all comments are shared with the relevant bodies for consideration.

October 2018
Keeping watch
The JSE has embarked on a public consultation process following the corporate scandals and speculation that have plagued financial markets over the past year. The exchange believes this has impacted on trust, and it says ‘they have highlighted the need to consider whether or not the regulation of primary and secondary listings could be strengthened’. It posed the question if there is more that other role players could do to build stakeholder trust.
The JSE invited public comment on the consultation process.

The exchange believes that through the process, and once feedback has been analysed, there will be improvements in regulation and governance structures, to provide more robust governance oversight. The process aims to address the concerns of the investment community and challenges all role players in the broader financial market ecosystem to consider their roles in advocating for the enhancement of corporate governance.

In particular, these are roles that fall outside of the JSE’s regulatory ambit including the disclosure of short sales, disclosure of progress on market abuse investigations and the responsibilities of other guardians of governance such as boards of directors, audit firms, analysts, large asset managers as well as shareholders.

Nicky Newton-King, CEO of the JSE, says that while the exchange is reviewing its own relevant mandate, the organisation does not suggest that it has solutions for the ecosystem as a whole. ‘Depending on the nature of the comments received in response to this paper, it may be appropriate to convene a colloquium to discuss the improvement of governance.’

Step it up
Government bonds can now be traded on an electronic trading platform (ETP) – another sign of the sophistication of SA’s capital market infrastructure. The Bond ETP benefits government entities through the issue and listing on the ETP of bonds that motivate funding of the country’s big infrastructure projects.

Investors receive regular interest payments, with their entire investment returned after a predetermined period. Currently, more than R2 trillion government bonds are listed on the JSE’s Debt Board, accounting for more than 90% of all debt market liquidity reported to the JSE. The new platform allows issuers to transact anonymously both pre- and post-trade – the end result of which will be lower transaction costs and live price trading.

Donna Nemer, Director of the JSE’s Capital Markets, says the launch is an important element of SA’s commitment to capital market reform. ‘A more sophisticated market infrastructure presents benefits beyond those for issuers and investors because it further positions South Africa as an attractive investment destination.’

The Bond ETP, launched in July by the JSE, is the result of collaboration with National Treasury and a multi-stakeholder group comprising Strate, the Financial Sector Conduct Authority and the banking institutions that service primary dealers.

Global benchmarks
Improvements to the JSE’s own environmental, social and governance (ESG) structures has entrenched its place in the FTSE/JSE Responsible Investment Top 30 Index, which the bourse pioneered among emerging markets in 2004.

FTSE Russell performs the ratings in conjunction with Evalueserve, which researches and assesses qualifying companies using information available in the public domain, inclusive of annual reports and websites. Shameela Soobramoney, JSE’s Senior Manager: Group Strategy and Sustainability, says the FTSE data model is based on global best practices. ‘It constantly adapts to what is happening in the ESG space, and the decision to use only publicly disclosed information in the assessments is to encourage disclosure to all stakeholders.’

The ratings are determined by breaking down pillar and thematic exposures and scores. These are built on some 300 individual indicator assessments that are applied to each company’s unique circumstances. To be rated in the Top 30 from an ESG perspective, index constituents are also required to pass various eligibility screens around liquidity, market cap and minimum free float. SA’s level of ESG disclosure is one of the highest rated in the world among emerging and developed markets assessed by the FTSE.

‘ESG issues have become more pertinent as investors across the world become more cognisant of the financial benefits of making sound investment decisions that include ESG factors,’ says Soobramoney.

‘Investors are increasingly looking at the ESG rating tools to see which companies are doing better, and using those more to influence their decision-making. The JSE’s role, therefore, is to create a more solid relationship between issuers and investors, and to continue to remain astute in enabling an environment in which a more sustainable economy can prosper through products, advocacy, engagement and governance rules.’

Earnings boost
The half-year report issued by the JSE for 2018 proves that following its continued focus on cost control, and a one-off tax credit of R31 million, earnings after tax have increased by 34% to R561 million. This performance is expected to increase in the latter part of 2018 as the JSE continues with its growth strategy and commitment to deliver R170 million in cost savings by the end of 2019.

One of the reasons for optimism is the nearing of completion of the Integrated Trading and Clearing (ITaC) project 1b and 1c. JSE CEO Nicky Newton-King confirms that this will provide JSE clients with robust trading and clearing technology in its equity derivatives and currency markets. ‘It will also introduce more sophisticated trading and risk management functionality, enabling us over time to reduce the cost of transacting in those markets,’ she says.

The half-year results are also attributable to a number of launches, inclusive of the electronic trading platform for government bonds and a new-tiered billing model for the cash equities market. ‘For the balance of 2018, we will maintain our focus on costs, while making the necessary capital investments in areas that will enhance the group’s service offering and sustainability.’

July 2018
Nourishing agriculture
Considered one of the most important events on the agricultural calendar, and with record ticket sales this year of 82 817, Grain SA’s NAMPO Harvest Day 2018 hosted 746 exhibitors, inclusive of the JSE.

The event exposes visitors to the latest technology and products on offer in the farming environment, and for the JSE this is an opportunity to engage with the end-users of its products, says Raphael Karuaihe, Head of Commodities at the JSE. ‘It is also a great platform for us to understand what the industry needs, the opportunities that exist for new products, and how we can assist the community to protect their businesses from price movements.

‘One of our takeaways this year, the 23rd year the JSE has attended, was that users are not clear on the difference between the usage of livestock versus maize products. We intend, therefore, to provide more education in this regard as well as increasing our accessibility to stakeholders.’

She Invests Arena
A growing number of women are choosing to enter capital investment markets, viewing the potential not just as a contributor to their own financial health, but one that can potentially make a difference to their immediate communities or families. In response and in an effort to guide women in making and taking control of their investment decisions the JSE held the She Invests Arena event at its premises in Sandton on 4 August.

In association with Ndalo Media and Easy Equities, stockbrokers and leading financial institutions, attendees were guided by experts in taking the first steps to investment and learnt from leading women about their own investment journeys.

Brand Africa
Four of the Top 10 African brands announced by Brand Africa 100 this year, at an event hosted by the JSE for the first time, are owned by companies listed on the local bourse. They are: MTN (2nd), DSTV (4th), Shoprite (6th), and Amarula (9th).

Mpho Ledwabe, JSE Head: Marketing said that while there is no scientific proof that being listed equates to being successful or being honoured, data purports that listing can be an avenue that enables business to raise the required capital to expand their businesses and essentially build successful brands.

‘We have seen this when companies list, grow and eventually lead in their own categories, locally as well as globally.

‘Brand leaders create good financial returns for their investors,’ Ledwabe adds. ‘So it is interesting to note that in the financial services sector of Brand Africa 100, 60% of the most admired brands are produced in Africa.’

April 2018
On equal footing
To celebrate International Women’s Day on 8 March, the JSE, UN Women and UN Global Compact hosted the fourth annual Ring the Bell for Gender Equality event, along with dozens of other stock exchanges around the world, to raise awareness about economic empowerment and gender equality in the workplace, marketplace and community. The event, themed Time is Now: Rural and Urban Activists Transforming Women’s Lives, highlighted the pivotal role that the corporate sector can play in advancing gender equality to help achieve the Sustainable Development Goals. By participating, the JSE showcased how the private sector is taking concrete steps to empower women in the workplace. Zeona Jacobs, the JSE’s Director of Marketing and Corporate Affairs, said that while progress on gender equality has been made, there is still much to do. ‘We cannot take our eye off the issue, and that’s why last year Business Leadership South Africa (BLSA) launched a contract with all South Africans that pledged them to work towards ensuring all citizens have equal chances to become business leaders.’ Representatives from organisations such as Global Compact Network (SA), UN Women South Africa Multi-Country office, BLSA, Rand Merchant Bank, De Beers Consolidated Mines, Motseng Investment Holdings and the Commission for Gender Equality shared how they are working to level the gender playing field.

Ready for the future
Foresight was instrumental in the JSE reducing its cost base to ensure it limited the decline in group earnings to just 9%, or R836 million, for 2017. The impact of tough market conditions was evident across the values and volumes traded in most of the JSE’s key markets last year, including operating revenue, which declined by 5% to R2.2 billion against 2016’s R2.3 billion. Earnings per share and headline earnings were also down, 977.4 cents and 996.6 cents respectively. The JSE Group maintained strong cash generation and, along with a robust balance sheet, was able to declare an ordinary dividend in December of 605 cents, an increase of 8% on the same period in 2016. An investment of R187 million in capital expenditure, though down on the R205 mil-lion in 2016, was required as the JSE gears up to the end-of-delivery of Phase 1 of its inte-grated clearing and settlement platform, and the exchange traded platform for government bonds – both targeted for delivery this year. CEO Nicky Newton-King reflects on the challenges faced by the JSE and its clients in 2017 and for the forthcoming year: ‘We are pleased that, in this environment, we were still able to grow the ordinary dividend to shareholders, and we continue to make year-on-year reductions in certain of our fees in order to find ways to make it more affordable for our clients to do business with us.’ Last year’s initiatives reduced the group’s total operating expenses to R1.40 bil–lion, the most significant contributors being a 3% drop in personnel costs, and 9% in technology. ‘The group is progressing well towards its commit- ment to reduce its cost base by R170 million by the end of 2019,’ says Newton-King. ‘We are excited by the current change in local sentiment and are clear about our 2018 priorities and hence the issues that we need to tackle to improve our operational resilience and to achieve our strategy.  We look forward to being a constructive part of the renewal of our battered country as we build momentum towards inclusive growth.’

January 2018
Leading by example
Trading volumes and votes cast by clients trading in the fixed-income, currency and commodity derivatives markets have seen Absa Capital being recognised as Best Bonds House and Best Research House, and Rand Merchant Bank (RMB) as Best Fixed Income and Currencies House, Best FX House and Best Interest Derivative House at the JSE’s 16th Annual Spire Awards. Despite a tough trading setting, the JSE continues to see significant growth in the currency derivative and interest rate derivative markets – traded up by 19% in the former and 33% in the latter.Bernard Claassens, JSE Manager: Fixed Income, translates the statistics into figures. ‘This year, from January to September, overall nominal bond market turnover totalled R20.293 trillion. The repo nominal turnover was R14.31 trillion, while the standard nominal turnover was R5.6 trillion.’ The Spire Awards acknowledge the successes of JSE clients and member firms, from brokers to sales teams and researchers that have demonstrated hard work, resilience and innovation. RMB received the highest number of awards this year (11). Other recipients include Nedbank Capital, Standard Bank, Citibank, Tradition, Avior Capital, Peregrine Securities, Prescient Securities and Robinson Mulder De Waal.

Dream team
In an extended partnership between the JSE and FTSE Russell, a range of co-branded fixed-income indices are now available to investors, providing access to internationally recognised benchmarking standards as well as serving to strengthen the development and growth of the local fixed-income market. The partnership combines the JSE’s regional expertise in Africa and its market standard bond prices with FTSE Russell’s global distribution network and capabilities in equity and fixed-income research, analytics and transparent investment benchmarks. In turn, this allows partners to deliver world-class investment tools for domestic and international investors. ‘This will enhance transparency and growth and, ultimately, also strengthen the robustness of the South African capital market,’ says Leanne Parsons, JSE Director of Information Services. ‘Not only will we be able to offer world-class fixed-income index capability to local and international investors, but it will also broaden our ability to offer multi-asset indices.’ The partnership with FTSE Russell and the JSE was established more than 15 years ago, and has enabled the provision of equity indices since 2002, proving – as Parsons mentions – the JSE’s drive to continue to enhance its capability by ‘continually developing innovative products as our clients’ needs evolve’.

Top of the class
Students and scholars from Stellenbosch University, Lethukuthula Secondary School, Gansbaai Academia and Maritzburg College have taken top honours in the JSE’s annual Investment Challenge, which – for 40 years – has focused on introducing youth at schools and universities to the JSE and its role in wealth creation, while contributing to the country’s economic growth. Recognised as SA’s largest financial literacy initiative, the JSE Investment Challenge was awarded the Mail & Guardian Investing in the Future Education award in December. The 2017 challenge ran from March to September and saw a participation increase of 18% in school enrolment and 14% for universities, with Gauteng enrolment increasing by 38% and KwaZulu-Natal by 10%. According to Ralph Speirs, the JSE’s CSI Officer for Marketing and Corporate Affairs, participants performed exceptionally well in this year’s challenge with the top-performing teams growing their portfolios by between 6% and 45%. ‘The winning teams have generated exceptional investment returns. Although the participants trade in a risk-free environment because they hold virtual portfolios, the competition still requires the weighing of different investment options against each other, and to manage their portfolios to maximise returns.’ Prizes awarded to university teams total R60 000, plus an inclusive all-expenses paid trip to an international stock exchange for the first-place winners. Final school challenge prizes total R180 000. ‘This is a game without boundaries,’ says Speirs. ‘We encourage the youth to join in and flex their investment muscles.’ Registration for the 2018 JSE Investment Challenge opens in January 2018.

Raising the bar
The 2017 top 10 companies recognised by Chartered Secretaries Southern Africa’s Integrated Reporting Awards are Gold Fields (overall); Anglo Platinum (Top 40); Kumba Iron Ore (mid cap); Royal Bafokeng (small cap); York Timbers (fledgling/AltX); Waco International (non-listed); Sasria SOC (small state-owned companies); Auditor General South Africa (public sector); the South African Institute of Chartered Accountants (NGO/NPO); and FNB Namibia Holdings (regional company). Merit winners included Vodacom Group, Barclays Africa Group, ArcelorMittal South Africa, PPC, Hulamin, Broadband Infraco Soc, FNB Namibia Holdings, the Competition Tribunal of South Africa, and the National Sea Rescue Institute. The annual awards, co-sponsored by the JSE for the past 22 years, have been recognising corporate excellence since 1956, with entries received across SA and neighbours Botswana, Swaziland and Namibia. This year, voluntary entries exceeded 95, which is in line with the more than 10% year-on-year entry increase experienced over the past five years. Stephen Sadie, CEO of Chartered Secretaries Southern Africa, said at the announcement event in November that one of the hallmarks of the Integrated Reporting Awards is that the 10 categories cover a range of companies, ‘from the Top 40 to NGOs’. Companies therefore compete against their equals and learn from one another. He further mentioned the contribution that the King III and King IV Reports have made to local companies, resulting in them being among the world’s leaders in the integrated reporting process. Sadie also highlighted the JSE for being the first stock exchange globally to require listed companies to produce integrated reports. ‘Integrated reporting is a critical aspect of good corporate governance,’ he said. ‘With the number of governance lapses we seem to be experiencing daily, it is vital that corporate reporting remains at a high level.’

October 2017
Quality factor
The latest ETF offering on the JSE, the Satrix Quality South Africa ETF (JSE: STXQUA) is the sixth Satrix listing this year, proving just how useful a tool the ETF product is for those seeking exposure to local equity markets, and also for first-time investors. According to the JSE’s Head of Primary Markets, Prejelin Naggan, ETFs track the value of a basket of shares or assets such as bonds and commodities, money markets and listed property. ‘ETFs allow retail investors to start investing with a relatively small initial amount, or monthly payment, which also increases accessibility,’ he says. The STXQUA forms part of the JSE’s smart beta offering – also known as ‘factor investing’ – and tracks the S&P Quality South Africa Index, which currently has 24 companies listed. This index invests in high-quality SA stocks, and is ranked by a quality score that’s based on a company’s return on equity, accruals ratio and financial leverage ratio. The inclusion of the ‘quality factor’ means investors are no longer solely dependent on just a good management evaluation. Instead, they are now able to look at other indicators such as strong balance sheets, high and sustainable levels of profitability, and a high level of earnings quality. STXQUA is the JSE’s 55th ETF, bringing the ETF market cap close to R78 billion.

Hot off the press
After consulting with its listed companies, the JSE has decided not to amend its listing requirement for publication of short-form announcements in the print media. According to Business Day newspaper, JSE CEO Nicky Newton-King was quoted as saying the proposal did not enjoy the support of a large number of listed companies. ‘Most of our peer exchanges globally don’t have a requirement to publish announcements in the media. We consulted widely on whether to change this. It was remarkable how big the support was to continue with the current requirements,’ Newton-King told the paper. Business Day has rallied in support of the decision. ‘We remain committed to ensuring that we cover business, companies and corporate SA in depth and without prejudice,’ says Andy Gill, MD of Tiso Blackstar, which owns Business Day. ‘Business Day and the business media in general are great tools for companies to market themselves directly to investors.’ The newspaper’s editor, Tim Cohen, concurs. ‘This is very welcome recognition of the importance of the fourth estate and demonstrates the business community’s commitment to support the press.’

July 2017
Crossing borders
With a total ETF market cap of almost R73 billion, the latest listing in April of the Big50 Ex-SA brings the total of JSE ETF listings to 53. Big50 Ex-SA gives investors access to a new index that offers a diversified investment of some 50 companies through 15 African stock exchanges. Offered by Cloud Atlas Investing, a Johannesburg-based collective investment scheme, the Big50 Ex-SA is expected to also expose investors to stocks in multinationals, offering tax and other cost benefits, and is considered a suitable investment vehicle for new stock market traders. The diversity of shares available from the listing of Big50 Ex-SA is of particular interest to institutional investors that are able to invest up to 5% of a fund’s capital in African investments. From the JSE’s perspective, confirmed by Donna Nemer, Director of Capital Markets at the JSE: ‘The new ETF offers an easy, safe way to invest in African markets and supports the continent’s growth journey.’ Exposure in countries such as Egypt, Mauritius, Kenya, Morocco, Tanzania, Nigeria, Tunisia, Botswana, Namibia, Uganda, Ghana and Zimbabwe, plus the BRVM Exchange in West Africa, but not SA, offers local investors long-term growth and rand-hedging opportunities.

Date to remember
In celebrating the 10th anniversary of the JSE’s currency derivatives market, it is highlighted that with an average of some 240 000 daily trades, averaging a total value of R3.2 billion, the continued growth experienced over the decade has come from constantly expanding the product range according to the needs of the market. That market is largely retail and institutional investors and importers/exporters who have been able to hedge currency risk. Donna Nemer, Capital Markets Director at the JSE, says the creation of the currency derivatives market moved currency trading exclusively from over-the-counter transactions to a transparent and regulated platform and, with the launch in 2011 of Any Day Expiry contracts, investors were given the flexibility to pick the expiry date of the contracts they trade. ‘These contracts allowed market participants to hedge their currency risk with even more precision.’ Another creation that revolutionised derivatives was the introduction of quanto futures, which track the movement of the euro/dollar and British pound/dollar ex-change rates, but settle at a fixed rate in rands. Funds used to buy such futures remain in SA without exposing investors to movements in the rand or needing to use offshore allowances. Currency futures were further expanded to include a range of African currency pairs in 2014, but it remains, given that it constitutes some 80% of total trade in currency derivatives, that the rand/dollar is the most actively traded currency pair on the JSE. The platform is enhanced with JSE futures offerings that track the movement in the rand exchange rate to the US, Canadian and Australian dollars, Chinese renminbi, Turkish lira, Swiss franc and Japanese yen.

Room to grow
Soya bean, considered one of the most important global food crops given its versatility for both human and livestock consumption, has been introduced as a specialised futures contract with the commodities sector of the JSE. This is in response to soya bean processors and commodity traders who are interested in trading not just the soya bean but its crush complex into a single product, which required the JSE to create such an index. The reference to crush comes from the processing – crushing – of two soya by-products, soya bean meal and soya bean oil. The difference between the combined value of the two and the value of the soya bean itself is called the ‘crush spread’ and is used as a measurement of the profit margin for soya bean processors. Craig Robinson, MD of Russell Stone International, which has recently executed soya bean transactions, says the new contract has made hedging much easier. ‘Before the introduction of this contract, you had to trade in South African and American beans and oil, and Argentinian meal in order to hedge meal, oil or the crush spread. This became very expensive. ‘The JSE’s soya bean crush contract provides the ability to hedge a crush by trading in one contract. It also makes the process more cost-effective for both buying and selling by the removal of a lot of red tape and the necessity for actual delivery.’

Developing trust
With a total market cap of almost R3 billion, after the listing of AEP Energy Africa at the end of June, special purpose acquisition company (SPAC) registrations at the JSE are indicating a growing interest in the investment product. The company is the sixth SPAC to list to date. Prior to 2013, when the SPAC regulations were amended, accessing such investment opportunities were traditionally only available to institutional investors and private equity investors. Zeona Jacobs, the JSE’s Director of Marketing and Corporate Affairs, says that, with SPACs, public investors can benefit from the liquidity and transparency associated with investing in a company listed on one of the best-regulated exchanges in the world. And because the JSE’s listing requirements also contain regulatory safeguards, all parties are protected during the investment process. ‘The SPAC’s capital is held in a separate trust until acquisitions are made,’ she says. ‘If viable assets are not acquired, the capital is to be returned to investors. The JSE provides SPACs with 24 months within which to acquire assets.’ AEP Energy Africa’s interest is in identifying and acquiring assets linked to the creation of clean-energy infrastructure and products to take advantage of demand for energy assets in SA and the continent.

April 2017
Silver lining
It’s good to know that the volatility in the markets experienced last year was, for a change, driven not by SA factors as was experienced in 2015, but those outside of its borders. Events that headlined market movements included Brexit and the US elections, which along with global political uncertainty, boosted the JSE’s 2016 market activity overall – a 17% rise in value traded on the equity market and 21% increase in nominal value traded on the bond market. Of note is that the exchange recorded 18 new company listings, one of which is leading global brewer Anheuser-Busch InBev, now the JSE’s biggest listed company with a market cap of R2.43 trillion (as of January 2017). According to Donna Nemer, JSE Director of Capital Markets, 2017 trade across asset classes is strong, ‘although volatility is lower than much of 2016. Markets are likely to be driven by the impact of Brexit, the economic policies of President Trump, developments in the domestic political sphere and overall investor sentiment towards emerging markets. ‘Investors will continue to keep a watchful eye on decisions made by ratings agencies as well. Guided by market needs, the JSE continues to enhance its listing and trading platforms, with work progressing well on ITaC, an electronic platform for bonds and a new listing framework for project bonds, among other initiatives.’

In the basket
SA’s first US Treasury Bond Custodial Certificates ETF has been listed on the JSE by Rand Merchant Bank (RMB), a division of FirstRand Bank. Called the Dollar Custodial Certificate, with the JSE share code DCC USD, investors are able to earn US dollar-linked returns while offering both institutional and individual JSE investors offshore exposure to US Treasury Bonds. ETFs have seen steady growth in SA, mirroring that experienced globally. The total number of ETFs on the JSE stands at more than 50 with a total market cap of nearly R70 billion. This is the second time RMB has listed a custodial certificate, the first being the Krugerrand Custodial Certificate ETF.

Building wealth
The JSE has expanded its product offering with the listing of two new Satrix ETFs – providing investors with access to the listed property sector and a basket of inflation-linked bonds. ‘We are committed to offering investors choice,’ says Donna Nemer, the JSE’s Capital Markets Director. ‘These two Satrix ETFs are a continuation of that journey.’ ETFs are investments that track the performance of a ‘basket’ of shares, bonds or commodities. The Satrix Top 40, for example, is a single investment that offers exposure to the 40 biggest shares on the JSE. In addition, says Nemer, ETFs are well-regulated by both the JSE and Financial Services Board. According to Satrix CEO Helena Conradie: ‘The Satrix Property ETF will track the performance of the S&P SA Composite Property Index, which invests in all companies in the index that are classified as property companies. Investing in a mix of asset classes is one of the chief means of reducing risk and volatility.’ She adds that, over the long term, SA listed property typically offers attractive yields and strong capital appreciation. The Satrix ILBI ETF tracks an inflation-linked bond index, providing investors with a hedge against inflation. Conradie adds that the index has provided strong risk-adjusted returns relative to traditional SA asset classes over the past 10 years.

Striking a balance
Along with 43 other exchanges around the world, the JSE marked International Woman’s Day on 8 March by ‘Ringing the Bell for Gender Equality’ – an event that aims to raise awareness of the role that organisations need to play to advance gender equality. The JSE honoured women in an event hosted by JSE CEO Nicky Newton-King together with Gloria Serobe, Women’s Investment Portfolio Holdings Limited founder and WIP Capital CEO. Proceedings included a gender equality panel discussion, opened by Bonang Mohale, Shell South Africa vice-president of upstream and chairman of downstream. Topics included transformation and gender equality policies, and deterrents in the private sector in implementing such policies. JSE Marketing and Corporate Affairs Director Zeona Jacobs reiterated that the exchange believes in having women at all levels as the norm. ‘Organisations should create the right platforms to provide female employees with the same opportunities as their male counterparts. There must exist an conducive environment for women to prosper.’ The JSE leads by example – 42% of its board members, 54% of its executives and 51% of employees are female. Meanwhile, Newton-King and JSE Chairman, Nonkululeko Nyembezi-Heita are setting the bar high as top-level female executives. Since 2015, companies listing on the JSE have been required to have policies that promote gender diversity at board level, and as of January this year, disclosure of the performance thereof became mandatory. The Ringing the Bell for Gender Equality event is part of a collaboration between the UN Global Compact South Africa Network; Sustainable Stock Exchanges Initiative; UN Entity for Gender Equality and the Empowerment of Women; International Finance Corporation, World Federation of Exchanges; and Women in Exchange Traded Funds.

January 2017
Top honours
Annually, the JSE highlights excellence in fixed income, currency and commodity derivatives markets by rewarding its listed companies with a sought-after Spire Award. In 2016, the 15th Spire Awards saw Rand Merchant Bank and Nedbank hailed as the biggest winners, having taken the honours for Best Bonds House, Best Fixed Income and Currencies House, Best FX House and Best Research House and Best Interest Derivative House respectively. ‘The awards not only allow the JSE to showcase the successes of our issuers, members and clients but also the achievements of the leading players in the industry to investors,’ says the JSE’s Bernard Claassens, Manager: Fixed Income. The award is considered valuable not only because it recognises the role that fixed income instruments play in the portfolios of most pension funds but also because they are granted based on trading volumes and votes cast by clients. ‘The awards allow us to recognise the hard work and innovation of a range of different market participants, from brokers to researchers and sales teams as well as issuers,’ says Claassens. Other companies that received 2016 Spire Awards include Absa Capital; Avior Capital; Standard Bank; ICAP; Tradition; Peregrine Securities; and Robinson Mulder De Waal Finance.

Playing the game
This is the 44th year that the exchange has presented the JSE’s Investment Challenge – the country’s largest financial literacy initiative that in 2016 also saw a 30% increase in the number of participating schools. Some 15 700 learners across the country competed for a winning percentage of the R180 000 available in the School Challenge, or a portion of the R60 000 for the first three winners of the University Challenge, including an overall winner’s benefit of an additional R25 000 and an all-expenses paid trip to the Australian Securities Exchange. The Investment Challenge is a simulated game in which participants are provided with an opportunity to explore the world of investing by trading JSE-listed shares. ‘The JSE is committed to educating the youth about investing, and the Investment Challenge allows us to achieve this goal,’ says Idris Seedat, the JSE’s CSI Manager. ‘Our aim is to reach as many schools and universities as we possibly can.’ The 2016 winning school teams were Sandisiwe 5 from Sandisiwe High School (income portfolio); DSS team from Domino Servite School (equity category); and Alliance Traders from Maritzburg College (speculator portfolio). The University Challenge honour was taken by Neverest from Stellenbosch University (speculator portfolio). Registration for the 2017 challenge opens in February. The JSE invites the youth to join the game and flex their investment muscles. Investment Challenge co-ordinators can be contacted on 011 520 7116/7344/7129.

Reporting excellence
Chartered Secretaries Southern Africa (CSSA), in partnership with the JSE, announced that Vodacom was the overall winner of the 2016 Integrated Reporting Awards. Celebrating its 60th anniversary, of which the JSE has been in support for the past 21 years, the event recognises good governance and reporting in the face of a rapidly changing business world. Companies that enter are afforded the opportunity to have their reports appraised against international best practice and for peer-to-peer comparison. As CEO of the CSSA Stephen Sadie explained, the awards also contribute to the learning process of reporting excellence. ‘The best way for organisations to become skilled at integrated reporting is to be compared with, and learn from, their peers,’ said Sadie. ‘One of the hallmarks of the awards is that they cover 10 categories from the Top 40 to NGOs, meaning that companies compete against their equals.’ Top 40 achievers for 2016 were the Nedbank Group as winner, while a merit award was granted to Sasol. Mid-cap and small-cap winners were Liberty Holdings and ArcelorMittal South Africa respectively.

October 2016
Centre of attraction
The recent launch of the JSE Exchange Hub in Cape Town not only reinforces the important role that the Mother City plays in building SA’s capital markets, but it also provides the JSE with an opportunity to enhance its service to local clients. Donna Nemer, the JSE’s Director of Capital Markets, points out that Cape Town – as the second-largest economic environment in the country – is a major centre for global and local institutional investors as well as a growing number of JSE-listed companies. ‘The establishment of the Cape Town hub is part of our established strategy to enhance the JSE service and relationships with all stakeholders,’ she says. ‘Cape Town is becoming an increasingly important investment destination in South Africa. The city boasts sophisticated infrastructure that includes shipping access and represents an important gateway for both the country and the continent. ‘The JSE Exchange Hub Cape Town will further support the investor community, especially with such a large part of the fund-management industry based in the city.’

Saving ourselves
Despite efforts by the National Treasury that included the introduction of measures and promotions to encourage a culture of saving, SA’s overall savings rate remains low. The JSE’s Director of Marketing and Corporate Affairs Zeona Jacobs attributes this to poor financial literacy. ‘As a country, we need to do better to encourage people to save and invest, eventually to lessen the burden on the government’s pot,’ she says. ‘In order for our economy to grow, more people need to take action in their personal finances by taking the first steps to invest. It is never too late to do this.’ In advancing the ‘savings’ concept, Jacobs encourages citizens to consider investing on the JSE through a tax-free savings account (TFSA), which enables access to the stock market through a wide range of ETFs. For as little as R300 monthly, ETFs track the performance of the stock market so that investors need not make any difficult decisions about where and when to move their money. ‘Neither are they exposed to costly performance fees,’ according to Jacobs. To date, more than 20 000 TFSA accounts have been opened on the JSE. ‘We believe there is scope for much more growth in this area, but we need savers to take an active part in their financial futures by equipping themselves with the necessary knowledge and by asking their brokers and advisors the right questions,’ says Jacobs.

Listing skills
With the opening of the JSE Training Academy, the bourse is providing companies with the opportunity to acquire the skills needed to list; meet the continuous obligations of being a listed company; and manage media and investor relations. ‘The regulatory and investment environment is ever-evolving, and it is crucial for both listed and unlisted companies to not only know what information they are expected to present to the market, but also how to present it effectively,’ says Carol Crozier, Company Services Manager at the JSE. ‘This allows them to build a compelling investment case for their business and turn the regulatory requirements they adhere to into a strategic advantage.’ For the JSE, the benefit of the academy is that it creates a platform for increased engagement with its customers. ‘We actively and regularly engage clients about their needs and update courses on our programme to reflect the changing landscape of the investment sector,’ says Crozier. Currently, courses on offer include a comprehensive overview of the JSE listings requirements; JSE regulation of transactions (acquisitions and disposals); how to list on the JSE; how and why to list debt securities on the JSE; the ABCs of investor relations; how to develop a compelling investment case for your company; understanding how analysts and investors use financial statements; investor relations and the chief financial officer; managing a social media crisis in SA; and customised media relations. To date, the JSE Training Academy has already trained more than 40 companies, including some of those in the JSE Top 40 Index. According to Crozier, the bourse also aims to partner with other stock exchanges to facilitate training across the African continent.

Master of all
The initiative taken by the JSE at Leaderex 2016 in presenting a series of masterclasses provided interested parties with a range of lectures and panel discussions that clearly outline how the JSE operates, while encouraging investment from a personal and business perspective. ‘We have set out to demystify the JSE and allow people to understand the different technical terms used by stockbrokers and the wider financial markets community,’ says Zeona Jacobs, JSE Director of Marketing and Corporate Affairs. ‘The JSE is one of the top 20 exchanges by market cap globally, and the largest on the African continent. It offers a strong track record, efficient systems, good regulation and cost-effective products and service.’ The masterclasses expanded on the benefits of the AltX and special purpose acquisition vehicles – structures designed to enable a company to raise capital with which it may embark on acquisition or merger activities. These are also ideally suited to SME businesses and individuals who wish to invest in the economic growth of SA. Other masterclass activities included the democratisation of capital and investment; the role of a stockbroker; and a mock-up of a day in the life of a trader.

July 2016
Broker development
Emerging black-owned stock broking firms are set to receive a boost with the JSE’s latest initiative, Enterprise Development. The programme will see the JSE paying cash disbursements equal to 33% of the quarterly equity trading and membership fees of a black brokerage, money that will provide financial assistance and support the sustainable growth of the business. The programme was established after consultation with the Black Broker Forum, where the JSE echoed concerns about the development of black brokers. The exchange is committed to the transformation of SA’s capital markets. ‘Our intent is to create more accessibility and encourage more black businesses and investors to enter our capital markets and therefore lead to the transformation of both the sector and the ecosystem,’ says Donna Nemer, JSE Director of Capital Markets. Under the Financial Sector Code (or any successor code) qualifying companies must have black ownership of more than 50% and turnover of less than R35 million per annum. Members will be reviewed annually.

Three days is a plus
With the final market-testing phase of the JSE’s transition to T+3 complete, the bourse will be moving to a shorter three-day settlement cycle as of July, aligning the equity market cycle with international best practice settlement standards. JSE Executive Director Leila Fourie says that this upgrade will ensure that SA remains as attractive as possible for foreign inflows of capital and settlement assurance. ‘It is vital for us to retain and continue attracting investment from outside of the country. Investors who trade on our market must have the assurance that trades will settle in a seamless manner,’ she says. Currently, non-residents hold 37% of equity trades, with approximately 30% trading daily. There are added benefits for the financial markets, including cash being released earlier in a settlement cycle, which increases funds in circulation. The JSE says that based on the average value traded per day of R25 billion, this will create the release of R50 billion into market circulation. Another advantage is that, at any given point, the amount of unsettled trades is dramatically reduced. So, particularly in the event of a market default, the potential losses between trading parties is lessened and investor protection is enhanced. Also, in negating the almost zero failed trade rate (over the past 15 years), the JSE is aiming to maintain a trade roll rate target of less than 5%, even though it is expected that between 5% and 10% may roll because of T+3. ‘We are working to minimise this percentage by improving the availability of securities for lending and borrowing activity,’ says Fourie.

Investment professionals shine
The Investment Analysts Society (IAS) hosts an annual awards ceremony to acknowledge JSE companies that have achieved excellence in communication and financial reporting. ArcelorMittal has been announced the overall winner for setting particularly high standards for transparency and disclosure in its financial reporting, and in the excellence of communication by its executive team. Chris Gilmour, deputy chairman of the IAS, explains that the society rewards excellence based on published financial reports; access to financial information on company websites; corporate presentations to IAS members; and guidance provided in terms of current and future performance. ‘The society seeks to promote full disclosure in presenting financial results, performance projections, future strategies and objectives as well as complete adherence to corporate governance and sustainability standards among JSE-listed companies.’ The awards recognise the top companies from 10 of the JSE Board’s main sectors. Awards are also granted for presentations made to IAS members during 2015 in the JSE’s small, medium and large-cap sectors, from which the overall winner is chosen.

Honouring CFOs
A number of JSE-listed company chief financial officers have been recognised by the 2016 CFO Awards. Taking the prestigious Chief Financial Officer of the Year Award was Reeza Isaacs from Woolworths Holdings, having achieved the best scores from a pool of 25 CFOs. Isaacs also received top honours for transformation and empowerment, a result of shifting his team from being income statement-orientated to instead focus on balance sheet and return on capital, which was required after acquiring David Jones and Country Road. ‘Setting a target, being clear about it and measuring it, is key to success,’ he says. Other JSE-listed company CFOs honoured included ABI’s Walter Leonhardt (Compliance /Governance and Finance Transformation); AngloGold Ashanti’s Christine Ramon (Finance/Technology); Imperial’s Osman Arbee (Strategy Execution and High-Performance Team); Olam International’s Bikash Prasad (Moving into Africa); and the National Arts Council of South Africa’s Dumisani Dlamini (Young CFO of the Year and Public CFO of the Year).

April 2016
Fee adjustment
On the back of excellent and robust revenue growth in 2015, the JSE anticipates 2016 will present a different challenge‘The JSE and its clients will be operating in a difficult economic environment this year. Understanding this, the JSE announced further reductions in trading fees with effect from April as we continue to find ways to make it cheaper for our clients to trade,’ says JSE CEO Nicky Newton-King. ‘We’re clear about our 2016 priorities and the issues that we need to tackle in order to achieve our strategy. In this vein, we have also announced that subject to market readiness, we will move to T+3 settlement on 11 July.’ The T+3 switchover will align SA’s capital markets with global best practice and aid the mitigation of systemic and settlement risk. It will further attract foreign investors by harmonising settlement with international standards and boost liquidity, as assets will be released from the process faster. ‘In addition to T+3, we are in the course of a demanding number of years of investment and delivery. Although this investment will impact our income statement in the short term, it will position the JSE well to continue to enhance the services we provide.’

Ringing in the changes
The celebration of International Women’s Day on 8 March saw 34 bourses from around the world, including the JSE, ring their bells in an effort to raise awareness surrounding gender equality and the need for transformation in the financial services industry. The Ring the Bell for Gender Equality events are in collaboration with the UN Global Compact Network South Africa, National Business Initiative, the Sustainable Stock Exchanges Initiative, UN Women, IFC, the World Federation of Exchanges and Women in ETFs. JSE Director of Marketing and Corporate Affairs Zeona Jacobs says that embracing diversity in the workplace is a key strength for businesses, ‘and a definite competitive advantage. Having women at senior management level enables more strategic, out-of-the-box thinking and more efficient decision-making’. The JSE can justify its stance given that seven of its 10 exco members are women and 51% of its employees are female. According to Jacobs, the JSE – as a leader in the financial sector – is ideally positioned to be a catalyst for gender transformation in the industry. ‘It also aligns us with the efforts of our partner, the SSE, to contribute to the UN Sustainability Development Goals,’ she says.

Futures for farming
Since the launch of a beef carcass futures contract last December, 104 have been traded. The JSE is the first African exchange to offer this with the aim of giving investors a product that ultimately protects beef farmers and sellers against volatile prices. JSE Director of Commodity Markets Chris Sturgess says that performance to date is encouraging. ‘By their very nature, futures are intended to manage price risk, especially as the industry continues to experience significant pressures.’ Although the SA beef market is one of the fastest-growing in the agri-industry, ongoing drought and reduced demand due to rising food prices may potentially affect the price of beef. This, in turn, impacts on cattle producers, sellers, wholesalers and retailers. The JSE’s contract specification offers a beef carcass futures contract size of 1 000 kg. On expiration, the contract is settled in cash with the price determined by the JSE and information provided by members of the Red Meat Abattoir Association. ‘We hope that the introduction of this product will bring new trading and hedging opportunities to South Africa’s beef industry,’ says Sturgess.

Attractive gains
The JSE’s excellent results for 2015 – showing a group earnings after tax increase of 42% to R899 million as opposed to the 2014 profit of R634 million – presents the bourse with ‘new opportunities to collaborate with government and other stakeholders to ensure similar sustained growth for the country,’ says Nicky Newton-King, CEO of the JSE. ‘The solid performance by the JSE is attributable to double-digit revenue growth across all operating divisions – driven by significantly higher market activity, which was well handled by the increasingly robust technology in which the exchange continues to invest.’ The 2015 figures are testament to the JSE’s ability to weather economic stresses and reflect the group’s well-established commercial momentum: earnings before interest and tax increased by 45% (2014: 22%) to R1 billion (2014: R704 million), with earnings per share and headline earnings per share at 1 051.0 cents (up 42%) and 1 026.3 cents (up 40%) respectively. A number of JSE markets contributed significantly to the 20% increase in operating revenue, totalling R2.1 billion. The primary market increased its revenue by 20% to R161 million; the equity market’s billable value traded grew by 26%; BDA experienced revenue growth of R311 million; the equities derivatives market increased value traded by 11% and currency derivatives by 48%; the interest rate market grew its revenue from R44 million in 2014 to R50 million; and the commodities derivatives market increased by 33%. Post-trade services and market data revenue also grew by 19% and 16% respectively.

January 2016
Integrated awards
Chartered Secretaries Southern Africa, together with the JSE, has congratulated Barclays Africa Group as the overall winner of the Integrated Reporting Awards, which recognises excellence in corporate reporting. The awards, in existence since 1956, enable a variety of organisations to assess their reports against that of their peers, and 2015’s recognised the importance of good governance and reporting in the face of a rapidly changing business world. Other award recipients included Standard Bank Group (Top 40 winner); Life Healthcare Group Holdings (mid-cap winner), Hulamin (small-cap winner); York Timbers Holdings (fledgling/AltX winner); and Transnet (large state-owned company winner). Awards were also given to the Development Bank of Southern Africa (small state-owned company); eAsset (public sector); Swaziland Sugar Association (regional company); Strate (non-listed company) and Cotlands (NPO/NGO).

Reducing settlements
The third and final phase of the JSE’s move to a T+3 settlement cycle is set to be actualised in mid-2016, with a go-live projection between May and July. Leila Fourie, JSE Director of Post-Trade and Information Services says: ‘The successful implementation of Phase 3 will conclude one of the most ambitious initiatives undertaken by the exchange, and will bolster the credibility of South Africa as an investment destination by bringing the market even closer to international best practice in the settlement space.’ Phases 1 and 2 introduced significant efficiencies and established a solid foundation for the move to shorter settlement cycles.

Talk CFO
The JSE’s launching of the CFO (SA) designation has provided a platform for a series of monthly CFO Talks, where discussion and the generation of ideas will be explored in an effort to improve the role of CFOs at some of the country’s most established companies. Given the continued uncertain global economic environment, this is especially pertinent. Strategic decisions taken by CFOs reach beyond the traditional realm of finance, and these key decision-makers are often judged on their ability to ensure business survival in an increasingly complex operating landscape. CFOs have had to contend with not only the global financial crisis but, more recently, the spike in eurozone volatility following Greece’s debt crisis as well as SA’s ongoing unemployment and retrenchment issues. With the IMF taking a dim view of SA’s economic growth prospects, the role of the CFO has never been more pronounced. With this in mind, CFO Talks will encourage CFOs to address three central challenges: delivering a business strategy that enables company success; the potential impact that a collapse of EU structures could have on operations; and the extent to which operational and strategic planning should be revised in light of the eurozone’s tough operating environment.

Accessing Krugerrands
In a world-first initiative, Rand Merchant Bank (RMB) has launched Krugerrand Custodial Certificates (KCC). This innovative product offers retail and institutional investors a low-cost way to own and take delivery of physical gold Krugerrands via custodial certificates listed on the JSE. Each KCC security provides the holder with full legal ownership of a specifically numbered 1 oz Krugerrand coin, in addition to a fully paid 10-year storage and insurance contract at vault custodians, Brinks. According to RMB commodities specialist Ebrahim Patel, a KCC is essentially a listed safety deposit box specifically for Krugerrands that is in line with international trends, which has seen a move away from traditional gold ETFs to more direct and lower-cost gold ownership options. ‘The problem with storing gold in a vault is that it is not tradeable,’ he says. ‘KCCs offer the security of direct ownership of physical gold combined with the liquidity of a listed security.’ Furthermore, they will also appeal to investors seeking an internationally recognised inflation and currency hedge given the international interest in gold coins as a safe-haven asset.

October 2015
Going places
Eris interest rate swap (IRS) futures have been launched by the JSE to enable contracts to replicate cash flows of over-the-counter (OTC) swaps. The new product offering is available for trading by all registered interest rate market members and their clients, and will be cleared through JSE Clear. Competitively priced, the new IRS swap futures clients are charged R1 per contract (R100 000) for one- and two-year tenors, and R2 for tenors greater than two years. It is hoped that the growth of these futures will follow that experienced in the US, where year-to-date volumes doubled in one year. The JSE will also use a portfolio value-at-risk framework to determine the amount of initial margin participants should post for position in the swap futures product suite, instead of the traditional portfolio scanning framework used for all other futures at the JSE. Portfolio-level initial margin will therefore recognise the offsets associated with trading long and short positions across the curve. ‘Bringing this product to market has been a collaborative effort between the JSE, our clients and our partnership with Eris,’ says Warren Geers, Head of Interest Rates and Currencies at the JSE. ‘After significant engagement with market participants, we took a global product and modified it to make it a truly South African product relevant to the South African market needs.’

Quality first
The JSE has been acknowledged for its ‘quality of governance reporting’ by EY’s Excellence in Integrated Reporting awards 2015. According to JSE CEO Nicky Newton-King, the merit underlines the exchange’s constant work in this area. ‘We are pleased with this acknowledgement as it reinforces our continuous efforts to reinforce the principles of good governance in the best interests of the JSE and all its stakeholders.’ Now in its fourth year, the awards follow a rigorous survey of the integrated reports of SA’s top 100 JSE-listed companies. The survey provides an extensive overview of the current standard of integrated reporting in SA and encourages improvement and excellence in the quality of integrated reporting.

Collaborative effort
Nigeria, Kenya and SA have opened discussions to launch the cross-listing of exchange traded funds (ETFs). Not only will this provide domestic investors with access to opportunities from other markets but it will also give them access to liquid company shares that are tracked by indices such as the FTSE/JSE Top 40, the FTSE/NSE Kenya 15 Index and the MSCI/Nigeria. According to Donna Oosthuyse, Director of Capital Markets at the JSE, the advantages for companies included in ETF indices – and the exchanges they come from – are that ETFs need to be fully covered. ‘This means that the asset manager managing the ETF portfolio has to buy and sell the underlying shares on the home exchange, depending on the activity of buying and selling of the ETF,’ she says. ‘So, for example, if an ETF from Kenya or Nigeria is listed on the JSE, the asset manager in Kenya or Nigeria has to buy and sell the constituent shares on the home market, as units in the ETF are bought and sold. This drives liquidity in the home market. In addition, it provides extra visibility on the shares on that exchange to new investors who in all likelihood don’t yet trade on that market.’ Haruna Jalo-Waziri, executive director of business development at the Nigerian Stock Exchange explains that ETFs are becoming attractive to many investors as they offer portfolio diversification and reduce the cost of investing. This collaboration underscores the commitment to providing investors with a wide range of products that aid in realising their financial goals and promote liquidity and interest across African markets.

Capital idea
For the fourth year, the Building African Financial Markets (BAFM) seminar, hosted by the JSE, brought together representatives from African stock exchanges, regulatory bodies and stockbroking firms, to discuss the promotion of the continent’s financial markets. The BAFM was designed to provide a platform for delegates to explore methodologies that the exchanges can use to facilitate the growth of capital-market ecosystems, with a view of competing globally. Topics discussed at this year’s seminar included exploring the challenges exchanges face in regional integration; how to attract more issuers and investors; encouraging the development of electronic bond and derivative markets; and ways to ensure the continent and its emerging markets become the investment destination of choice. Zeona Jacobs, Director of Marketing and Corporate Affairs at the JSE, says that African stock exchanges play an important role in fostering continental economic growth and development. ‘As the largest and most mature stock exchange on the continent, the JSE is duty-bound to assist with the growth, development and sustainability of Africa’s capital markets.’ At the BAFM, an MOU was signed between the JSE and the Stock Exchange of Mauritius to ensure that both exchanges co-operate, share knowledge and promote the development of both countries’ capital markets.

July 2015
Sporting gesture
UK Trade & Investment, the business arm of the British High Commission, hosted an exclusive Business and Sport reception at the JSE to mark 100 days before the opening of the 2015 Rugby World Cup in England. In partnership with the JSE, Land Rover, Heineken and Absa/Barclays Africa, the event brought together more than 200 leaders from the UK and SA business communities, as well as rugby legends and players, including John Smit, Butch James and Victor Matfield. The 1995 winning Springbok captain Francois Pienaar shared memories of that magical moment he and Madiba lifted the cup together. The event showcased the value of business partnerships through sport, trade and tourism opportunities associated with the Rugby World Cup, as well as the British High Commission’s youth player exchange partnership programme with the South African Rugby Union, through which the UK government contributes more than R150 000 to help create opportunities for talented players. UK Trade & Investment is set to play host to a Rugby World Cup international business programme that will coincide with key fixtures across the UK and the Springboks’ pool matches during September and October.

Chairing the future
The JSE has been elected to chair the Association of Future Markets (AFM). For the next two years, Chris Sturgess, the JSE’s Director of Commodities and Key Clients, will be representing the JSE as chairman, given his prominent participation in the forum and passion for developing derivative markets. A non-profit association, the AFM was established in 1998 in Buenos Aires, Argentina, by the Amsterdam Commodity Exchange, Buenos Aires Futures Exchange, Budapest Commodity Exchange, Central Clearing House and Depository Ltd of Budapest, Romanian Commodities Exchange, South African Futures Exchange, Warsaw Commodities Exchange and Malaysian Derivatives Exchange. The AFM’s mandate is to promote the establishment of new derivative (and related) markets; co-ordinate conferences to further promote dialogue among its members and country hosts; and to encourage opportunities that will strengthen partnerships and knowledge-sharing among its member exchanges.

Buy your side
Trends discussed at the TradeTech 2015 Conference in Paris, France, in May, included the regulatory frameworks around buy-side institutions; cyber security; high frequency trading; and ‘dark pools’. The increased prevalence of algorithmic trading has created the added risk of institutional buy-side trade dynamics. However, properly regulated, dark pools could mitigate this. On attending the conference, the JSE’s Director of Capital Markets, Donna Oosthuyse, noted that the global regulatory interest around buy-side activity (low latency trading, in particular, and certain rules governing dark pools) is likely to increase. ‘There has been much debate around the expected introduction of the Markets in Financial Instruments Directive [MiFID] II within the European Union’s member states,’ she says. ‘While this is not likely to impact South Africa for the time being, we know that SA tends to adopt best global practices. There is a chance that new regulatory measures, such as MiFID II, may start to filter through to the local regulatory environment.’ The JSE has already implemented various initiatives aimed at value creation for long-term buy-side institutional investors. They include revision to the block trade rule and introduction of the closing price cross platform, as well as a new order attribute. ‘South African institutional investors and the buy-side community now have access to a well-balanced mix of trading options that are on a par with global trends,’ says Nicola Comninos, Head: Equities, Equity Derivatives and Business Intelligence at the JSE. ‘It is essential to keep abreast of global innovations among the buy-side community to ensure that the JSE continues to provide a relevant service offering to its clients.’

Next-generation disclosure
A recent partnership agreement between the JSE and FTSE Russell will ensure that the former aligns its environmental, social and governance (ESG) disclosure indicators and data-collection methodology with the FTSE Russell’s more evolved ESG approach. This will replace the existing Socially Responsible Investment (SRI) Index established in 2004. JSE-listed companies will now be able to assess their ESG practices against cutting-edge global factors and provide investors with more opportunities to integrate ESG into their investments and portfolios. ‘This transition represents the next generation in our evolutionary work to promote ESG disclosure,’ says Corli le Roux, Head: SRI Index and Sustainability at the JSE. The collaboration with FTSE Russell expands our efforts in sustainability and offers a number of synergies and benefits for both organisations and our clients.’

Sense of saving
The JSE is driving South Africans towards a culture of savings, by introducing a tax-free savings account (TFSA). The TFSA product is a platform that allows individuals to invest in selected JSE-listed instruments, such as the Collective Investment Scheme exchange traded funds (ETFs), with no tax implications. Such ETFs also enable investors to diversify their risk by buying into a basket of securities through single-product security and offer a number of other tax-free benefits, including no dividend-withholding tax on dividends earned or interest; no capital-gains tax; and no securities-transfer tax on purchases. Limited to an annual investment of R30 000 and a maximum R500 000 life-time contribution, TFSAs will encourage an increase in the number of individuals that participate on the exchange. The TFSA is aligned with Treasury’s goal of encouraging a culture of saving, thereby reducing household indebtedness. Mpho Ledwaba, the JSE’s Head of Marketing, says that one of the most common barriers to investment is a lack of financial knowledge. For this reason, selected and approved JSE brokers have been identified to assist investors on their investment/savings journey.

April 2015
Core strength
The JSE’s strong performance for 2014 was delivered against the backdrop of a declining economy and dramatically increased regulatory demands, and highlights growth in the core areas of the exchange. Group earnings after tax increased by a healthy 25% to R634 million with operating revenue growth of 13%. Underpinning this performance was good growth in annuity revenue from listed companies (24 of which were new additions) and products, including notable cost management. Four areas were highlighted for their contributions to revenue: equity market, where billable value traded grew by 7% year-on-year resulting in revenue to R426 million; post-trade services, which grew 20% to R299 million; market data with revenue growth of 15% to R203 million; and new revenue lines in colocation (R9 million) and issuer services (R2 million). Total operating expenses increased by 5.5% to R1.14 billion. Group earnings before interest and tax increased by 22% to R704 million, while earnings per share rose to 742.4 cents, up by 25%. Headline earnings per share was up by 14% to 735.0 cents. Overall, this performance enabled the JSE to declare a total dividend of R417 million or 480.0 cents per share, which is 20% above the total dividend paid in 2013. This a record high dividend payout.

The next best thing
A licence agreement between the JSE and Euronext provides the former with the right to list Euronext’s flagship contract, Milling Wheat. This is part of Euronext’s strategy to take Milling Wheat’s contract to a broader global audience and extend its own reach into Africa. According to IMF forecasts, it will be the world’s fastest-growing region in 2016. The agreement between the two exchanges gives each the right to use the settlement prices and data for commodities contracts. Further, the agreement can be extended to include contracts for rapeseed and corn. Chris Sturgess, the JSE’s Director of Commodities and Key Client Management, says that local market participants will now have easy access to the EU wheat market. ‘This provides a wider choice of trading opportunities where participants already access South African and North American wheat markets. ‘This type of agreement strengthens the strategic relationship between the JSE and Euronext, allowing us to jointly offer a wider range of products.’ Nicholas Kennedy, head of commodities business development at Euronext concurs: ‘The agreement also strengthens our high-quality franchise through greater visibility while providing the JSE with the opportunity for its clients that look to hedge volatility in the wheat agricultural area.’

Get in on the act
The new hedge fund regulations that came into effect on 1 April are expected to attract more individual and retail investors, given that the previously unregulated fund class now falls under the Collective Investment Schemes Act. Hedge fund managers remain regulated under the Financial Advisory and Intermediary Services Act, and both acts will be regulated by the FSB. The two products on offer are a qualified investor fund and a retail investor fund. The former’s requirements demand that investors be qualified and demonstrate sufficient expertise in investment and financial management. They must also meet the minimum entry requirement of a minimum R1 million, and portfolios must be submitted to the FSB for review on a quarterly basis. Retail fund portfolios will exist under management companies (ManCo) and must be FSB-registered. ManCo, together with an independent trustee, are required to register a scheme under which the portfolios are defined. Investors in these funds will own participatory interests in such portfolios and ManCo will outsource the management of those to FSB-licensed hedge fund managers. Portfolios are also subject to certain gearing mechanisms and instruments traded, and must be reported to the regulator monthly. Daily pricing of the portfolio must also be made available.

Clear vision
Gauteng premier David Makhura joined the JSE, business and government representatives to speak about the province’s 15-year transformation vision, which aims to drive growth and development of the Gauteng economy. JSE CEO Nicky Newton-King, who opened the closed session, addressed the delegates who were presented with a vision to ensure the province will become a ‘seamless, integrated, socially cohesive, economically inclusive region that is underpinned by smart industries and sustainable development’. Such statements are aligned with the stock exchange’s own growth path and its history, given that its primary address was on the corner of Simmonds and Commissioner streets in the Johannesburg CBD, 128 years ago. Such a timeline includes many global recognitions for the bourse and its contributions have certainly added to the province’s 34% role in SA’s GDP, and more than 10% to the total continent. Plan 2030 for Gauteng includes radical economic transformation and modernisation, and embracing an industrial revolution. To enable this, the region is seeking support from the private sector particularly to ensure the improvement of administrative efficiencies; transport and logistics infrastructure; skills development; reductions in the overall cost of living; crime issues; power and water improvements; the development of an energy mix intervention and broadband connectivity; and the building of integrity within government.

January 2015
Good timing
With the completion of the second of three phases of the T+3 project, the JSE is closer to aligning the SA market with global best practices while simultaneously improving efficiency and credibility. T+3 refers to the number of days within which a trade must be settled, from the day it takes place. To do so, the seller of the share must receive payment and the buyer must take ownership. Phase One introduced a series of technical changes and Phase Two entailed the implementation of the equities clearing system and changes to other JSE systems, including the Broker Dealer Account. With sights firmly set on the final phase, Leila Fourie, Director: Post-Trade Services and Information at the JSE, says that apart from mitigating systemic and settlement risk, T+3 has numerous benefits. ‘These include attracting foreign investors by harmonising settlement with international standards and boosting liquidity as assets are released from the settlement process quicker,’ she says. T+3 will also enable the stock exchange to realise its vision of becoming a global leader in the post-trade and clearing environment.

Top dogs
Absa Capital, with 12 ‘bests’, is the winner of the 2014 JSE Spire Awards, which recognises excellence in SA’s fixed income, currency and commodity derivatives markets. The awards, based on trading volumes and votes by clients, indicate growth in the commodity market and allow the JSE to showcase the success of its issuers, members and clients. The winners, as well as runners-up Rand Merchant Bank (in second place) and Standard Bank (in third place), were congratulated by the JSE’s Chris Sturgess, Director: Commodity Derivatives, and Donna Oosthuyse, Director: Capital Markets. Sturgess says that although trade volumes were slightly lower in 2014, value traded was up 1.3% to R381 billion. ‘With the ever-increasing demand for new products, a wide range of cash-settled products have been added,’ he says. According to Oosthuyse, fixed income instruments play an important role in the portfolios of most pension funds. ‘This means that almost all South Africans contributing to pension funds are exposed to this asset class.’

Fast tracking
Amendments to fast-track listing requirements have made it quicker and easier for certain internationally listed companies to obtain a secondary listing on the JSE’s AltX or Main Board. Accredited exchanges include Australia, London, Toronto, New York and its Euronext. Firms listed on those exchanges for a minimum period of 18 months – and that make use of fast-track listing – need not produce a prelisting statement. A prelisting announcement is, however, required, and must contain disclosure items pursuant to the listings requirements and details of the listing on the JSE. Both are in conjunction with the company’s most recently published information, inclusive of the annual report, and prepared in accordance with the requirements of the exchange where it has a primary listing. Donna Oosthuyse, Director: Capital Markets at the JSE says: ‘The streamlined process gives companies the opportunity to access South Africa’s deep pools of capital at a lower cost by eliminating a second round of administrative preparation for listing. It will also make it easier for multinational companies already operating in South Africa – and the continent – to list on the local bourse or use it as a springboard to the rest of Africa.’ On 5 December 2014, Sirius Real Estate Limited became the first fast-track listing on the AltX board.

SPAC and span
With its listing as the first special-purpose acquisition vehicle (SPAC) on the JSE’s AltX, Sacoven undertakes to buy operating assets on the continent within two years. An SPAC is a business best described as a reverse initial public offering and provides investment companies with a platform to raise immediate capital with which to acquire assets, explains the JSE’s Donna Oosthuyse, Director: Capital Markets. ‘Investors benefit from the liquidity and transparency associated with investing in a listing company,’ she says. ‘SPAC is a new avenue for companies seeking to expand into Africa to raise capital and access investment opportunities, which will help development and growth of the continent.’ Sacoven’s main interest is to acquire companies, businesses or assets in the natural resources and consumer goods sectors in Europe as well as emerging markets, including Africa. Once Sacoven has completed its acquisition of targeted companies, it can retain its listing on the JSE if it meets the criteria for a primary listing on the Main Board or the AltX.

October 2014
Five in a row
For the fifth consecutive year, the WEF has ranked SA first among the 144 countries it reviewed for regulation of securities exchanges and the auditing and reporting standards to which local businesses must adhere. SA was rated third in raising finance through the local equity market, third for effectiveness of corporate boards and second for protecting minority shareholders’ rights. The WEF report rates countries according to 12 pillars, or sets of criteria, including quality of infrastructure and institutions, efficiency, market sophistication and capacity for innovation. John Burke, Director: Issuer Regulation at the JSE, says this accolade reinforces the bourse’s constant goal to provide investors and issuers with a safe and credible environment in which to trade, list and invest. The exchange works hard to maintain high standards when formulating and implementing its regulations. ‘The country’s excellence in regulatory standards speaks of a sound working relationship between the JSE and its regulator, the Financial Services Board.Regulatory standards cannot be viewed as a set of rules to be drafted and applied blindly in years to come. Regulation needs to be adjusted and updated constantly according to a changing environment,’ he says.

Building Africa
Under the theme Building African Financial Markets, the JSE and the African Securities Exchanges Association (with the help of the World Bank Group), hosted discussions with stakeholders from across the continent to strengthen investor confidence and the role of exchanges in the region. Sessions covered data commercialisation; exchange demutualisation; electronic bond markets; market liquidity; and the role of exchanges in African growth and development. Aigboje Aig-Imoukhuede, first vice-president of the Council of the Nigerian Stock Exchange, pondered the future of African exchanges in his keynote address. Aig-Imoukhuede said it was important that African exchanges look beyond the ‘bits and bytes’ of the bourse business and consider the nuances of respective environments. ‘Creating and sustaining the growth trajectory of our exchanges, capital and financial markets, economies and the continent as a whole requires a strong commitment,’ he said. The JSE’s Zeona Jacobs, Director: Marketing and Corporate Affairs, says initiatives such as this seminar are an integral part of the continued development of sustainable economies within Africa. It enables dialogue about ways to strengthen investor confidence, address governance issues and promote financial literacy.

Twice a debutante
Following the debut listing of Standard Bank’s palladium-backed exchange traded fund (ETF) on the JSE in March, a secondary listing has been approved for the Namibian Stock Exchange. Palladium ETFs invest directly in palladium, gold and platinum and track the rand (or Namibian dollar) prices of these metals. Namibian investors can gain direct exposure to physical palladium via a liquid, listed instrument – simply and cost-efficiently –without the usual costs and risks of ownership. AfricaPalladium ETFs will also be treated as a local set and have no exchange control implications for Namibian investors. Since listing on the JSE, AfricaPalladium has attracted 560 000 ounces of palladium valued in excess of R5 billion from investors. This makes it the second-largest palladium ETF in the world. However, Standard Bank estimates that due to the prolonged mining strikes in SA, some 530 000 ounces in production have been lost, which means the global market for palladium will remain in deficit until 2016. Johann Erasmus, head of global structuring at Standard Bank says: ‘The long-term fundamentals for palladium are promising, as the demand for it has outstripped production over the past few years and this trend seems set to continue for the foreseeable future.’ Commodity ETFs are seen as a good investment to complement portfolios and are ‘a different investment class with several benefits including exposure to the physical commodity, some level of protection from negative real interest rates, and a hedge against currency deprecation’, he says.

Services extended
The Namibian Stock Exchange (NSX) has renewed a contract with the JSE to use the latter’s trading technology and services indefinitely. The two first signed the original accord 15 years ago and agreed to share equity trading systems and services to trade, clear and settle securities. The latest agreement covers a range of services including the use of the Millennium Equity trading system; real-time market data distribution; surveillance services; maintenance of the market data gateways; use of the Securities Exchange News Service; equities clear and settlement services; reporting facilities to assist NSX members to perform back-office administration functions; and a portfolio facility so that they can calculate client investment portfolios. CEO of the NSX, Tiaan Bazuin, says the JSE has had a positive impact on NSX trading volumes. ‘We see the JSE as a strategic partner, offering a platform that is good for the NSX and its clients.’ The NSX is of strategic importance to the JSE. Leanne Parsons, Director: Trading and Market Services at the JSE, confirms that the arrangement provides insight into the services that the JSE can offer African exchanges with massive economies-of-scale benefits. ‘The close relationship between the two exchanges extends beyond technology and includes knowledge sharing where appropriate. It makes sense to us to continue to grow the relationship,’ she says.

July 2014
Up to date
The latest JSE equity market and price data is now a mere Google bookmark away. In collaboration with Google Finance, the JSE’s latest platform is updated every 15 minutes, offering JSE clients, investors and the public an easy and reliable way to track market activity of their JSE shares online by visiting www.google.com/finance?q=JSE. Google Finance already provides access to financial information from 35 stock exchanges worldwide and this, says Ana Forssman, the JSE’s Director of Market Data, is a great development for the JSE. ‘Technology and accessibility to information is a critical enabler for exchanges, and with more people accessing market data online, it makes sense for the JSE to be more broadly available,’ she says. In 2013, 45% of the JSE’s data was subscribed to from outside of SA, indicating international demand for SA equities and exposure to African investments in general. According to the WEF, SA is ranked second in terms of raising finance through the local equity market.

Eco bond
The first JSE-listed green bond, issued at R1.46 billion by the City of Johannesburg in June, is expected to boost and fund green initiatives in SA’s largest city. Referred to as COJGO1, the bond is priced at 185 basis points above the R2 023 SA government bond. It will mature by 2024. Created to help fund climate change mitigation strategies, COJGO1 advances the use of gas and natural energy initiatives, like the Johannesburg council’s programme that aims to install 43 000 solar water heaters, saving the equivalent of 22.5 GW-hours of power per year. Johannesburg is the first of the C40 Cities Climate Leadership Group to issue a green bond. According to Graham Smale, the JSE’s Director of Bonds and Financial Derivatives, it emphasises the importance the JSE places on city development. ‘Funding green projects is important in all cities to ensure their greater sustainability,’ he says. Executive mayor of Johannesburg Parks Tau says that as a funding source, the bond will not only expedite the implementation of climate change mitigation strategies but also motivate for low-carbon infrastructure, minimal resource reliance and increased natural resources.

In the know
An exciting new range of JSE services is primed to boost listed company and issuer competencies, providing knowledge and skill-acquisition to help identify prospective investors, build profiles and enhance communications with existing investors and the market. This is in line with the global focus on corporate governance and transparency which, according to the JSE’s Head of Investor Relations Michelle Joubert, means that many listed companies are looking to up their skills in these areas. ‘In addition, the service offerings also aim to include unlisted businesses that seek to list, with a particular focus on continental or international companies that are considering listing on the JSE. Our aim is to help promote such businesses in SA and abroad,’ she says. The bourse will be hosting regular company investor meetings and seminars on regulatory changes and integrated reporting, as well as updating listings requirements knowledge. This is in addition to improving investor/media relations skills through the formation of a media hub based at the JSE that will include CNBC Africa, Bloomberg Africa, Biznews.com and PowerFM. ‘The media hub is a critical component of the JSE’s Issuer Relations strategy to create opportunities for our issues to engage with their stakeholders,’ says Joubert. ‘Our discussions with international investors indicated they are interested in JSE-listed stocks as well as building their exposure to the African continent, and engage more effectively with prospective investors and analysts.’

Data central
The launch of the colocation centre at the Sandton-based JSE enables clients to take optimum advantage of market movements through the lowest possible latency trading connectivity, in combination with the receipt of real-time data. At 150 microseconds, compared to the previous 2 550 microseconds, it is the fastest way for clients to access all JSE markets. ‘Clients demand faster execution speeds, and exchanges need to offer this in order to compete,’ says the JSE’s Leanne Parsons, Equity Market Director. ‘Aside from faster trading speeds and updates to market data, which will allow for enhanced response to market movements and deployment of new trading strategies, colocation also reduces the cost of bandwidth for clients. It further improves trading resilience as clients are in the JSE’s data centre, and reduces their dependence on network providers.’ Riaan van Wamelen, the JSE’s Chief Information Officer says: ‘The colocation centre will initially provide space, power, cooling and physical security for 35 hosting units for clients’ computers. The colocation centre design is based on a Tier III design that is optimised to conserve efficiencies in energy and cooling. The JSE colocation data centre has been configured to ensure that all clients experience the same speeds on the JSE colocation network.’

Record highs
Best day ever, best month ever, best year ever. March proved to be the JSE currency derivatives market’s most successful month in terms of the value and volume of derivative contracts traded since its inception in 2007. At R80.8 billion, this is a 122% increase since March 2013, with around seven million contracts traded. Alongside this achievement is the best single-day performance which saw a value traded of R36 billion. Having now traded a record R1 trillion over the last seven years, Warren Geers, General Manager of the JSE’s Bonds and Financial Derivatives Trading Division confirms that the SA currency derivatives market continues to grow at a rapid pace. ‘The R1 trillion milestone is a great accolade for our market. The market has continued to draw more and more trades as investors and businesses look for more efficient ways to manage their currency risk.’ In response to this need, the JSE continues to develop new currency derivative products, such as the Quanto range, which talks to the euro/dollar exchange rate. ‘These derivatives are traded on the JSE and settled in rand, even though they track the movements of the euro which is quoted in US dollars. This product has the ability to attract local investors who want exposure to the most globally traded currency pair.’ Geers says the dollar/rand contract continues to remain the most liquid of all the listed and traded JSE currencies. In 2013, it contributed 81% of the total value traded. The JSE currently offers a range of currency futures contracts. This include futures that track the movement in the rand exchange rate to the US, Canadian and Australian dollars, the Turkish lira, the Swiss franc, the Chinese renminbi and the Japanese yen.

April 2014
Bridging the gulf
Arqaam Capital is the first Gulf brokerage to join the JSE as an equity member. Arqaam’s primary role, through its eight business lines, is to provide financial intermediation and create investment opportunities for emerging markets investors looking to invest in their own markets and abroad, as well as to facilitate opportunities for international investors to penetrate emerging markets. Leanne Parsons, the JSE’s Equity Market Director, affirms that Arqaam Capital has a proven track record in the Middle East and North Africa (MENA), and its membership is in response to an overwhelming demand from clients for investment opportunities in SA and the continent. ‘We see the Arqaam-JSE liaison as another step in strengthening the JSE’s relationships with financial market players in other emerging markets,’ she said, adding that the association has the potential to produce other new initiatives in MENA and other regions.‘The JSE is focused on acting as an investment bridge to African opportunities thereby providing JSE-listed companies with access a wider pool of international investors,’ she says.

Up for the challenge
Registrations for the 41st JSE Investment Challenge have opened with expectations that this year the long-standing competition will further boost financial literacy among the country’s youth by providing them with access to information and knowledge about the stock exchange. The annual competition is open to teams of four students from either high school or university institutions. Allocated an imaginary sum of R1 million, teams trade JSE-listed shares in a virtual arena that is risk-free, with portfolios tracked and measured against opposing teams. Ending on 26 September, the leading team will win R25 000, second place will win R20 000, and third place will win R15 000. ‘The Investment Challenge demonstrates to young people that investing is not something that only a small number of elite people can do or understand. It aids youth in gaining the knowledge and practical skills of investing while introducing them to the world of finance,’ says Idris Seedat, the Head of JSE Corporate Social Investment. The scores and teams’ progress can be accessed on social media via Facebook at www.facebook.com/jsechallenge and Twitter at www.twitter.com/JSE_Challenge.

Day of reckoning
On 12 March the JSE had its best single day performance on the currency derivatives market since its inception, trading a value of R36 billion. ‘This market has seen new records being set all the way through 2014, and yet another record has been broken. We’re seeing currency derivatives growing from strength to strength, and we are certain this is not going to be the last record we will see and break in the days and months to come,’ says Warren Geers, the JSE’s General Manager Bonds and Financial Derivatives. In September last year, the past record for a single day was achieved at R13.4 billion, with the highest value traded in a month reaching R46.3 billion. That record was broken mid-March when trade had already exceeded R48.7 billion, and so, as Geers predicts, record achievements will continue. Geers says that open interest is at an all-time high of 4.2 million contracts despite the closing of trades leading up to close out.

Record performance
With a 68% net profit increase after tax, culminating in a record-high of R507 milion, the annual results from the JSE’s 2013 trading year posted by the exchange are the best yet since listing. Strong operating revenue growth was up by 14% on the 2012 figure, resulting in R1.58 billion for 2013, with a moderate increase of 5% to R1.08 billion achieved for operating costs. CEO Nicky Newton-King is particularly impressed with the progress made towards achieving the JSE’s five-year plan of providing integrated trading and clearing across all of its five markets by 2017. ‘As we run the exchange, we continue to be mindful of equitably balancing the interests of all stakeholders,’ she says. In recognition of the group’s performance, the JSE was able to both return an amount of R84 million (5% of group revenue) to Equity Market clients by way of a rebate in 2013 and declare an ordinary dividend for the year ended 2013 of 350 cents per ordinary share, and a special dividend of 50 cents per share. Group earnings before interest and tax increased by 42% to R578 million, while earnings per share and headline earnings per share are 592 cents and 645 cents respectively. Standout revenue performances were achieved by the Equity Market, Post-trade Services and Market Data divisions. Such pleasing performances translate into a strong cash flow with a net increase in cash of R250 million for 2013, with year-end group cash and cash equivalents standing at R1.38 billion.

Guru approach
With the listing of a range of exchange traded notes (ETNs) on the JSE by one of the world’s largest banking groups, BNP Paribas, SA investors now have greater opportunities to diversity their investment portfolios through offshore exposure. This listing brings to 28 the number of ETNs now available on the JSE. ETNs are transparent, liquid instruments providing simple and cost-effective exposure to assets that are traditionally difficult to gain exposure to as an individual investor. They also act as convenient building blocks for portfolio allocation according to individual market views, and African investors may buy and sell them through registered stockbrokers. Guillaume Dolisi, creator of the Guru strategy at BNP Paribas, explains that the investment methodology is simple and completely objective. ‘It aims to achieve an optimal investment solution by giving clients access to a back-to-basics approach that relies on investment techniques used by some of the most successful fund managers –including Benjamin Graham, Warren Buffet and Peter Lynch.’ The listed products, denominated and traded in rands, include the Guru US ETN, the Guru Europe ETN, the Guru Asia ETN and the Guru Equity World ETN.

January 2014
Cream of the crop
The JSE introduced short-dated new crop options (SDNCs) in December 2013, which provide farmers and millers with greater protection against fluctuations in the maize price. Expiring in July 2014, the options will be converted to futures at the end of March 2014 should the price level require this. ‘Short-dated options are cheaper because they have a shorter time horizon, but can provide farmers with greater protection against fluctuating prices specifically during the crucial growing season when the weather can make the maize market particularly volatile,’ says Chris Sturgess, Director: Commodity Derivatives at the JSE. Gulf Wolff, a trader at Corn International, says the SDNCs offer a variety of new trading and hedging opportunities. ‘We are committed to offering liquidity to the options market as best we can,’ he says. Maize options are contracts that give the buyer the choice, but not obligation, to buy or sell maize at a specific price at a certain date in the future. A put option represents an opportunity to sell, while a call option represents an opportunity to buy. Farmers in the maize market will thus have the opportunity to make use of put options while millers can use call options.

Grains of truth
In the JSE’s commodity derivatives market, a spot basis trading platform introduced just over a year ago has seen grain-selling farmers and clients earn a premium of R10 million. ‘This is only the beginning and we must work harder to ensure producers are aware of the premiums available and understand how to access the system. The platform will become more efficient if we have increased participation,’ says Chris Sturgess, Director: Commodity Derivatives at the JSE. The basis trading system allows buyers to offer sellers a premium over and above the currently traded JSE nearby price of grain to receive it from their preferred delivery point. The system also allows sellers to take their wheat, white or yellow maize, soya beans or sunflower seeds to a broader market to gain a premium based on where they deliver their product. The value of grain varies from delivery point to delivery point based on supply and demand, and farmers can therefore negotiate a higher price where demand is greater. The basis premium system also makes it easier to know what buyers are really willing to pay for grain at each delivery point. Premiums are paid over and above the JSE price after the location differential is subtracted from it. Sturgess says the market has seen premiums of R700 per ton on trades for yellow maize in the Western Cape. Drought in the North West also impacted supply and delivery points such as Mareetsane and Kameel commanded higher prices with premiums of between R230 and R250 per ton reached. The JSE is also focused on expanding the system to allow market participants to manage their basis risk by introducing a basis futures contract on certain delivery points.

Best SRI performers
The JSE raised the bar for the constituents of the 2013 SRI Index, who were assessed only on publicly available information. The requirements of participation in the index in 2013 were fulfilled by 72 companies compared to 76 in 2012. The best corporate performers for 2013 included companies from the mining, food production, health care, household goods, banking and mobile telecoms sectors. The JSE’s Head of the SRI Index and Sustainability Corli le Roux congratulated the best performers and said being transparent in applying environment, social and governance principles in business practice, and in meeting growing investor demands for transparency in the way companies manage their sustainability impacts had proven to be a winning formula. In 2013, small-cap companies were included in the automatic assessment for the first time, whereas in previous years they participated voluntarily. Despite only six small caps qualifying for index inclusion, overall those assessed fared better than anticipated. ‘Several small caps came very close to making it while some did not have the resources to participate actively this year,’ says Le Roux. Overall the 2013 SRI Index assessment proved, as in the previous two years, that the strongest performance came from Top 40 companies, with 87% meeting entry-level requirements. ‘It is an accolade that over 90% of companies assessed this year met corporate governance criteria,’ says Le Roux. ‘However, the environmental pillar remains the most challenging for companies and the social area saw a decline in performance this year, mostly due to insufficient disclosure. Companies are looking for guidance in these areas, so we hope this year’s index process will assist them. We are confident we’ll see improvements in these areas in future years.’

Mining the future
The JSE is set to launch SA’s first coal derivative market in the early part of 2014 to help manage price risks, says Chris Sturgess, Director: Commodity Derivatives at the JSE. He says the JSE is going full steam ahead with the introduction of the contract for which the launch had been planned for January. However, there has been a delay due to a last minute development around one of the role players in December. ‘This will be wrapped up in the new year and the details announced,’ he says. The arrival of the coal futures market in the new year is a positive development for emerging mining firms in particular, as they will be able to sell their products through inland coal terminals in Mpumalanga. The coal futures will enable mining firms, traders and brokers to trade a minimum of 500 tons of thermal coal in rands with a minimum fluctuation of 25c a ton. The JSE believes this product will introduce new opportunities for the coal industry, Sturgess says. SA exports 70 million tons of coal a year through the Richards Bay coal terminal, mainly to India and China. ‘Mining houses have indicated that if there is an opportunity, they would participate in the product. There is also value opportunity for junior miners who may want to find buyers for their products on a different platform.’ The launch of the derivative market was postponed because of the need to find additional JSE-approved inland terminals. Sturgess says two of the three terminals identified were in eMalahleni (formerly Witbank) with the third in Ermelo. The quality of the coal for the contract would fall outside the requirements of Eskom, with specifications set for bituminous coal of uniform quality, according to Sturgess. The JSE’s trading fees would be 15c a ton while physical handling would amount to R2 a ton. Sturgess says he expects the new product to take off gradually as education was needed to promote it.

By Kerry Dimmer
Illustration: Clinton Prins