JSE finds new ways forward during South Africa’s greatest challenge

Published by: Dr Leila Fourie, CEO, Johannesburg Stock Exchange May 2020

Covid-19 has rocked the world on its axis, but for South Africa the pandemic opened a window on the nation’s existing inequalities forcing different communities to see one another with unflinching honesty as the country wrestled with the unintended consequences of one of the toughest lockdowns anywhere.

But every challenge brings opportunity. For the Johannesburg Stock Exchange, over and above successfully pivoting the entire bourse to operate virtually, including being able to host virtual AGMs and market openings online, this has been a golden opportunity to literally walk the talk.

“The Covid-19 crisis sharply exposed our nation’s underlying vulnerabilities, making problems that existed beforehand not just more visible but also more urgent. We all have a huge role to play in this now and after the lockdown to help bridge the divide between the privileged – those of us who have jobs, homes and full stomachs – and those who go to bed hungry, if they even have a bed to go to at night,” said Group CEO Dr Leila Fourie.

Clarion call 

When President Cyril Ramaphosa announced the initial lockdown, he did so with a clarion call to all South Africans to help the nation overcome this unprecedented public health crisis: “to be courageous, to be patient and, above all, to show compassion”.

The JSE board set about finding innovative and creative ways to support not just its own community of staff, partners and clients but to serve the broader community too, especially the most vulnerable.

The president launched a Solidarity Fund - a special vehicle set up to help government and civil society fund South Africa’s response to the Covid-19 pandemic. He challenged business to contribute in their personal capacity towards the fund by pledging a third of his own salary, along with his ministers and the provincial premiers, for three months to the Solidarity Fund.

Dr Fourie, as well as the JSE’s chair and members of her board, answered the challenge and pledged 30% of their salaries towards the fund for three months – a commitment that sent a strong message of solidarity with ordinary South Africans and one that big business also embraced. Many JSE executives and staff made personal pledges to the fund too.

The JSE also launched #Trade4Solidarity, a special Covid-19 campaign that saw the bourse and 36 of its market participants, including all the major South African banks and many of the international banks as well as commodity, equity and bond traders, donate a portion of their fees derived over two days to the fund. The JSE intends to hold more #Trade4Solidarity days to continue to contribute to the fund.

Hygiene hampers

Other JSE initiatives have included partnering with Business Leadership South Africa (BLSA) to help vulnerable communities flatten the curve of the coronavirus infection by distributing hygiene hampers.

“When President Cyril Ramaphosa launched the fund, we knew we had to rise up and play our part,” Dr Fourie said. “We put out a call to our market participants and I have been so humbled at how everyone rallied as the Capital Markets ecosystem to donate to the solidarity fund. The money raised will no doubt touch many lives that have been impacted by the coronavirus.”

“The JSE is also in the final stages of finalizing our social bond framework which will enable future investment in sustainability projects,” she said.

The bourse has also looked to support its own community, re-assuring its network of suppliers that all their contracts would be honoured at a time when many other South African SMEs were having their contracts suspended via the enforcement of force majeure clauses. Other suppliers which might not have had the security of a contract, have been paid throughout the lockdown on a pro rata basis of what they had been billing beforehand – even though the terms of the lockdown would have precluded them from performing those services.

Price transparency

“The depth and liquidity of capital markets ensures that the financial sector can support the real economy during times of crisis. The exchange plays an essential role in enabling price transparency, trading out of positions and providing access to capital,” said Dr Fourie, and because of this, the JSE cut trading, clearing and settlement fees on the JSE AltX and BEE boards by 50% for the remainder of 2020 to stimulate trading and liquidity. The bourse also reduced listing fees by 25% for small cap and AltX companies looking to raise secondary capital.

The JSE also increased the amount of cash disbursements in quarterly trading and connectivity fees from 33% to 50% for small and medium stockbrokers who are part of the JSE’s Enterprise Development Programme, started in 2016 to foster black participation, to ensure their continued viability and lessen possible job losses.

“Corporate South Africa has a huge role to play in bridging the divides in South Africa, by creating jobs and using its existing supply chain networks to radically transform the economy. At the JSE, we deeply value our relationships with our market partners and we will play our part in making sure they remain sustainable, especially those who have been affected by the pandemic,” said Dr Fourie.