Copyright© JSE Limited 2005 www.jse.co.za

WORKINGS OF THE JSE

7 February 2009

Waldemar Budeli

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WHAT IS THE JSE

What is not JSE:

- Not a bank or an insurance house

- Not a gambling resort/ pyramid scheme

- Not a get rich quick scheme

- Not big brother to listed companies

- Not Government Agency

- Not Rich & Famous Club

What we are:

- A market where shares bought and sold

- Place where primary capital is raised

by listed companies

- A company owned by its shareholders

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HISTORY OF THE JSE

Founded in November 1887

Trading between the chains

Open outcry (market floor) trading

ended in June 1996

Relocated to Sandton in 2000

Demutualised on 1 July 2005

Owned by shareholders

Listed on 5 June 2006

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REGULATORY FRAMEWORK

SARB: Banking Financial Services Sector

Banks

Building Societies

FSB: Non Banking Financial Services Sector

Capital Markets

Insurance Houses

Retirement Funds

Collective Investment Schemes

Friendly Societies

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JSE & ECONOMIC SYSTEM

Companies in search of primary capital issues shares through the market

The market is the place where shares traded (capital raising and as investment) and other financial securities are bought and sold

Gather the savings of the nation by bringing potential

buyers & sellers together

Pass the capital on efficiently and securely to the users

Employment opportunities

Wealth creation

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FUNCTIONS OF THE EXCHANGE

Company allots shares to the public to raise capital

and the proceeds of the sale are used by the company

to establish or expand its business

The provision of an orderly market to facilitate the

secondary trade of listed securities between

buyers and sellers,

in terms of Rules and Regulations of the JSE,

with due protection for all parties concerned.

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WHAT ARE SHARES

• Shares represent ownership in a company

• Holding a company’s shares means you are one of the many owners (share holders)

• If a company does well (profitability), then the share price could potentially rise and some companies may choose to pay dividends

• Likewise if a company is not doing well (losses) then its share price could potentially fall, and it might not be able to declare a dividend (situations differ from company to company)

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Benefits of investing in shares

Capital Income (dividends)

Capital Growth ( the difference between price paid and the selling price)

Right to attend meetings and vote

Right receive company information (financial statements, etc)

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INVESTING IN SHARES

First and foremost : It is very Important to understand the difference between LISTED and UNLISTED SHARES

Listed shares are trading on the JSE

Unlisted shares are issued and trade outside the market

Investing in shares is about creating wealth or growing your savings (capital growth and capital income)

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METHOD OF TRADING

Prior March 1996 - Market floor

June 1996 – Johannesburg Equities Trading (JET) System –an automated Trading

Extremely reliable & providing optimal investor protection

Efficiency and equal participation of all players

(large and small)

Dual Trading (Agent or Principal)

May 2002 – JET system changed to JSE SETS System -

Functional Segments & Sections

In April 2007 – TradElect replaced SETS system

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JSE MARKETS & PRODUCTS

Equities – Shares, ETF’,

Financial Derivatives – SSF, Warrants

Agricultural Derivatives – Yellow Maize, Soya, Beans

Yield-X – linked to interest rate bearing instruments

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LISTING CATEGORIES

Main Board

Development Capital Market (DCM) – 1984

This board is closed to new companies since 2003,

however in share price pages this board is shown.

Venture Capital Market (VCM) – 1989

This board is closed to admitting new companies since 2003,

however in share price pages this board is also reflected.

Alternative Exchange (ALTX) 2003

In essence 2 boards exists: Main Board and Alternative Exchange

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MAIN BOARD REQUIREMENTS

R25 000 000 subscribed capital

25 000 000 equity shares in issue

3 years profit history (R 8 000 000 before taxation)

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BULL AND BEAR MARKET

Downwards trend Upwards trend

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The JSE provides…

Regulation of members and listed companies

through the Rules & Directives

Electronic Trading (JSE SETS) – ensuring transparency & efficiency

Electronic Settlement System guarantees settlement

SENS – dissemination of price sensitive information

Surveillance system – constant monitoring of members and their trading activities

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International economics

Company profits

Commodity and gold prices

International markets

Politics

Local economy

THE MARKET

Major Market Influences

- Demand & supply- Inflation- Interest rates- Unemployment- Environmental factors *floods *drought *fires, etc- Crime rate

- What they say- Political state

- Exchange rates-Global economies

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STOCK BROKERS

Agents in trading

Advice for the selection of securities

Advice for the buying & selling (time)

Research-based advice

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Investing Responsibility

Do not borrow to invest

Always invest in what you know

Do some homework on the company : Challenge!

Buy the business, not the share

Regularly review return on investments

Be an active Shareholder – Know your rights

Exercise patience, but do not get married to your share

Diversify – do not put all your eggs in one basket

Take calculated risk

Make use of your stockbroker

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Sources of Stock Market Information

Daily Newspapers

Radio & Television

Financial Magazines

Annual Reports

Stock Brokers

JSE Monthly Bulletin

Stock Market Handbooks

Companies Publications

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Questionnaire Link

Why should I complete this survey?

As a member of Judicial Officers Association, YOU are representatives of the retail market. We would like to ask your HELP with this initiative. Your participation will help us to develop Education programs tailored to YOUR investment knowledge needs. So, it’s VERY important that you are HONEST. Your results will make the difference!

What is the survey about?

We would like to learn whether YOU save or invest, how much YOU know about investments and whether you’re interested in investing. Please tell us!

Please submit your completed survey by latest 27 February.

Please follow the link to complete the survey: http://www.surveygizmo.com/s/56912/jse-retail-investor-survey-legal-practitioners-copy

If this link does not open, copy the link into an Internet browser.

Thank you and enjoy!

Copyright© JSE Limited 2005 www.jse.co.za

Thank you

JSE Education DivisionTel (011) 520 7127/8/9Fax (011) 520 8586E-mail : education@jse.co.zaWeb : www.jse.co.za