JSE delivers robust performance

Cape Town - The Johannesburg Stock Exchange (JSE) delivered robust performance for the first half of 2016, driven by strong growth from almost all divisions, it announced on Friday.

Group earnings after tax increased by 19% to R513m compared to R430m in the first half of 2015. Operating revenue grew by 17% to to R1.2bn compared to 16% to R1bn in the first half of 2015.

The JSE has operated as a market place for the trading of financial products for 129 years and is regarded as one of the top 20 exchanges in the world in terms of market capitalisation.

“This growth is net of nearly R50m fee cuts in equity market report-only trading fees and broker dealer accounting (BDA) fees - part of a consistent focus on transaction fee reductions to drive the use of our markets and taking client needs into account,” said JSE CEO Nicky Newton-King.

Group earnings before interest and tax (EBIT) are up by 17% to R567m compared to R484m in the first half of 2015. The earnings per share (EPS) increased by 19% to 599.7c compared to 503.9c in the first half of 2015 and headline earnings per share (Heps) increased by 19% to 585.1c compared to 490.3c in the first half of 2015.

One of the contributors to revenue was the cash equities and equity derivatives markets, which grew by R55m and R8m respectively due to an increase in billable value traded of 31% and 11% respectively.

BDA contributed R151m on the back of an 18% increase in the number of trades. This growth (R1m) is net of fee cuts amounting to R39m.

Post trade services

Post trade services revenue rose to R212m as a result of the 29% growth in value traded in the equity market and market data revenue including colocation rose by 32% to R150m. Funds under management increased revenue to R46m due to an increase in margin deposits.

The JSE said its primary markets division bore the brunt of the uncertain economy with a decline in initial and additional listings fees, resulting in a 2% decrease in revenue.

There were six new equity market listings in the first half - including the significant listing of AB InBev - compared to 9 in the first half of 2015.

A highlight of the first half, according to the JSE, was the achievement of readiness to move to a three-day settlement (T+3) for the equity market. This project went live on July 11 2016.

READ: JSE ready for shorter settlement cycle

"The South African market is now aligned to global standards, helping to make South Africa more attractive to foreign investors,” according to the JSE.

The JSE also said it continues to maintain positive operating leverage with total expenses growing 12% to R636m compared to 12% to R567m in the first half of 2015.

Focus for second half

"The JSE’s focus for the second half of 2016 remains on projects that are designed to strengthen the delivery of its strategic vision," the groups said in a statement.

These include progressing the integration of the JSE’s trading and clearing systems for all JSE products, which will enable a central point of risk management, margin offset and cross-collateralisation; investigating alternative equity market risk and settlement models; developing an exchange-traded platform (ETP) for government bonds; and monitoring the implementation of the Twin Peaks model of financial sector regulation for South Africa.

There will also be an increased focus on selling JSE products and services outside of SA; improving client service; and reviewing its approach to all areas of transformation.

“We continue to focus on strengthening the foundational elements of our business which include people, technology and regulation, diversifying revenues, and driving enhanced capital and cost efficiencies," said Newton-King.

"We are particularly focused on driving high-growth areas and on July 1 2016 we restructured the business to enable enhanced focus on two such divisions, namely post trade services and information services.”