JSE probing securities surge linked to Gordhan’s UK recall

Cape Town – The Johannesburg Stock Exchange (JSE) said it is reviewing the significant moves in “numerous listed securities including currency futures” that occurred when former finance minister Pravin Gordhan was recalled from his investor roadshow in London two weeks ago.

The review follows analysis by Intellidex chairperson Stuart Theobald which queries the drastic moves in the rand future securities at the time of Gordhan’s recall from London on March 27 2017.

“Could one profit if you knew of such an event in advance,” he asked in a blog post on his website. “The answer is clearly yes. One simple way to do so would be to buy those futures on the JSE.”

Theobald calculated a person earning R42m in two days, assuming “that the contracts were opened before the Gordhan news broke”.

“There is circumstantial evidence supporting the view that it was before the news,” he said.

JSE director of market regulation Shaun Davies said in a statement on Monday that "the JSE is reviewing trading in affected securities prior to the news of the recall of the minister of finance from the roadshow, as that news precipitated material moves in the value of numerous listed securities including currency futures".

“Once the JSE has finalised its review it will forward its findings to the FSB (Financial Services Board).”

Davies said that, as a matter of procedure, the JSE Market Regulation Division reviews trading activity in its listed securities ahead of any market moving event to identify any activity which may warrant further investigation by the Department of Market Abuse at the FSB.

GRAPH: Forex futures open interest (number of contracts)

Source: Intellidex

The Market Regulation at the JSE also picked up unusual activity with regards to share moves in Gupta-owned Oakbay Resources and Energy four days after the future moves and the morning after President Jacob Zuma removed Gordhan from office as part of his Cabinet reshuffle.

“When routinely monitoring trades during the morning of Friday 31 March 2017, the JSE’s Market Regulation team identified trades in Oakbay Resources and Energy Ltd shares that appeared to be evidence of market abuse,” said Peter Redman, senior technical advisor in Market Regulation at the JSE.

“These trades were cancelled. A report has been prepared and will be handed to the Directorate of Market Abuse at the FSB. There is nothing to suggest that the company is in any way connected to the trades in question.”