The Johannesburg Stock Exchange (JSE) will remain fully operational throughout South Africa’s 21-day lockdown.
JSE group CEO, Leila Fourie says the bourse was constantly monitoring the impact of the Covid-19 pandemic, continuously engaging with National Treasury, the Prudential Authority and the Financial Sector Conduct Authority (FSCA).
The JSE had already moved close to 90% of its employees out of the exchange to work remotely. Critical staff would be able to work from the exchange should the need arise to enable the JSE to seamlessly trade, clear, settle and disseminate information. Normal trading hours would be maintained, she says.
“As many companies enter lockdown, their operations and cashflow will come under a huge amount of pressure. During this time the exchange will play an essential role, enabling price transparency, trading out of positions and providing access to capital. As a destination for international investment, the JSE must ensure that the channels remain open and integrated into major global exchanges and OTC markets,” says Fourie.
The JSE, as noted by President Cyril Ramaphosa in his address to the nation on Monday 23 March 2020, is an essential service providing critical market infrastructure and maintaining economic momentum, continued Fourie.
“The depth and liquidity of capital markets ensures the financial sector can support the real economy during times of crisis, which is vitally important in the current situation where the level of volatility has been comparable to the global financial crisis of 2008, with one-day losses approaching levels last seen during the Asian crisis of 1997.”
The JSE had already begun proactively implementing business continuation plans as early as February when staff travel was first limited, culminating in an international travel embargo in early March, while all events had been cancelled from 18 March, when all meetings and listed company training moved online.
The exchange has made changes to its circuit breakers which trigger temporary halts in securities trading during market volatility providing investors with a breathing space to better understand market conditions. These have proven to be valuable mechanisms which would continue to be monitored and further reviewed, if the situation warranted.
Fourie warned that the JSE would take strong and decisive action against any instance of naked short-selling, including restricting the particular member’s trading activities, if the exchange believed that a member was trading in a manner that put the market at risk.
“Under the current market conditions, market participants need to maintain confidence in the ability of their counterparts to meet all of their settlement obligations,” Fourie concludes.