Johannesburg - The JSE Limited was monitoring the implementation of the twin-peaks model of financial sector regulation for South Africa, the company said on Friday.
The twin-peaks model will culminate in the creation of a prudential authority that will be housed in the Reserve Bank, while the Financial Services Board (FSB) will be dedicated to regulation of market conduct. The prudential authority would ensure the reliability of regulated financial institutions.
Speaking after the release of the JSE’s results for the six months to June, chief executive Nicky Newton-King on Friday said the local bourse was watching the implementation of the twin-peaks model closely as it would have implications for the company.
Newton-King said both authorities would regulate the JSE.
“At the moment we are only regulated by the FSB. The twin-peaks model will have a major impact on the market,” she said.
Commenting on the company’s results, Newton-King lauded what she said was robust performance “notwithstanding the overall atmosphere in the country”. In the half year, earnings after tax rose 19 percent to R513 million, compared with R430m last year, while operating revenue was up 17 percent to R1.2 billion, up from last year’s R1bn.
Newton-King said: “This growth is net of nearly R50m fee cuts in equity market in report-only trading fees and broker dealer accounting fees, part of a consistent focus on transaction fee reductions to drive use of our markets and taking client needs into account.”
Group earnings before interest and tax increased by 17 percent to R567m. Earnings per share increased by 19 percent to 599.7c, while headline earnings per share were up 19 percent to 585.1c.
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 percent decrease in revenue. In the six months, there were six new equity market listings, compared with nine in the same period last year. The six listings included the high profile listing of the world largest brewer, Anheuser-Busch InBev, which made its JSE debut in January.
The JSE said the readiness to move to a three-day settlement for the equity market was the highlight of the six months. “This project went live on July 11, following extensive collaboration between the JSE, market participants and regulators. The South African market is now aligned to global standards, helping to make South Africa more attractive to foreign investors,” the JSE said.
In the three-day settlement cycle, equities are delivered in exchange for payment in four days, instead of the current six-day schedule, according to the JSE.
Personnel expenses rose by 17 percent to R246m, mostly owing to an increased number of senior hires and a rise in average headcount from 470 to 498, the JSE said.
The JSE’s technology costs rose by 20 percent to R133m, while capital expenditure for the period was R61m. It said all its planned investments and capital requirements would be funded from its own resources.
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