The JSE and the Competition Commission are headed for a legal showdown next year over allegations Africa’s largest bourse has breached the country’s antitrust law by starving smaller rival A2X of trading volumes to maintain its market dominance.
The imminent legal showdown will be a baptism of fire for incoming JSE CEO Valdene Reddy, who takes the reins of the JSE in March.
The commission, which released a statement after Business Day’s request for comment, has now referred a complaint against the exchange to the Competition Tribunal for prosecution after it completed a three-year investigation of the JSE after A2X lodged a complaint in 2022.
A2X, which serves as a secondary listing venue for companies, offering enhanced trading efficiency and cost savings, burst onto the scene in 2017.
At the heart of A2X’s complaint is that the JSE has engaged in various forms of exclusionary conduct seeking to slow its growth and expansion in the secondary trading market by starving it of the necessary scale and trading volumes.
The competition watchdog found there is merit in A2X’s complaint and has asked the tribunal to fine the JSE 10% of its revenue, among other steps.
The secondary listing of paper and plastics packaging and recycling business Mpact earlier this year brought the number of instruments available for trade on A2X to 175, representing a combined market capitalisation of about R10-trillion — half that of the JSE.
Many JSE top 40 listed groups such as AngloGold Ashanti, Sanlam, Discovery, Standard Bank, Prosus and Naspers are listed on A2X.
Siyabulela Makunga, the commission’s spokesperson, confirmed to Business Day that the watchdog had made adverse findings against the JSE, accusing the bourse of placing various restrictions on cross-platform trading. These restrictions, it said, have starved A2X of trading volumes and served to entrench the JSE’s dominant position in the market.
“In essence, the commission found that because trading of shares in the secondary market involves trading in shares already issued and listed on the JSE, also known as primary listing, an exchange in the secondary market requires sufficient interoperability of its trading system with the trading system used by the JSE to facilitate, among other things, cross-platform trading in shares,” Makunga said.
“For example, if company A is listed on both the JSE and A2X (secondary listing) and a broker receives an instruction to purchase 1,000 shares of company A, but the trader intends to buy 200 shares on the JSE and 800 shares on A2X, a broker must transact on both the JSE and A2X platforms,” he said.
“Due to the lack of seamless interoperability, the process of cross-platform trading is currently onerous, inefficient and costly, thus discouraging brokers, especially smaller and historically disadvantaged brokers, from engaging in cross-platform trading.”
The commission will also ask the tribunal to find that the JSE has abused its dominance and that it takes the necessary remedial steps to facilitate cross-platform trading, including removing restrictions on interoperability.
A2X is run by Kevin Brady, who is also the company’s co-founder.
Restrictions by JSE
The commission’s investigation found the JSE is enforcing the mandatory use of its broker dealer accounting (BDA) system by its member brokers, and has raised barriers to the cross-platform trade on A2X through direct and indirect refusal to make the BDA system sufficiently interoperable with A2X systems.
The investigation found that the JSE’s BDA system facilitates trades in equities by confirmation and clearing for subsequent settlement of such trades on Strate, an authorised central securities depository (CSD) for the electronic settlement of all financial instruments, including equities, in SA. Clearing is a necessary process for the preparing of the settlement order and risk management.
The probe also found the JSE has hindered attempts to achieve equal treatment of cross-platform trades undertaken by common brokers — members of the JSE and A2X — between itself and A2X through the differential treatment in its favour in the processing of different trade types.
JSE denies allegations
The 138-year-old JSE is the 19th-largest stock exchange in the world. The bourse said it would challenge the commission’s findings before the tribunal.
“The JSE supports the important principles that underpin the provisions of the Competition Act and has not nor will it ever act in a manner that is exclusionary or unlawful. The JSE has always acted appropriately, lawfullyand within the bounds of the provisions of this statute,” the bourse told Business Day.
“The JSE is of the view and has been advised that the commission’s allegations are without any merit.”
A tribunal spokesperson said the matter was likely to be heard in 2026.
“The matter is currently in the filing phase. By agreement between the parties, the timelines for filing extend into early next year. Once the filing phase has been completed, the tribunal will hold a pre-hearing to determine the further conduct of proceedings,” the spokesperson said.
“Referrals of complaints by the commission to the tribunal generally follow an investigation by the commission. In its referral, the commission alleges that the respondent has engaged in exclusionary conduct that has anticompetitive effects.”
Competition in SA’s stock market has increased over the years with the emergence of new licensed exchanges, challenging the long-standing dominance of the JSE. The primary competitors are A2X and the Cape Town Stock Exchange.
Over the past five years, the JSE has positioned itself as a diversified financial market infrastructure provider by increasing the adoption of technology and innovation in its operations and exploring new markets and services.
This diversification, together with the implementation of an inorganic growth strategy, has increased its non-trading incometo 38% of total income in 2024, from 29% in 2020.
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