EDITORIAL: JSE monopoly claims face tribunal scrutiny

Our country says it wants competitive capital markets. We repeat this line at conferences, in policy papers and when foreign investors ask whether SA is serious about reform. The JSE agrees, at least in principle, until competition threatens the rent.

Then stability suddenly means whatever keeps the incumbent comfortable. That is the heart of the Competition Commission referral to the Competition Tribunal, a case billed as legal but freighted with market structure, public costs and whether innovation needs a hall pass from the monopolist.

When the incumbent controls the listings, settlement and post-trade data, does stewardship shade into self-preservation? This is not a trivial question. The answer will set the cost of capital and the pace of innovation for years, well beyond the JSE and A2X, which lodged the anticompetitive complaint with the commission.

Competition among trading venues disciplines fees, forces technology upgrades and tightens spreads through sharper execution. In concentrated markets, costs tend to harden, and innovation drifts toward incrementalism. SA’s pension funds, brokers and mid-cap issuers feel this directly. If the rules and pricing for essential functions tilt against rivals, dependence replaces contestability, and the public pays for stability twice. First in fees, then in foregone efficiency.

Of course, the JSE matters. It is a national asset with systemic obligations. But stewardship is not the same as self-preservation. The question before the tribunal is simple: do the JSE rulebooks protect the integrity of settlement and market functioning, or do they protect a monopoly?

If the latter, then policy is failing at its core task of ensuring that essential infrastructure is governed by public interest norms. The remedy should not stop a theatrical punishment; it goes as far as defining and enforcing parity. And crucially, the commission is asking the tribunal to test access to market infrastructure, not superficial appearances.

What does that look like? Level access to listings, settlement and essential data without the incumbent acting as gatekeeper to competitors’ viability. Transparent pricing that doesn’t punish multivenue strategies. Interoperability norms that let innovation plug in without first seeking a permission slip from the very player it aims to challenge.

Give investors a choice, not an obstacle course. Give issuers tighter spreads and credibility alternatives. Let brokers route intelligently across venues and prove value in execution, not political navigation.

The counterarguments are familiar. Fragmentation erodes liquidity. Free-riding threatens investment in infrastructure. Systematic risk trumps novelty. All true in a context in which interoperability is a chaotic free-for-all. Still, contestable markets are regulated competition with supervised access and technical standards that reduce risks while broadening options, not chaos.

Fragmentation is addressed by an automated system that splits and sends an investor’s order to the venues that together deliver the best execution, not a single silo. As for free-for-all riding, that’s a framing choice. Either you recognise interoperability as a public good, or you conflate it with parasitism that keeps rivals outside.

The tribunal need not pick corporate winners. It should design conditions under which winning is possible. That means distinguishing systemic risk from incumbent risk and writing orders that travel beyond this case into a lasting governance baseline for essential market infrastructure. If the JSE’s policies primarily protect integrity, they will survive transparency. If they primarily protect market share, transparency will reveal it.

SA’s ambitions for deeper, cheaper capital markets will not be realised by slogans about openness, but by rules that ensure the rails are managed for integrity and accessed on merit.

The cost of getting this wrong is measured in the arithmetic of higher fees, wider spreads and slower innovation. The benefit of getting it right is competitive pressure that improves the market for everyone, even in the long run for the incumbent.