Africa’s largest stock exchange, the JSE, will provide relief measures to listed “market participants”, aimed at countering the impact of the Covid-19 pandemic.
“The relief measures will be offered to businesses that are affected by the pandemic and in financial distress. The JSE will grant distressed companies extended payment terms of between three and six months, with no interest charged,” it said in a statement on Monday.
The JSE noted that it will engage with companies and review requests on a case-by-case basis.
Commenting on the move, JSE Group CEO Leila Fourie said: “The JSE is extending a helping hand to our valued clients and suppliers that are affected by the pandemic. We value our relationships with our market partners and we will endeavour to play our part in making sure they remain sustainable.”
Most South African corporates are facing a major financial fallout from the global Covid-19 pandemic and the lockdown locally. This has seen major restrictions to trade, while many businesses, such as airlines, restaurants, hotels and casinos, remain closed.
The JSE has also felt the impact, not only related to unprecedented market volatility in March, but more recently with listed groups like Comair and Phumelela Gaming, suspending trading on the JSE.
The bourse also highlighted the “harsh impact” that Covid-19 and the lockdown is having on small business. It announced a 50% fee reduction for trading, clearing, and settlement in all companies listed on the JSE AltX and BEE Board for the remainder of 2020.
“This measure is offered to help stimulate continued trading and liquidity in our AltX- and BEE-listed companies,” said Fourie.
“The JSE recognises the strained situation facing small business and is taking further steps to encourage investors to support and encourage trading in small, mid-cap and BEE companies listed on the exchange,” she explained.
“The depth and liquidity of capital markets ensures that the financial sector can support the real economy during times of crisis. The exchange plays an essential role in enabling price transparency, trading out of positions and providing access to capital.
“The JSE is reducing listing fees by 25% for those small-cap and AltX companies looking to tap the market to raise secondary capital,” she added.
Fourie said that small cap counters are among the most vulnerable in strained markets. “The discounts we are announcing for these market segments are aimed at stimulating liquidity and supporting this vital growth node of our economy.”
Meanwhile, Valdene Reddy, the JSE’s director of Capital Markets, says that the JSE will continue paying its small- and medium suppliers as well as service providers monthly retainers for contracted suppliers to help mitigate the impact of Covid-19.
“Non-contracted small and medium suppliers will be paid the average amounts those suppliers were billing the JSE prior to the national lockdown,” she notes.
The JSE has also revealed that it will be increasing the amount of cash disbursements given back to small and medium stockbrokers that are on the JSE’s Enterprise Development Programme.
“The cash disbursements in quarterly trading and connectivity fees will increase from 33% to 50% of the traded value by these stockbrokers. This temporary relief is applicable for the second quarter of 2020,” it pointed out.
The enterprise development programme was introduced by the JSE in 2016 to increase black participation in the exchange’s value chain and ecosystem.
“These brokers are 51% black-owned and we believe that this temporary relief will insulate them from the negative impact of Covid-19. The Black Stock Broker Programme is a key part of our transformation strategy and with this targeted relief, we are ensuring that black representation within the financial markets is sustained,” says Reddy.