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What is the JSE?
The Johannesburg Stock Exchange (JSE), or Johannesburg Securities Exchange, is Africa’s largest stock exchange. With more than R23.49billion in shares traded daily, it currently ranks 19th in the world.
What is a Stock Exchange / Stock Market?
A stock exchange (or stock market) is a market where investors can buy and sell securities, usually in the form shares. There are many stock exchanges around the world, which allow for the constant trading of securities in local and international markets.
South Africa has the JSE, Germany has the DAX (Deutscher Aktien Index), the United Kingdom has the London Stock Exchange (LSE) and America has two of the largest stock exchange markets in the world, the New York Stock Exchange (NYSE) and the Nasdaq Stock Market.
What Are Securities?
Securities are rights to financial assets. There are generally three types of securities: equity, debt and hybrid. Equity gives over ownership rights, e.g., ordinary shares. Debt is in the form of loans which are usually paid over periods of time, e.g., banknotes, bonds and debentures. Hybrid securities are a combination of debt and equity.
Companies make their shares public and sell them in the stock market in order to raise capital for growth. Investors purchase shares in order to own percentages of successful businesses, or businesses that show potential. They either keep the shares and receive dividends, or trade them according to market behaviour, and earn profits in the process.
What Are the Functions of the Johannesburg Stock Exchange (JSE)?
Like other stock markets, the JSE provides many opportunities for investors and business owners. While its primary purpose is to provide a platform where businesses can raise capital, and investors can trade stocks, there are many other functions that the security exchange serves.
Here is a list of some of the functions of the JSE:
- It acts as a link between investors and public companies.
- Provides a safe market for buying and selling securities.
- Prevents fraud and protects investors by applying strict rules regarding trading.
- Encourages new investments.
- Encourages short-term investments.
- Allows companies to raise primary capital.
- Makes the venture capital market available to the open market.
- Uses STRATE to facilitate the electronic trading of shares.
- Serves as an indicator of economic conditions in South Africa.
- Gives small investors the opportunity to invest in the country’s economy, by buying shares in large companies.
- Keeps investors informed on the share prices of companies, by publishing share prices daily.
- Gives opportunities to financial institutions like insurance companies to invest their funds in shares.
Other Useful Articles
- What is a Stakeholder in Business?
- 6 Examples of Stakeholders and Their Importance in Business
- What is the Triple Bottom Line in CSR? 3Ps Simply Explained
- Real World Examples of CSI and CSR: Google and GrandWest
- Disadvantages of CSR to the Community
Now it is time for you to test your knowledge. Download the quiz cards below and practice answering these NCS exam questions. Share them with your friends and test each other online. You will find more images like this, and other Grade 12 Business Studies notes, on my Facebook page: Nonjabulo SA.
1. Outline FIVE (5) functions of the Johannesburg Securities Exchange Ltd (JSE).
2. Explain the functions of the Johannesburg Securities Exchange (JSE).
- Johannesburg Stock Exchange. Who we are. https://www.jse.co.za/about/history-company-overview [2020/07/17]
- Johannesburg Stock Exchange. Why do companies list? https://www.jse.co.za/grow-my-wealth/why-do-companies-list [2020/07/15]
- Kenton, W. 2020. Security. Investopedia. https://www.investopedia.com/terms/s/security.asp [2020/07/15]
- South African Market Insights. 2018. The average number and value of shares traded on the JSE per day. https://www.southafricanmi.com/blog-17apr2018.html [2020/07/17]