The Johannesburg Stock Exchange, a 138-year-old financial institution that has long dominated South Africa’s financial markets, now faces the possibility of a record penalty.
The Competition Commission has accused the JSE of using its power to prevent the growth of rival exchange A2X and is seeking to fine the JSE 10% of its annual turnover.
The case began when A2X filed a formal complaint in October 2022. Competition Commission spokesperson Siyabulela Makunga said the alternative exchange was launched in 2017.
He added that A2X alleges that the JSE has engaged in various forms of exclusionary conduct to slow its expansion in the secondary trading market.
A2X has entered an area historically controlled by the JSE to bring more competition to South Africa’s capital markets.
Mr Makunga said the commission’s investigation found that A2X was struggling to increase trading volumes because it could not easily connect to the JSE’s systems.
Since the JSE houses South Africa’s major listed companies, brokers trading in multiple markets need to interact with the JSE to buy and sell the same stocks on multiple platforms.
According to Makunga, this is where the JSE is making things difficult. “Secondary market exchanges require sufficient interaction with the JSE trading system,” he explained.
If a broker cannot execute trades smoothly in both markets, the process becomes slower, more complicated, and more expensive. This problem hits smaller and historically disadvantaged brokers hardest.
The commission believes the JSE has “depleted A2X’s trading volumes” and created obstacles to protect its dominant position.
A key issue is the JSE’s broker-dealer accounting (BDA) system, which brokers must use to allocate trades.
Makunga said the JSE not only forced the use of the BDA system, but also failed to ensure that it would work well with A2X’s system.
This created a barrier for brokers who needed to allocate trades between the two platforms in a simple and efficient manner.
JSE’s deliberate strategy
Following these findings, the European Commission will refer the matter to the Competition Tribunal and the JSE will have to defend itself or risk one of the largest fines ever proposed in South Africa.
“The commission strongly believes there is a case to answer,” Makunga said. A2X CEO Kevin Brady added that the BDA system is at the heart of the issue.
In most markets, exchanges set technical standards and allow brokers to choose systems that meet those standards.
However, the JSE’s BDA system is a closed system that cannot be easily accessed or integrated by other platforms. “You can’t have a closed system that’s enforced,” Brady argued.
Brady explained why this is important from a practical standpoint. Brokers often need to combine trades across markets. For example, buying stocks on the JSE and A2X and grouping them into one trade.
He added that the system handles some trades differently, allowing certain trades to move from A2X to the JSE, but blocking the reverse.
“This is not a regulatory issue. This is a deliberate strategy by the JSE to make it difficult for brokers to easily and seamlessly trade and allocate between markets,” he said.
Brady also believes South Africa’s extensive regulatory framework is outdated compared to markets in Europe, India and the United States.
Reform proposals are being drafted, including new standards of conduct and a long-delayed Financial Markets Review, but these changes are expected to take several years.
Until then, he said, a lawsuit from the Competition Commission is necessary. “They finished their homework.”
Makunga added that the commission is focused on fairness and the creation of a market that allows new and small brokers to fully participate.
“We are committed to leveling the playing field,” he said. Efficient and open markets, he argues, create opportunities for broader participation, economic growth, and job creation.
The JSE confirmed the commission’s referral and said it was preparing a petition, expected to be submitted in early 2026. It is not yet clear if or when the case will be heard.
