The London Stock Exchange plc ("the LSE") and the JSE Securities Exchange South Africa ("the JSE") are pleased to announce the signing of Heads of Terms, representing a new development between two international exchanges. The deal comprises the provision of core technology services by the LSE to the JSE and aims to achieve easier access to each other’s markets for both member firms and issuers.
The completion of the final agreements, which is expected within six to eight weeks, will be subject to the obtaining of all necessary regulatory approvals.
Provision of technology services
The LSE is to provide the JSE with core technology services, including its world class trading system, SETS. The JSE will be providing its member firms with a leading edge trading platform capable of meeting its objective of significantly growing its markets over the future.
The delivery of these technology services is scheduled for the end of this year. The term of the deal will initially be for five years.
Information dissemination
Each exchange will leverage the existing client relationships of the other to increase revenue from the sale of share price information and to promote trade on each other’s market.
Access for member firms
The exchanges aim to provide their respective members with remote access to trading in the most liquid securities on each other’s markets.
This is intended to enable local member firms to access an international market without having to establish a physical local presence in the overseas markets, allowing local brokers to offer a more comprehensive product range to their clients.
Access for issuers
The LSE and the JSE are exploring ways of simplifying the means by which UK and South African issuers access the respective London and Johannesburg markets.
Benefits to the JSE
This deal provides the JSE with world class technology at a competitive price. It will increase revenue potential from data distribution, while enabling the JSE to retain its major listed companies and provide significant additional advantages for its customers. At the same time, the JSE retains control over the operation of its market.
Commenting on the agreement, Russell Loubser, the CEO of the JSE, said: "Just over one year ago, the JSE formulated its vision to be the Gateway integrating Southern Africa into the global financial community. This deal lays the foundation for realising our vision and provides an exciting opportunity for South Africa’s financial markets. We will also be able to offer the Namibian exchange the opportunity to join us in using the London Stock Exchange’s technology in unlocking the potential in the SADC region."
Benefits to the London Stock Exchange
As well as enabling both organisations to benefit from each other’s expertise in local markets through the identification and development of new business opportunities, the deal represents a diversification of the portfolio of products and services offered by the LSE. The deal with JSE also provides an opportunity to share in any additional revenue generated as a result of growth in the South African market.
The deal is worth a minimum of £11 million in terms of additional revenue for the LSE over the next five years.
Commenting on the partnership, Clara Furse, Chief Executive of the LSE, said: "The deal with JSE provides us with a new business partner with whom we can identify and develop new business opportunities. It also represents an exciting step for the LSE as a provider of technology services. It underlines the attractiveness of our technology, which we aim to extend to new customers in the future."
Involvement of Accenture
Accenture has been advising both the LSE and JSE in relation to this agreement.
