JSE Limited (JSE) Earnings Call Transcript

Good morning, good afternoon, and thank you all very much for joining us at what is our first JSE Capital Markets event. It's a real pleasure to have you with us today. This marks a significant moment for us as we bring you into the heart of our journey, one that's about driving innovation and delivering sustainable value to our stakeholders. Today, I'm excited to take you through this journey, how we're building a strong foundation, modernizing our business and also focusing on key areas that will drive our future success. Throughout the session, you're going to hear from our leaders who are instrumental in making this vision a reality. We'll share with you how we're positioning the JSE to remain competitive, agile and innovative, while ensuring that we continue to deliver long-term value for our stakeholders. Over the next 2 hours, we'll delve into several key areas. First, we'll walk you through how we're modernizing our infrastructure, sharpening our focus on our core operations and setting ourselves up to capture future opportunities. We'll also focus on the progress that we've made, it's through our diversification strategy, which has really been central to our resilience and our growth. You'll hear from the team about the ongoing initiatives that we've undertaken driving our diversification as well as the levers that we are planning to pull to accelerate the growth and innovation across the business. Our goal is very much clear and unified, creating value not only for shareholders, but also for stakeholders, clients, investors, partners and the broader market. And that's what today is really all about, showing you how we are executing on that vision and the progress that we've made. So let's start with a high-level view of the JSE, facts that many of you, no doubt, already know. As 1 of the top 20 exchanges globally by market capitalization and also the largest exchange in Africa, we operate in a unique position. With a market cap of what was in August, 18.6 trillion and now is almost 20 trillion, JSE is much more than just a financial marketplace. It's a vital engine for economic growth, investment and for innovation in the region. We've built a reputation as an efficient and trusted regulator and a reputation that is supported by a market availability of 99.99%. That level of uptime is not only impressive, but it's also on par and even exceeding some of our world's most developed exchanges. Another key strength of the JSE is the range of multi-class asset products -- assets and services and products that we offer. This diversity allows us to be less reliant on the traditional trading revenues, while enabling us to cater for a much broader spectrum of participants in the financial markets, from institutional investors to retail traders. It also positions us to respond more effectively to the evolving needs of our markets. Finally, we're going to be looking at the numbers. Our return on equity and our dividend yield, looking at this, it's really clear to see that we deliver strong value to our shareholders. We'll hear a little bit more about this through Fawzia's presentation. We're consistently generating returns while maintaining a fine balance between growth and innovation. So having a look at the next slide, let's just take a bit of a step back and reflect on the progress that the JSE has made over the past decade. Over the past 10 years, we've seen a period of tremendous expansion and resilience. Our market cap has grown by an impressive 68% over the past decade, and this is underpinned by the strength of single name companies and major sectors. This growth reflects the confidence that both local and now growing and increasingly global investors have us in the JSE as a platform for raising capital and investment. Moving on, you'll see here that diversification has and continues to be a key pillar for our strategy, and it's one that served us particularly well. Over the past 5 years, we've significantly broadened our revenue base, reducing our dependence, as you can see on the left-hand side graph, on capital markets revenues, while increasing the contributions from other segments. As you can see in the chart on the left, the capital market's contribution to our revenues has decreased from 45% to 37% at the end of last year. The shift has been grown in -- the shift has been enabled by growth in areas such as JSE Clear and our JIS, and we expect to see these areas to continue to grow as we push forward on our strategic initiatives. The performance over this period is really best reflected in our nontrading income, which has grown, in this graph, by 67.3% since 2019. If we include the interims of this year, that growth is more than 80%. This represents, over this period, a compound annual growth rate of 10.8%, a rate that's particularly impressive given the challenging economic environment that we've been navigating. This growth underscores the success of our diversification strategy, but it also shows our ability to tap into new revenue streams and asset classes that position us for future growth. We will hear from Val a little bit later about our asset class diversification and our overall capital markets drive. This is a very interesting slide because while innovation and diversification are key strategic pillars in driving the performance of the JSE, the performance of our trading market is inherently linked to overall market segments and macro factors. Now if you compare in the top graph, the green versus the black bars, you'll see that we had a very negative month just prior to the elections, with the risk of wait and see sentiment driving flows out of the economy, so quite a material increase in the negative outflows. As we shift over the last 4 months post the establishment of the GNU, you can see that the green bars significantly reduced relative to the prior year, which is the black bars. So if we take now an overall look at the flows in the equities and bond market this year, as of the end of September, we reported a decrease in the equity market, foreign outflows to negative ZAR 94.4 billion versus the ZAR 99.8 billion negative flows in the same period the prior year. On the other hand, the bond market foreign flows increased by just over 3x to ZAR 84.7 billion over the same period versus the ZAR 27 billion positive inflows for the same 3 quarters of 2023. So we see there's been a clear shift to point of inflection over the last couple of months, really driven by the government of National Unity, and we've seen a reduction in the net outflows of our equity markets year-to-date. Moving on to what we've done over the past 5 years, we're very proud of the progress that we've made in transforming the JSE over the last 5 years. But this transformation isn't just about adapting to the present. It's really about positioning ourselves to meet the needs of the future. So let me just highlight very briefly a couple of the key initiatives that have been instrumental in this transformation. In 2019, as we all know, the ITaC project went live, and this not only aligned us with international best practice, but it reinforced our commitment to operational resilience. In 2020, we formed a private placement partnership with an international fintech called Globacap. And we also launched our sustainability segment, both of which reflect our commitment to fostering increasive and sustainable growth. We believe that by expanding access to capital markets, we can drive long-term value creation in ways that benefit not only investors, but society at large. Val will talk a little bit more to this area of our business later. And then last year, we began, as you all know, the modernization of our broker deal accounting system. This project, which is currently in its pilot phase, will eventually transform from old technology into new modernized Java language, and it will also facilitate the transfer of that data to the cloud. This is a crucial step in increasing our agility, enabling us to innovate faster and providing the flexibility that we need in a rapidly evolving digital world. Both Alicia and Tebalo will touch on this later in the presentation. And then finally, as you all know, 10 years ago, we launched our colocation services, which provided clients with the opportunity to co-locate their trading engines alongside aisles, and thereby providing lowest latency connectivity for trading. This was genuinely a game changer in both operational excellence and in latency. Last year, we took this a step further by providing Colo 2.0 colocation service. And this was in collaboration with Beeks and IPC. And this service enhances our ability to deliver faster, more reliable services to our clients and keeping us at the forefront of technology in the exchange space. Tebalo will talk a little bit more about this later. As we move to some of the key trends shaping our industry, it's impossible to ignore the transformative role the technology is playing. The financial markets are evolving at an unprecedented pace, and this transformation is being driven by a number of factors, all of which are shaping how markets operate and how participants engage in them. Let me highlight just a couple of the most significant trends that we're seeing across the industry. Firstly, we are witnessing the disintermediation of market infrastructures. Much of this is driven by the next block, which is blockchain and digitization. And disintermediation and the new technologies of blockchain and digitization can improve the efficiency and lower costs for participants. To remain relevant, we are modernizing to ensure that we provide platforms that cater for the evolving needs. Alicia will chat to you a little bit in a bit more detail about what we're doing here. Alongside technological innovation, we're seeing increased M&A activity in the industry. M&A creates opportunities for exchangers like us to expand our capabilities into new markets and to deliver more comprehensive services to our clients. The success that we've experienced in JIS is an incredibly good example of how we've responded to this trend, and Val will elaborate a little bit more on this a little later. And then, of course, the trend towards shorter settlement cycles is another major development that we're seeing across the world. This is an area where Alicia and her team are engaging and working actively with market participants to determine the appropriate pace and the appropriate timing which we might look to reduce our settlement cycle. In addition, we're also witnessing the emergence of new marketplaces for sustainable capital formation. New platforms are emerging to facilitate the flow of capital into sustainable ventures, and this is a place where the JSE is very proud to be performing a leading role through initiatives such as our sustainability segment, which is dedicated towards driving ESG-focused projects. Another key driver of the change is the growth in technology, data and analytics, whether it's through AI-powered analytics, big data or advanced trading algorithms, the role of technology in market intelligence is only going to expand. And as an exchange, we must keep pace of these advances. Mark will spend some time explaining how we're responding to these developments, and in many ways, are on the forefront of that development curve. Finally, we're seeing the rise of alternative assets and private markets. Investors are increasingly looking beyond traditional asset market with alternative assets, for example, private equity, venture capital and cryptocurrencies, and these are all gaining prominence. Val and Alicia well and will discuss both the JPP and the digital market solutions that we're planning, respectively. So these trends, collectively, represent both challenges and opportunities for the JSE. As the market evolves, we're very committed to staying at the forefront of these changes and innovating through technology, adapting our infrastructure and ensuring that we remain as a trusted, innovative platform for all market participants. And now as we briefly turn to the topic of regulation, it's clear that the evolving regulatory landscape, both locally and globally, is shaping how markets operate and how investors perceive both risk and opportunity. We've outlined on this slide some of the key regulatory developments that will impact the JSE and the broader South African financial markets. First, I'll touch on market fragmentation, which has been a growing concern since the expansion and licensing of new exchanges and a new CSD. To address this, a draft conduct standard has been developed to provide a cooperation between exchanges and to provide for interoperability between market infrastructures, with the aim of reducing inefficiencies in the market and enabling fair competition. As market participants, it's crucial that we all work together to support these regulatory efforts. Next is the conduct of financial institutions or CoFi Bill, as it's widely known, which represents a significant step forward in operationalizing what was the initially South Africa's Twin Peaks financial regulatory framework. The National Treasury has committed to taking this bill to Parliament by the end of 2024. Another key area is the central clearing of OTC derivatives. While central clearing mandate implementation has been delayed until 2028, it's important to recognize that this gives us time for us to prepare for these changes and to ensure that all market participants are ready to comply when the time comes. This shift towards central clearing is designed to mitigate counterparty risk, to improve market stability and also to align South Africa with global best practices and global standards, particularly around the G20 mandate. The Financial Sector Conduct Authority or FSCA has designated crypto assets as financial products. This is an interim step, which gives investors greater protection in what has traditionally been a much more volatile and largely unregulated space. The CoFi bill and the proposed amendments of the financial markets act are expected to provide a framework that offers both insight and flexibility for innovation, ensuring that as the crypto market continues to evolve, investors' interests remain safeguarded. On a less positive note, South Africa's recent gray listing by the Financial Action Task Force or FATF, has had a negative impact on market sentiment. Being placed on the gray list in 2023 highlights the need for continued efforts to strengthen our anti-money laundering and our counterterrorism financing frameworks. And the sooner [Audio Gap] amendments to the company's act place a higher disclosure burden on listed companies, especially as it relates to remuneration, with significant challenges for Directors if the binding vote on company's implementation plans are not passed for 2 consecutive years. In sum, the regulatory environment provides a situation of both challenge and opportunity. At the JSE, we are committed to working with our regulators, our market participants and our stakeholders to navigate these challenges and to continue to create value in an increasingly complex regulatory environment. Sustainability is very much at the heart of the JSE strategy, not just because it's the right thing to do, but importantly, because it's increasingly becoming a critical driver of long-term value creation. Our role of the exchange is to enable an environment where sustainable investment and growth can thrive, and we're very proud of the progress that we've made in this regard. I'm very briefly going to walk you through how we're integrating sustainability across our value chain to create tangible outcomes for all of our stakeholders. First and foremost, we are committed to enhancing ESG disclosure. To help meet the growing need of transparency, our sustainability disclosure guidance is a critical tool that helps companies to meet investor expectations and our regulatory requirements. And it's really all about promoting better decision-making around ESG factors. Our sustainability segment is another key pillar of our efforts. To date, it's raised ZAR 11.7 billion, with 82 sustainable bonds listed. These numbers speak to the growing appetite for sustainable investors as companies and investors alike recognize the importance of aligning financial returns with positive social and environmental outcomes. Internally, we're also focused on enhancing our own sustainability performance. As a business, it's very important for us to lead by example. Our internal staff ratings have grown tremendously and are at an all-time high, and we're very pleased to have grown from what was Level 3 BEE in 2019 to the current Level 1. Moreover, our Net Promoter Score, as you can see in the graph on the bottom right-hand side, has seen significant improvement, from minus 28 in 2019 to 33 in 2023. This dramatic shift in the NPS score really underpins and demonstrates how we are growing trust and satisfaction among our stakeholders who recognize that the value that we are delivering through our sustainability initiatives and others is very important. Ultimately, for us, sustainability isn't really just a buzzword for us. It's a solution that is underpinning everything that we do. By integrating sustainability across our entire value chain, we're ensuring that the exchange remains resilient, forward-looking and is poised to deliver well into our future. Turning now just briefly to Slide 15. I wanted to just quickly highlight our performance, both in the ordinary dividend per share and our overall performance over the last 5 years. So while we continue to operate in a dynamic and volatile market, the JSE continues to be resilient, and we are very pleased to have been able to maintain quality earnings, which is underpinned and supported very much by the success of our diversification strategy. Then as you know, we are committed and continue to be committed to our payout ratio of 67% to 100% of our earnings. Then on the right-hand side, you can see that the JSE Limited share price, which is in green, has grown by more than 45% over the last 6 months, very much in line with that point of inflection I spoke about in the foreign flows just after the introduction of the government of National Unity. So it's clear that the sentiment towards South Africa is shifting and post largely off the back of successful and business-friendly government of National Unity elections. And of course, this all translates into potential upside for the JSE. Thank you very much. I'm now going to hand over to Valdene, who will run you through some salient points relating to our capital markets.

Thank you, Leila. Good day. I'm Valdene Reddy and Director of Capital Markets. In this division of the JSE, we look after largely all the trade-related and product-related activity of the core functions of the exchange. And as we grow and diversify the exchange looking to grow along the value chain in capital markets products. As highlighted by Leila, we run a multi-asset class exchange. And within that, the primary focus is that of capital raise and trading. As mentioned, we are looking to supplement that with services such as colocation and new markets to add and enhance and deepen our market services. And then adjacent to that, add businesses and services that not only give us diversification of our revenue, but also enhance our product offering to our clients along the value chain. Specifically within Capital Markets, we wanted to just highlight some of the areas in terms of how we price and make our money in these areas and what would be some of the dependence and drivers in terms of revenue generation. In the primary market space, largely this comes from the capital raise on the public markets, which is the listings in the equities and debt markets as well as structured products. Here, we largely make our revenue line in terms of a value-based fee model. And within that, it is really market cap dependent in terms of issuances. In adding new products and services, such as our actively managed ETFs or actively managed certificates in our structured products, we sell those as packages as we enhance the structured products suite, but they are not large revenue contributors, but add in terms of diversification of product. In the secondary market trading, we run our cash equities, cash bonds in 5 derivative markets, most of those are either value-based or contract based and for larger trade activity or heightened trade activity, adds to the revenue contribution for the group. As Leila mentioned, not only does the asset class diversification support the business through cycles and ebbs and flows of trade activity, but also business diversification as we move away from trade-related revenue lines to more annuity-based revenue lines to complement through the cycles. Supporting that, but specifically from a capital markets arena, we've added services such as colocation. Colocation has been on a decade-long strategy to deepen and to mature. And we've recently added Colocation 2.0, which is best-in-class shared infrastructure services and optimizing some of the solution in the cloud. To bring a best innovative offering, we partnered with global providers who invest heavily in the development within the space, but also gives our clients the ability to flex their cost spend by moving some of the goods to the cloud as well as not heavily capitalizing, but sharing in the infrastructure of a global provider. We've also in the defense of the delistings narrative, and I will come to that specifically in the capital raise slide. We've launched the JSE Private Placements. What we've seen over the past decade is a shift globally between public and private markets in not only asset growth, but also in the capital formation between private equity and private debt away from public market issuances. Our response to this was a defense, not only to the delisting space that we felt over the past 20 years, probably, but also to provide a home and a marketplace for new capital alternative raises, and JSE Private Placements has stood next to our public listed offering, but will take a long time to incubate. Here we have a similar pricing model to our public markets. It's a listing fee or a setup fee, and then we have a value-based fee on closure. And then the new market which we look to explore, at the moment, we've launched carbon markets under JSE ventures, but as we look to diversify away from traditional asset classes and look to the demand of new asset classes, carbon market was an area that we felt strategically aligned to national agenda objectives, and will be a potential supply demand for the continent to unlock economic parts for the country as well as across the region. It is a long incubation period, as there's net zero commitments set globally. And as a compliant market converges to the voluntary market, but the JSE launched a voluntary carbon market in partnership with the world's largest player in the secondary market trade of voluntary carbon credits, and we will see this mature over the next 5 years. We are in conversation with some of the largest emitters as well as the big projects who are leaning in to generate carbon credits. And even in the wake of the liberalization of energy reforms in South Africa, have also launched products of renewable energy certificates that can be traded in the secondary market. And here, we will have a similar structure, which is the trading fees based on a per credit basis. Lastly, as has been highlighted to Leila of the diversification of the group revenue, through the acquisition of JIS, which is JSE Investor Services, and later supplemented with the acquisition of Investec's share plans business, we have launched JSE Investor Services, which is largely a transfer secretary custody as well as share plans business offering. Not only does this support in goods and services that we can offer to our clients, in particular, our listed clients, our issuers, but also adds diversification to the group revenue, which Fawzia will cover later, where JIS now contributes 7% of top line group revenue to the JSE as well as decent profitability and CAGR growth in that EBITDA line year-on-year as the business and services grow. If I focus on the 3 key revenues of protecting our business, growing and diversifying our revenue, we segment this largely into 3 big chapters of heading. One is on capital formation. Two is on liquidity and market quality, which we feel is a strong differentiator, not only to competitive exchanges, but also as a destination for developed and emerging market trade activity. And lastly, in launching new products and services as we supplement and complement the core capital markets businesses of the exchange. In capital formation, a huge part of our focus has been on generating new listings, whether it is equity, debt or structured products issuances. What we've done to complement this is despite the macro challenges we faced in the past decade, we've done a concerted effort with our issuer reg team, which Andre Visser will cover later, to really reform and rightsize not only our product offering, but the ease and attractiveness of listing at the JSE and in South Africa. We've done a whole raft of regulatory reforms in our listing space to enhance the equity's issuances. And while it hasn't manifested in fresh IPOs, it's given us product offering that makes us competitive, both locally and globally. And we've seen the manifestation of that in the additional capital raises that we've seen as well as the increase in secondary listings on our market or new listings in our market through unlocking value. We've also grown our debt segment. In particular, we'd like to highlight our sustainability segment, where we launched it in 2017 with green bonds, but have supplemented that by adding in sustainability bonds and social impact bonds in 2019 and 2020, and see that as a fully fledged diverse segment in the debt space. Not only does it give us an awareness and a positioning to stronger ESG focus, but we see that these instruments are commanding decent demand, not to compromising on the yield, and will be the first choice of issuance for our debt market as we grow that space. On the structured product side, we've worked closely with our regulators to bring in new products. The 2 that we'd like to highlight is the actively managed certificates and actively managed ETF. Over the last decade, we saw a shift from active to passive management, but what we see now is more of a hybrid formation as has been evidenced with the demand. For the AM ETFs, where we even see our local buy side and international community coming to issue more product that is listed on exchange, has better price formation, more transparent and is more cost effective. And we see this as a growth pipeline for more product on exchange. We will continue to work with our issuer reg team to ensure relevant fit-for-purpose product. We will continue to geographically diversify the capital formation initiative as we chase new jurisdictions of which to attract secondary listings, where we feel that we want to generate fresh IPOs, we believe that there's a huge benefit to our market to increase our addressable universe in the number of listings. So there are many initiatives between the London Stock Exchange, Amsterdam, Singapore, Hong Kong, the Middle East, such as Saudi, New York Stock Exchange to name but a few, where we are chasing new secondary listings to enhance and deepen our addressable universe in the capital formation, but also in the secondary market trade activity. And lastly, we will continue on SLE and SA Inc. roadshows. What we've seen is a disinvestment for the projects over the past 10 years in South Africa. And as investors become more aware of South Africa or reinvigorated interest, we will supplement that with showcasing a stability in our macro and a positive trajectory in the reforms that have been put in structurally to South Africa. And then through the JSE, really an outlet through public markets, trusted capital markets, for mechanisms in which our foreign investors can reinvest into South Africa. We are working on a whole SOE pipeline to bring these instruments to market. While they are a long way away in terms of equity and debt issuances, the frameworks that we are proactively leading, both on a regulatory as well as on a structural perspective, will stand quite good testament in terms of bringing new equity and debt issuances from the public sector to the JSE. On liquidity and market quality, this is really where we make the largest part of our revenue at the exchange, both in trading as well as in the post-trade services. In the liquidity and market quality, South Africa and in particular, the JSE's top 20 in the world, we have a long established pipeline with international clients. Through our Colo initiatives continue to see growth and diversification through adding in new clients from geographically diverse regions, where previously the South African market was known to have a good footprint of foreign investors from the European, U.K. and U.S. markets, we've seen that extend now to the Middle East, India, interest from China and Saudi, Hong Kong as well as new regions such as Germany and Amsterdam as we've seen Brexit shifts with capital flows out of the U.K. We will continue on that strategy to diversify our clients, but also to deepen our market quality and liquidity to stand as differentiated not only to alternative venues and fragmentation, globally but also to the local competition and exchanges. That said, it is imperative for us to ensure that we have the right balance of clients, but the right product and trade mechanisms to ensure deep markets and market quality that is not -- that does not add elements of toxicity, but of good execution. And so we are very pedantic about new trade taps and mechanisms. We want to service the deep institutional base of South Africa, but the balance in which to also keep up with the change of flows, adding new clients such as low latency clients and then also respond to a slight uptick in the retail market that we see. I will cover a few of the market quality metrics shortly, but this is a high area of precision that we focus on because it really is the bread and butter and the backbone of the exchange in generating the core services and trade activity. The regulatory reforms and technology enhancements within this space is equally important, one, to increase the appeal of South Africa, but two, to ensure that we have resilient markets, competitive and comparable markets. Not only is it easy to convert new trading clients into our market, but it also gives us a value proposition that stands us strong and comparable as we are attracting new clients into our market and as we command more due listings. We have 30% of our counters that are due listed. And as mentioned, we'll continue to add to those counters. Lastly, the new markets and services is really to support the group strategy of diversification of revenue. In the capital market space, we are focusing on new markets such as carbon markets and JSE Private Placements as well as new goods and services, which is JIS. I will cover a little bit more deeper in JIS, but to highlight with carbon, we are looking to launch the secondary voluntary market -- voluntary carbon market trading. As mentioned, it's a long incubation period, but this can stand as a new marketplace for our exchange as that develops and grows. With JSE Private Placements, while we are focusing right now on the digitization and automation of private markets, and just on the capital formation, we have product services with the international fintech that we've partnered with, such as secondary market -- second pre-round activity and liquidity as well as digital registry services and data sales that we can sell out of our private marketplace. In terms of the capital formation of the JSE, as mentioned, we look at this as a multi-offering exchange. Within the public markets, we focus on the equities market, debt and structured products. And in the launch of JSE Private, now the private markets under equities and debt. With the public market, equities remains our biggest trade activity both in the primary market as well as secondary market trade activity, and we see a solid pipeline of companies listing, either through M&A activity, regulatory reforms, transfer from other exchanges, such as the U.K. or even some of the local exchanges as well as a pipeline of fresh IPOs. This year, we've seen 4 new listings and a pipeline of another 3 that are likely to come to market. We've seen a massive uptick in this additional capital raise between 2024 and 2023. And as the macro rehabilitates and looks more promising, we see a pipeline through our sell-side universe that we look -- that is quite promising to come to market over the next 18 months. On the debt side, we predominantly issued government bonds, and that is the biggest market for us. Even though we have inflation cycles correcting and tapering globally, South Africa has always stood quite strong on our yield issuances and in terms of the yield returns that we give on our debt market. And with the macro improving -- improvements on the FATF grey list, South Africa slightly improving on the credit downgrades from the worst that we've seen ourselves, this will stand as a strong market for us and will be supported by some of the product issuances that we bring. And then as highlighted earlier on, the sustainability segment has been a great offering, and we'll continue to grow that. On the structured product side, we are actively managed, growing our ETFs and AMCs, and this is a growth pipeline. And on the private market side, long incubation period, but we see this as an alternative capital raise. And we'll continue to focus in areas such as infrastructure, SME -- SMEs, SOEs and other projects. This slide really captures the asset class diversification of the exchange. If you highlight from 2019, it was core focus from our division was on the trade activity from capital raise to trade activity. So if you look at the big blue bar, we had 46% in our equity markets that contributed to capital markets revenue. But if you look on the complete right-hand side, to first half of 2021, we have equities at 34%, but that really just came from the dilution of revenue from the addition of JIS, which now adds 20% to the division and about 7% to the group, and then also the growth in colocation services, as I highlighted, which is now 4%. In terms of the market quality and innovation, these are metrics that we measure quite closely. If you look at the JSE, the caliber and quality of our market is really important and what we position. The average value traded while it's been cyclical in our equities market, has stood quite strong, both in performance and absolute terms, not only to the continent, but to the rest of the world. As well as on the quoted spread where you see the quality of execution at the JSE, quite remarkable, not only to the global peers, but also to our local competitors. And this speaks to the execution quality at the JSE, which, through our enhancements of trade types and client mix and services, is something that we've managed to grow, enhance and scale. Further to add is the auction activity. Globally, you've seen a massive shift to off-exchange venues of various auctions. At the JSE, we have about 25% now on average going through our auction. It's a meaningful period where people can get execution done. But it still means that throughout the day, we have 75% of trade activity that you can access through our list of trading hours. And that's quite a compelling metric. The last quality metric that I wanted to highlight was on full probability. So where we get compared against our top line pricing, full probability is the second order of market impact in terms of how likely it is to full year execution at the JSE. If you look, we have quite high stats, especially relative to our local competition, but also very comparable to our global peers where we have dual listed counters and common names. The last area I want to focus on is JSE Investor Services. As mentioned, this was an acquisition through Link Market Services in 2020 and further enhanced by the acquisition of Investec's share plan business in 2021. This offers registry, custodial services, shareholder management, stakeholder engagement and share plans management that we can enhance. It's of strategic importance to the group and to our division, and we will continue to grow this organically and look to diversify the product offering. To summarize, we are multi-asset class exchange, we are focusing on new clients and geographical diversification to enhance our primary exchange services, but also our business. We will enhance utility services such as colocation and additional products to enhance the revenue, as well as adding a new market such as carbon and JSE Private Placements, which we wish to scale, and then further grow goods and services along the value chain such as JSE Investor Services. All of this encompasses the capital market strategy to scale new markets, drive new client acquisition and add to goods and services in the value chain, and support the group objectives of diversifying and defending our core. Thank you. I'd like to hand over to Alicia to cover the post-trade elements.

Good morning, everybody. I'm Alicia Greenwood, I'm the Director of Post-Trade Services at the JSE and also the CEO of JSE Clear. I'm going to start by telling you a little bit about our work that we're doing in the digital assets market space. The JSE is proactively investigating the trading of digital assets and adding these innovative digital instruments to our portfolio and offering to our investors. Digital assets, of course, include things like crypto, CBDCs, derivatives of crypto and also tokens of real-world assets or of financial instruments. I'm sure you will be aware that there has been an explosion of trading in crypto and more especially in the African continent, where the growth of crypto trading has exceeded the growth rates globally. This activity has largely been through retail investment interest. However, in 2024, we have seen a material uptick of activity in the digital asset space by very large global institutional companies such as BlackRock, such as [ AR, ] who are not only listing crypto-based ETFs in particular, but are also holding material positions in these types of assets. This uptake of institutional business has really been driven by some key accommodating decisions taken by U.S. regulators, the SEC early in 2024, and that really has set, I think, the tone globally for increased interest, particularly amongst institutional investors and exchanges are offering services to that particular investor base. So there is definitely for us, an opportunity to investigate these markets further and to expand our offering and to not only to our existing investor base, but also to attract an investor base that we do not hold today. The JSE is working on 2 particular initiatives. The first one would be to list crypto-based derivatives like the ETFs and the ETNs we see elsewhere on our traditional platform. We've seen this strategy being taken by multiple credible large exchanges across the globe, and it is an interesting approach because it requires very little build to no build or infrastructure development within the exchange or within our community. It does, however, require us to work on listings and a regulatory framework within which these instruments will be traded and governed, and that is what we are busy with at the moment. The second initiative in this space that we are proactively investigating is to establish a blockchain-based infrastructure as a separate parallel digital exchange on which we are able to target both retail and institutional clients and offer them a very wide range of these digital instruments. Both of these initiatives will, of course, require us to overcome some of the regulatory hurdles and some of the gray areas that exist in our South African regulatory frameworks around these spaces. But we are certainly doing our due diligence and working closely with our regulators to make sure that we mitigate and address any concerns and risks that are highlighted. We have been extremely encouraged by the very positive response that we've had from our community of stakeholders as we've discussed these various initiatives with them, and so we do believe that there is significant market interest to make both of these initiatives a success and to grow meaningful liquidity pools in the digital asset space over time. Right. Moving on then to Post-Trade Services. If you will indulge me, I am aware that many of the audience may not be very familiar with what exactly Post-Trade Services does. So I thought I would spend a little bit of time just providing a bit more detail as to what is that is involved in post-trade service management. There are a number of activities relating to administration of trades, clearing, settlement and risk management that occur in the post-trade services area of responsibility in between the time frame that a trade has matched to the time frame that a trade has actually settled. That time frame can differ from instrument to instrument, and in some cases, it can be a short as a day. In other cases like the derivatives market, those positions can be open for a number of months. So Post-Trade Services is responsible for managing all the open positions before they settle. And of course, we manage the risk that buyers and sellers may renege on their responsibilities before the trade has actually concluded. And so a lot of our focus is on making sure that we avoid and/or minimize any losses that may occur due to settlement failures or in fact, due to counterparty defaults during the period that the trade is open. These, of course, are core activities to any financial market infrastructure, and the JSE indeed has a very proud history and an exceptionally good track record in managing settlement and systemic risk in the markets that we offer to our investors. We have had a negligible sale trades over the past multiple years and certainly no material losses off the back of any issues relating to settlement or counterparty defaults. And this, of course, is a very essential track record for us to have because it promotes our ability to offer and manage safe and credible markets and to, of course, attract and retain investors through this confidence in their ability to participate in safe markets and to choose South Africa and the JSE over the various other investment destinations that they could also have access to. Post-Trade activities vary across the different markets that we manage. And we do have a range of bilateral clearing approaches in the cash markets today, while we have CCP clearing or central clearing in the derivatives markets. These 2 risk types are quite different from each other in the bilateral space, each buyer and each seller faces off directly to the participants on the other side of the trade and therefore, they fundamentally hold the risk that opposing party may default, either outright or may default on the particular settlement of the trade. CCP clearing is quite different in that the clearinghouse or the CCP actually legally interposes itself between each buyer and each seller, so that each buyer and each seller now faces off directly to a clearing house that is transparent, well-regulated with well-publicized risk management capabilities and also a balance sheet behind it. CCP clearing is most definitely the global best practice approach to managing markets, and this has evolved since the days of enormous losses faced through the Lehman's default back in the '80s. But as things stand today, the JSE does still operate both of these models in the various markets. This is a function of the history as to how we've evolved over the years and our acquisition of BESA and of SAFEX for the bonds and the derivatives markets a few decades ago. It is most definitely our stated intention to translate the bilateral markets into the centrally cleared market space, so that we bring all of our markets into a standardized approach, which gives us the ability to offer various value propositions to both our investors who can benefit from the benefits of netting in a portfolio basis rather than expensive silo-based approaches and also operational efficiencies. From the JSE's perspective, of course, it does allow us to build out on our clearinghouse, JSE Clear, and to benefit from efficiencies of reuse of infrastructure sets. So JSE Clear is the CCP of the JSE. It's been in existence for over 20 years now, and this is certainly the foundational financial market infrastructure that we will develop all of our further Post-Trade Services strategies into. It is a separate legal entity. It is separately licensed. And you can see from the metrics put up on the screen, that we do have a very strong network of clearing members who are all Grade A banks. As part of our network are supporting us as we manage the risk of the market, and we also have a material amount of margin resource to mitigate and to manage any potential losses that may arise from the derivatives market. So this slide represents the 3 key projects that we are currently working on with in post-trade services. And you will see from project #1, we are on the path of expanding our clearing house JSE Clear to now also offer bonds central clearing as a service offering to the bonds market. The bond CCP project, as we call it, started in 2023. It is a multiyear project as is typical for these sorts of projects because we do require extensive involvement and technical development within the JSE as well as within our network of 7 clearing banks, and we do also require a specific regulatory license to operate the CCP for the bonds market. That project is going along extremely well. And we anticipate to be live with this at the end of 2026. The value that this will -- this project will bring to the market is, of course, improved risk management in the bond market itself, increased safety, but it is also a mechanism for increased participation in particularly the National Treasury's bond ETP market by participants who are uncomfortable with the bilateral risk management approach, and we would prefer or who are mandated by their regulators to participate in a CCP risk management approach. Obviously, for JSE, we are able to leverage our existing infrastructure and our existing operating model in JSE Clear and bringing in additional asset classes such as bonds, and in the future, equities and perhaps OTC derivatives, we will also be able to reduce our cost-to-income ratio and increase our diversification profile. The second area in post-trade services that we are currently doing material projects in is the equity market. There is, of course, a quite -- a number of initiatives, quite a material amount of transformation we'd like to bring about in the equity market over time. But this will take its time. It is a complex environment. We have developed a road map of initiatives to ultimately get to a marketplace that is cleared through the CCP and that has compressed settlement cycles, as Leila alluded to earlier, the global trend is to move to shorter settlement outcomes. And that is on our road map for the equity market. The first 2 projects in that road map, of course, are the 2 that I've listed here being the BDA systems modernization and the BDA pricing model review. The BDA system, I think most will know, is a system that executes core functions for us in the equity market. And it is essential that we make sure that, that system remains resilient and open to further innovations that we wish to bring to this market. So the value of us modernizing the code is really that we optimize our operational efficiency and that we create a technical platform that is more flexible, that is more modern and allows us to implement innovation going forward. The fee model is a project in which we will transform the basis on which we charge from a model that is currently based on system usage to one which is a more functional model based on the functional services or offerings that is derived from the JSE. It will be beneficial to our client base to change the pricing model from what we have today to this functional model because it will most certainly provide them with enhanced levels of transparency and predictability in the fees that they pay to the JSE to execute equity trades in our market. Both of these projects are currently underway and will conclude in 2025 and 2027, respectively. It's important to note that most projects in the post-trade space and especially the ones that I've highlighted here today, do require a partnership and joint technical development with our community of external and interconnected stakeholders. So it is very critical for us to make sure that we have collaborative planning, collaborative design and collaborative implementation with that wide net of stakeholders. In summary then, all 3 of these projects are critically important for the JSE as we fulfill our role as a financial market infrastructure, and we meet the associated responsibilities that we have to ensure that our investors are operating in a safe, resilient and stable marketplace. This, of course, is not only the JSE's responsibility, but it is in the best interest of investor protection and of investor interest in the South African marketplace as a whole. Thank you. I'll hand over to Mark Randall.

Thank you, Alicia. Good morning, everybody. My name is Mark Randall. I'm the Director of Information Services at the JSE and I'm going to spend a little bit of time speaking about the division and about some of our forward-looking [ views on ] strategy. So our Information Services division really owns the data assets of the exchange. If I look at allocation of workflow, we focus on 2 core outcomes, namely FMI data operations, the first one, and of course, data monetization being the second core outcome. If I start with our FMI data operations, this function really is about providing the core data workflows that support both trading and clearing within the exchange. Each of these data workflows is run and operated by a dedicated and specialist team within Information Services, with the idea that each team owns the full life cycle of each data workflow. So at the core [ phase ], that could really incorporate things like data capture, data interpretation, quality management, qualitative and quantitative analysis and of course, data governance more broadly. It further includes a specialist custom support incorporating both education and consultation around methodology. If we look at the actual services that manifest in terms of public [ facing ], we include our [ SN ] service within Information Services, things like tradable instrument reference data and corporate actions, closing prices and valuations and, of course, market data statistics and analytics. Ultimately, we also leverage on this capability, not just for supporting trading clearing, but also for delivering self-service business intelligence back into the organization in order to really drive data-driven decision-making. So we do see that a large proportion of Information Services headcount, core technology and indeed, general running costs is dedicated to servicing these FMI data operations functions from a shared services point of view. That does mean that the majority of our data products, if you look at the granular level, are not purely focused on revenue generation. But also on providing trusted data to support our trading and clearing functions and ultimately, investment decisions by our stakeholders. When we think about how we monetize data, I think in principle, exchanges monetize their data through product licensing or data licensing where the commercial policy of the license is really aligned with the specific use case of the client and how that data is being used to generate value for that client on the ground. So when I think about licensing implementation, there are several use case questions that we would ask before settling on the right price item. For instance, is the client distributing the data or redistributing the data? Or was it already used in-house? Is that client working with the data real time? Or do they use it on a delayed basis or an end-of-day basis or even a historical basis? Does the client display the data to the individual staff members on a trading terminal? Or is it being used in some kind of application or algorithm? And finally, what kind of directly billable services were client using to generate data rather value of the data IP. And here, we think about things like index creation, CFD trading or running trading platforms directly. So if you consider the full range of physical data products as well as separate licensing use cases that we consider, our data prices contains more than 500 distinct items. Having said that, we see material revenue concentration in [ ready ] 2 categories of data product. The rest is more in the FMI data operations that I mentioned earlier. So the first category is around real-time data in the equity market that is used to really drive and report on price formation and drive trading. And the second one is our benchmark and index data business through our long-standing partnership with FTSE Russell, a part of the LSE Group. At a broad level, data sales are a material contributor to overall JSE revenue, attracting just shy of ZAR 450 million last year in terms of top line. Since we do maintain both rand-based prices and a dollar-based price list for international clients, we see that around 60% of this total revenue is dollar-denominated. This, of course, can create volatility in the Information Services reported revenue number in line with ForEx volatility, but does provide a really healthy and I think a key natural hedge for the group's dollar-denominated liabilities. I must add, however, that many of our international vendors that are paying on the dollar-based price list are also delivering their services to customers within South Africa, not just globally, meaning that a dollar-based revenue line for the JSE may not necessarily or strictly align with complete geographical diversification in addition to the currency diversification that we see. From a client perspective, Capital Markets data, the way it's distributed into the market is generally aggregated, normalized and distributed by a number of large multinational data vendors. And here, you'll be familiar with names such as Bloomberg, Refinitiv, Iress, FactSet Morningstar, ICE Data Services and so on, there are many of them. This does create a concentration in the exchange billing profile among the largest clients, typically in the data vendor space despite us having more than 500 individually named clients on our books. However, over and above the data vendors, we are seeing some increasing interest from clients to access data directly from the JSE, particularly for some of our more niche emerging data sets, but often really just trying to procure the data closer to its golden source and reduce some intermediary costs. This does create an opportunity for the JSE Market Data team. This trend does span our brokers, but we're also seeing increasing opportunity for new clients in the space of asset managers, asset owners, media houses and other ecosystem service providers. Information Services revenue is generally contracted and linked to a recurring billing model. This may be monthly, quarterly or annually. As such, this revenue does not directly fluctuate with daily market value or daily trading patterns and therefore provides an essential revenue diversification to our core trading and clearing revenue. Having said that, though, in the medium and long term, data sales, of course, are tightly linked to the number of participants that we see active in the SA capital markets and the broader market wallet size. So we do see that this has the direct result that we are unlikely to see accelerated growth from our existing or traditional set of data products despite this being the bulk of our revenue base. On our next slide, we do see that there are many comparison points between the JSE and other exchanges globally. We have seen many and some of these quite high profile, ultra large global exchanges progressively and aggressively chasing revenue diversification through acquisitions. Some of these exchanges are focused acquisitions in the data space. Others are focused on technology or other opportunities. Some of these large exchanges have also established very public and strategic partnerships with the top 3 cloud hyperscalers and are spending a tremendous amount of energy in evaluating the size and opportunity in the cloud space, and we are watching their progress very closely. Looking at Tier 2 exchanges, and these are often exchanges that are critical providers in their home countries but don't necessarily have -- sorry, haven't necessarily grown into some more multinational business lines and typically you have a smaller balance sheet than some of the Tier 1 exchanges. When we compare ourselves to these exchanges, we note that there is a very wide range of maturity when looking at the data infrastructure and data services. Many of them are only now starting to grapple with the same strategic data opportunities as the JSE as well as the trade-offs that we all experienced between investing to grow our core business lines versus new strategic opportunities. Having said that, it is extremely rare for an exchange in 2024 of any size to not be having design conversations around their ability to deliver modern data products and services in line with the emerging customer demands. I believe that the JSE's delivery in building truly innovative data products and services positions it very favorably compared to many of these peers. When we look at large developed markets, the proliferation of exchanges and new trading venues in particular, that are not traditional license exchanges has steadily increased the number of data sources that our ultimate end clients need to consume and consider. Data aggregators and distributors have helped the market poses complexity but the rapidly increasing number of data sources and trading venues has driven up costs for the end user at a far higher rate than the growth experienced by individual trading venues. This has triggered public and regulatory pressures on data costs and consolidated tape services in the Americas and in Europe. From a JSE perspective, we have been very intentional around how we cross our core trading data, and I did mention the concentration in core equity trading data real time, ultimately referencing an inflation level as our standard. However, for data services that can be delivered by any market player based for public market data, the JSE does have far more flexibility in terms of pricing, of course, subject to normal competitive market forces. We have really spent a tremendous amount of energy over the past 3 years investing into the way that we think about modernizing our data infrastructure. Starting, I think, with the key objectives for this strategy. Our approach really is to completely recraft our existing data infrastructure, ultimately creating an adjacent capability for us to rapidly innovate and deliver new products and services. In addition, this would allow us to monetize new JSE data assets that we haven't previously exposed, as well as creating new classes of data services for our existing data client and ultimately targeting new clients in new geographies. The ultimate goal of the [ ICE ] modernization strategy is to maintain an elevated annual revenue growth rates in the division across the medium term and to increase the relative contribution of these new types of data services to overall JSE Information Services revenue of the current low base. On the infrastructure side, we have really prioritized cloud infrastructure over our legacy on-premises infrastructure when we think about the future of data delivery. This kicked off with a project to copy all of our market data assets from our core actual data systems into a cloud location that is really optimized for data delivery and data analytics. By the end of this year, 2024, we would have transferred all of our core trading and market data across all 6 of our markets into the cloud. And from next -- early next year, we will shift our focus to prioritize post-trade data going forward. Our Market Data Connect platform is our new data shop for our information subscribers to interact with us on a digital self-service platform and ready to do a self-service management of all of their JSE market data procurement needs. This includes a full service offering all the way from a catalog interaction, contracting and licensing, fulfillment of their orders to API delivery tokens and ultimately, billing and self-service administration. Our foundry platform has been built as a cloud-native mechanism that we are using internally to fulfill data orders and deliver the data from our internal cloud data store directly to licensed and entitled customers. We have designed this from the ground up as a brand-new platform to solve for many of the historical paint points that our clients have identified around data products, things like flexibility or formats and content things like security, access to history and a general support for really modern data workflows that they are looking for in the cloud. Over the next few years, the intention is to replace all of our legacy data products, particularly end of day with the new equivalent Foundry product. But we are also taking this opportunity to flag data assets that we are not monetizing today and create new products around that with the intention of revenue growth. The technology itself, as I said, will also attract new direct clients to the JSE and support our ambitions for geographical diversification by leveraging hyperscaler backbones where possible. In parallel to this core data infrastructure replatforming that we're seeing on the left of the slide, we also continue to invest against parallel data services that ultimately create credibility, I would say, for the JSE as a provider both of analytics as well as alternative market data. Our flagship and standout success here has been our JSE Trade Explorer product which delivers rich analytics directly to the desktop of our equity market trading members, creating commoditized analytics at source on private market data has provided access for our equity market brokers to truly world-class execution quality metrics as a subscription service. This initiative of an exchange democratizing analytics really across the full range of broker sizes is a world first for exchanges and positions the JSE as an innovative leader in the space, which we intend to continue to capitalize on. We have further established a joint venture with big xyt analytics partner and our intention here is to offer this trade explorer product to other exchanges globally, and we are currently in the business development phase of this initiative. Other themes where we're spending energy relate to sustainability data and how we help our listed companies capture and contribute that data in a structured and simple and multipurpose way. Things like listed company data, and we think about moving -- helping listed companies convert their unstructured financial statement or other type of data into a really structured machine-readable and query ready data. And we believe ultimately, third-party capital market data assets will find a home on our new infrastructure platform. Our ability to deliver consistently against these themes over the past 3 years in a way that has not impacted the broader organization has really been due to our ability to find and integrate world-class but truly specialist partners and other providers. We will, of course, continue to protect our core advantages in IP around existing client relationships, existing distribution channels, our deep understanding of our core market data assets as well as the market infrastructure. But at the same time, we will also continue to accelerate delivery through working with best-in-class partners, right technology and analytics, ideally to support our forward-looking growth trajectory for Information Services revenue. Thank you. That brings me to the end of the Information Services section, and I will hand over to my colleague, Tebelo Tsoaeli, to speak about technology. Thank you.