VZCZCXRO0582
RR RUEHDU RUEHJO RUEHMR
DE RUEHSA #2068 1391031
ZNR UUUUU ZZH
R 191031Z MAY 06
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 3516
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHBU/AMEMBASSY BUENOS AIRES 0243
RUCPDC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS PRETORIA 002068 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF/S/MTABLER-STONE 
COMMERCE FOR JDIEMOND 
TREASURY FOR BCUSHMAN 
 
E.O. 12958: N/A 
TAGS: EFIN EINV SF
SUBJECT: SOUTH AFRICA'S JSE EXCHANGE PLANS TO LIST ITS OWN 
SHARES 
 
 
¶1. (U) Summary. South Africa's JSE Securities Exchange (JSE) 
plans to offer its shares to the public on June 5.  The JSE 
hopes that listing on its own exchange will boost 
shareholder liquidity and the percentage of black ownership, 
as well as raise additional capital for further investment. 
Simultaneously, the JSE will launch a Broad-Based Black 
Economic Empowerment (BEE) Initiative focused on fulfilling 
its BEE Financial Sector Charter obligations.  The JSE all- 
share index has risen 68% in the past year and continues to 
break records, topping 22,000 last week.  Market 
capitalization currently stands at over $700 billion, likely 
meaning that the JSE will jump a notch or two from its 
previous position as the 17th largest exchange in the world. 
End Summary. 
 
¶2. (U) On June 5, South Africa's JSE Securities Exchange 
(JSE) plans to offer its shares to the public by listing on 
its own exchange.  The JSE hopes that the listing will boost 
shareholder liquidity, the percentage of black ownership, as 
well as raise additional capital for further investment. 
Listing is another step of a conversion process that began 
in 2000, transforming the JSE from a member-owned, tax 
exempt entity to a publicly held corporation.  In July 2005, 
the JSE first offered its shares on an over-the-counter 
basis to its members.  Since last July, its share price rose 
from R30 ($5) to more than R180 ($30).  To meet the 25 
million share minimum listing requirement and attract an 
array of retail investors, the JSE will split 8,340,250 
current ordinary shares, each with a par value of R1, into 
ten shares with a par value of R10 cents.  The JSE predicts 
that the new shares will trade at around R15 ($2.50) or 
higher in June.  The JSE expects that its regulator, the 
Financial Services Board, will give its seal of approval to 
the listing soon. 
 
¶3. (U) One of the objectives of the listing is to attract 
greater black ownership through its Broad-Based Black 
Economic Empowerment (BEE) Initiative.  Currently, black 
companies and individuals own about 9% of the JSE's shares. 
In line with the Financial Services BEE Charter, the JSE 
would like to increase this to well over 10% and has 
developed two vehicles to accomplish this -- the JSE 
Empowerment Fund (JEF) and the Black Shareholder Retention 
Scheme.  Specifically, the JSE proposes to issue 1.74 
million new shares to the JEF, a fund set up to support 
educational opportunities for blacks entering the financial 
services sector.  In addition, the JSE will offer stock 
options to black investors for the purchase of an additional 
1.74 million new shares through its Black Shareholder 
Retention Scheme.  Options will be issued in three tranches 
beginning June 2006, and following in June 2007 and June 
¶2008.  Options may be exercised in June 2011 at 20% of the 
average price around the time of the option grant date. 
 
¶4. (U) JSE's move comes at a time when its all share index 
and market capitalization are at record levels.  The JSE's 
all share index rose 68% over the past year, soaring to the 
22,000 mark before resting at 21,000 this week.  Market 
capitalization is now over R4.4 trillion ($730 billion), 
after increasing 66% since last May.  This means that the 
JSE is likely to jump a notch or two the next time the World 
Federation of Exchanges recalculates rankings.  As of March 
2006, the JSE ranked as the world's 17th largest exchange. 
 
¶5. (U) Additional details on the JSE and its offering can be 
found at http://www.jse.co.za. 
 
TEITELBAUM