NEW BUSINESS ASSOCIATIONbetween the

JSE Securities Exchange South Africaand

London Stock Exchange

2 www.jse.co.za

Discussion items

» Global trends and challenges

» JSE reality, vision and strategic position

» JSE/LSE relationship

3 www.jse.co.za

Global Trends and Challenges

» Technological innovation allows for a greater degree of automation, reduction in transaction costs and increase in processing efficiency

» Alliances and partnerships facilitate economies of scale and provide for a single point of access to larger pools of liquidity

» Demutualisation will result in exchanges no longer being owned by their members and allows them to run as independent organisations

» Deregulation enables a greater degree of cross-border trade and investment

The JSE investigated global trends in financial markets to gain insight into its future direction. There are a few key characteristics that are shaping the future:

4 www.jse.co.za

What is the JSE Reality ?

1. The JSE cannot maintain the status quo.

3. The JSE must replace JET.

4. The JSE is looking for a broader business relationship.

5. The JSE needs to offer a new information dissemination system.

6. The JSE needs to ensure operational excellence to compete.

2. The JSE must offer SA companies more than what is currently offered.

The JSE is aware of the changes it needs to make.

5 www.jse.co.za

JSE Vision

“To be recognised for providing world-class primary markets,

secondary markets and services facilitated by strategic affiliations

while providing a gateway integrating Southern Africa into

the global financial markets”

6 www.jse.co.za

JSE Strategic Options into the Global Market

» Aligning with internationally accepted practices

» Providing gateway for SA listed corporates to global markets

» Utilising proven technologies without reinventing established practices and technologies

» Positioning the JSE within it’s geographical area to successfully challenge competitive markets

» Enabling the trade in a wider product range thereby creating economies of scale

» Creating cost competitive structures, processes and infrastructure

An affiliation with a global stock exchange with proven technology would

create the opportunity for the JSE to achieve the following objectives:

7 www.jse.co.za

JSE/LSE Deal

The JSE/LSE deal consists of a number of key areas.

Technology

Listings

Membership

Information Dissemination

8 www.jse.co.za

JSE/LSE Deal - Technology

» Trading platform run remotely from UK

» Communication link between JSE technology hub in SA and LSE core technology hub in London

» LSE will provide the JSE with a customised, complete and fully functional trading and information dissemination solution which will enable the trade in all counters

The LSE is to provide the JSE with a set of core technology services delivered through the LSE’s Sequence system

9 www.jse.co.za

JSE/LSE Deal - Listings

To ensure the JSE is attractive as a gateway to international capital for large SA companies

Prevents further large companies moving their primary listings away from the JSE

JSE will manage the entire listings relationship for companies on the international board - creates an easier route for dual listings with the LSE, which is a potential growth area for new listings

Companies on the international board will be dual primary listed on both the LSE and the JSE

Create an international board with listings requirements acceptable to the LSE and UKLA

10 www.jse.co.za

JSE/LSE Deal - Membership

» Members of the JSE authorised as remote SETS participants will be entitled to trade on SETS in addition to any trading entitlement that they have on the JSE by virtue of membership of the JSE

» Members of the LSE authorised as remote JSE participants will be entitled to trade on the JSE in addition to any trading entitlement that they have on the LSE by virtue of membership of the LSE

» Only JSE and LSE members who comply with criteria determined by the LSE and JSE will be accepted as remote participants

A number of core principles of participation by LSE members trading on the JSE and JSE members trading on the LSE are being negotiated (remote participation)

11 www.jse.co.za

LSE JSE

Local LSE Participants Int. LSE Participants

Int. JSE Participants Local JSE Participants

Segment

Partici-pants

KEY:OA – Opening AuctionCA – Closing Auction

Segment 1:

SETS 184 Board

Segment 2:

UK International

Board

Segment 4:

International JSE Board

Segment 5:

Local JSE Board 1

Segment 6:

Local JSE Board 2

Segment 7:

Local JSE Board 3

Order-driven

OA, CA

~ 184 UK Stocks

(GBx)

Order-driven

OA, CA

~ 40 – 60 SA Stocks

(GBx)

Order-driven

OA, CA

~ 40 – 60 SA Stocks

Order-driven

OA, CA

Other Liquid SA Stocks

Order-driven

OA, IA, CA

Illiquid SA Stocks

Quote-driven

MM

Possible Illiquid Stocks

Dual Primary Listed JSE Primary and Other Secondary Listings

What are the implications regarding Membership and Listings ?

Segment 3:

International UK JSE Board

Order-driven

OA, CA

~ 184 UK Stocks

Segments

Listing

Segment

Charac-teristics

Exchanges

Segment 8:

NSX Board

Order-driven

OA, CT, IA

. . . CT, CA

NSX Stocks

(ZAc) (ZAc) (ZAc) (ZAc) (ZAc) (ZAc)

IA - Intraday AuctionMM – Market MakersInt. - International

12 www.jse.co.za

JSE/LSE Deal - Information Dissemination

» JSE information will be disseminated on the same technology platform as the LSE

» JSE will market LSE information in Africa subject to LSE contract

» LSE will market JSE information in rest of world subject to JSE contract

The LSE and the JSE will market each other’s share price information thereby providing greater access to such information

13 www.jse.co.za

Key Issues

• Indices

• Exchange controls

• Regulatory buy-in / support

• Market participation and support

14 www.jse.co.za

Functionality

Technology

RealisableStrategic Benefits

• Natural strategic partner• European accessibility• Listings reciprocity• Improved liquidity• Cross-membership• Improved integrity• Central Counter Party• Joint marketing• STRATE/Crest association

Valu

e t

o J

SE

Strategic Benefits

The LSE strategic option provides a world-class trading platform used by the world’s third-largest market place.

LSE Strategic Affiliation

Benefits for the JSE• Access to global markets• World class trading solution• Joint development of new products and dual listing and/or trading thereof• Access to increased pool of liquidity• Enhanced image and brand of JSE• Knowledge sharing

Benefits for the LSE• Global business relationship outside of Europe• Commercial gain• Improved shareholder return• Enhanced executive leadership reputation• Proof of technology and implementation• Knowledge sharing

Questions