JSE Glossary

Name	Description
premium	The amount by which a bond or stock sells above its par value. The amount by which a closed-end fund’s market price exceeds the value of its holdings. An additional cost above the normal cost. The amount that the buyer of an option pays to the seller. A regular periodic payment for an insurance policy, here also called insurance premium. The amount by which the first trading of an IPO exceeds its offering price. Opposite of discount.
price/earnings ratio (p/e ratio)	Shows how much investors are willing to pay for each rand of the company’s earnings. If a company’s shares are currently trading at a P/E of 20, it means that an investor is willing to pay R20 for R1 of the company’s current earnings.
primary market	The market that relates to the sale of “new issues” or common stocks or bonds, where a financial instrument is introduced for the first time, typically when a company raises capital through listing.
public company	A limited liability company that offers its securities for sale to the public on a stock exchange or over-the-counter market.
put option	An option to sell assets at an agreed price on or before a particular date.
Quanto Futures and Options	Types of derivatives in which the underlying traded product references a foreign underlying traded product – the instrument is settled in another currency at a fixed rate. Gives investors exposure to foreign commodities free of exchange-rate influence.
quarterly index review	The quarterly review of the FTSE Africa Index Series constituents takes place in March, June, September and December.
Rand Index	This index tracks the combined movement of the rand against a basket of currencies from South Africa’s five most active international trading partners.
rate of exchange	Rate at which one currency may be converted into another. Generally, one unit of the home currency is expressed in terms of another currency. For example, an American bank may quote the exchange rate between the dollar and the yen as the number of dollars needed to buy one yen. Also called exchange rate or foreign exchange rate or currency exchange rate.
redemption	Repayment of the face value of a debt instrument by its issuer (the borrower).
real estate investment trusts	Investment vehicles with tax advantages that invest in and derive their income from real estate properties and mortgages.
retail investor	Individual investors who buy and sell small amounts of securities for themselves.
risk	Also known as market risk. The probability that a share price will go down rather than up. All investments have an element of risk, which is harder to quantify than their return, and therefore very often left to “gut feel”. The quantifiable likelihood of loss or less-than-expected returns. Examples: currency risk, inflation risk, principal risk, country risk, economic risk, mortgage risk, liquidity risk, market risk, opportunity risk, income risk, interest rate risk, prepayment risk, credit risk, unsystematic risk, call risk, business risk, counterparty risk, purchasing-power risk, event risk.
return on equity	A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year’s after-tax income (after preferred stock dividends but before common stock dividends) divided by book value, expressed as a percentage. It is used as a general indication of the company’s efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. Investors usually look for companies with returns on equity that are high and growing.
return on investment	A measure of a corporation’s profitability, equal to a fiscal year’s income divided by common stock and preferred stock equity plus long-term debt. ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better. More generally, the income that an investment provides in a year.
South African depository receipts	South African depository receipts (SADRs) are not actual shares of stock, but receipts representing shares. They are handled and traded just like shares. They offer the same economic, corporate and voting rights enjoyed by investors holding underlying shares directly. An SADR may represent one share, several shares or a fraction of a share, so its price may differ from that of the share it represents, but should still be reflective of the price.
South African Reserve Bank	The South African Reserve Bank is the central bank of the Republic of South Africa. The primary purpose of the Bank is to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa. Together with other institutions, it also plays a pivotal role in ensuring financial stability.
Satrix	Satrix securities are Exchange Traded Funds listed on the JSE. They seek performance of the main FTSE/JSE indices by holding the constituent companies of the index in exactly the weighting they are allocated for that index.
SAVI Dollar	The South African Volatility Index (SAVI Dollar) is a forecast of 90-day implied volatility of the rand against the dollar, allowing investors to gauge market sentiment with regard to the local currency market.
SAVI Squared	A variance future contract that obliges the holder to buy or sell variance at a predetermined variance strike price at a specified future time, offering investors direct exposure to volatility.
SAVI Top 40	A forecast of equity market risk in South Africa, allowing investors to gauge market sentiment with regard to the local equity market.
SAVI White Maize	A three-month forward-looking index, allowing investors to gauge market sentiment with regard to the local white maize market.
scrip	Physical share certificate(s). Since 2001, physical share certificates have been replaced by electronic entries that settle through Strate.
SENS	The JSE’s real-time Stock Exchange News Service (SENS).
settlement	The daily payment of net sums of money by an exchange’s users to each other, after the clearing process has been completed. It is usually carried out by banks acting as settlement agents on behalf of users.
special purpose acquisition company	A collective investment scheme, set up like a shell company, which allows stock market investors to invest in private equity-type transactions such as leveraged buyouts.
spread	The difference in yield between a government benchmark bond and another fixed-income instrument with the same coupon rate and redemption date, due to a difference in the perceived credit-worthiness of the issuers. Also used to describe the gap between a broker’s bid and offer prices for an instrument, and the yield difference between two government bonds having different redemption dates
Socially Responsible Investment Index	This index measures company policies, performance and reporting in relation to environmental, social and governance (ESG) principles as well as social sustainability.
self-regulating organisation	An organisation that has a degree of regulatory authority over its members and their representatives within an industry or profession.
Single Stock Futures	A contract that allows investors the right to buy or sell individually listed shares at a fixed price on a future date.
Shareholder Weighted Indices	The Indices have been designed to represent the performance of companies listed on the JSE, while providing the investor with indices that exclude foreign shareholding. The constituents of both the FTSE/JSE Shareholder Weighted Top 40 Index and FTSE/JSE Shareholder Weighted All Share Index are identical to the respective headline indices, with the only difference being the constituents’ weightings in the indices. The Shareholder Weighted Indices use the share register to reduce constituent weights by foreign shareholding.
secondary listing	Secondary listing status means that once an applicant issuer is listed, it will only be required to comply with the listings requirements of the exchange where it has its primary listing, save as otherwise specifically stated in the listings requirements.
seller’s price	The price at which someone is prepared to sell a security. At the end of the day’s trade, there is often a seller who was not able to find a buyer for his shares at the price he wants, so that his price remains in the seller’s column until the next trading day. The lowest seller’s price is reported in papers as it stood at the close of trade on the previous day.
sell-side	The part of the financial industry involved with the creation, promotion, analysis and sale of securities. Sell-side individuals and firms work to create and service stock products that will be made available to the buy side of the financial industry.
settlement	The date on which an executed security trade must be settled. Market convention currently stipulates T+5 where trades settle five business days after the trade is executed.
share register	A list of active owners of a company’s shares.
shareholder weighted index	Calculated by excluding the foreign-held shares in issue for particular security.
silver futures	A contract that allows investors the right to buy or sell silver at a fixed price on a future date.
single-equity warrants	A Vanilla Warrant is one of the most common types of covered warrant traded. It is very similar to a call or a put option. Vanilla Warrants are typically settled by cash, and physical delivery of the stock rarely occurs.
small cap	Refers to stocks with a relatively small market capitalisation.
soft commodity	A commodity such as coffee, cocoa, sugar and fruit. This term generally refers to commodities that are grown, rather than mined. Soft commodities play a major part in the futures market. They are used both by farmers wishing to lock in the future prices of their crops, and by speculative investors seeking a profit.
speculation	Buying shares with the intention of selling them after a very short period, to make a quick profit.
speculator	One who takes greater risks in trading financial instruments with the expectation of greater rewards.
sponsor	Usually a private equity investment firm engaged in leveraged buyout transactions; companies owned by sponsors may raise equity in public markets through an initial public offering (IPO).
Spot Bond	Bonds are long-term loans where borrowers pay bond holders interest over time and repay the full loan amount on the date of maturity; spot deals are transacted on a standard T+3 settlement date and forward deals after T+3 (see T+3).
stock	An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits. Ownership in the company is determined by the number of shares a person owns divided by the total number of shares outstanding. For example, if a company has 1 000 shares of stock outstanding and a person owns 50 of them, then he or she owns 5% of the company. Most stock also provides voting rights, which give shareholders a proportional vote in certain corporate decisions. Only a certain type of company called a corporation has stock; other types of companies such as sole proprietorships and limited partnerships do not issue stock. Also called equity or equity securities or corporate stock.
stokvel	Group saving scheme allowing a number of people to pool their savings towards particular objectives.
Strate	Share Transactions Totally Electronic. Strate is an electronic settlement system for transactions on the JSE and off-market trades.
surveillance	Oversight of a market by a regulatory authority to protect its stability by ensuring that its rules are observed and that traders are always financially able to meet their trading commitments.
suspended share	Trading a security may be stopped if there is a lack of, or adverse, financial information on that security – once the security is suspended its shares cannot be traded until the suspension is lifted.

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