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History and the functions of the JSE
The JSE Limited (JSE) was founded as Johannesburg Stock Exchange little more than a year after the discovery of gold inJohannesburg. The discovery of the Witwatersrand goldfields in 1886 and the subsequent formation of mining and financial companies,meant investors needed a facility with which primary capital could be accessed. Benjamin Minors Woollan provided that facility when he founded the JSE on 8th November 1887. He (Wollan) proposed to a meeting of the Exchange and Chambers Company board and members that ‘the Johannesburg Stock Exchange be established’.
This simple resolution was accepted unanimously Mining companies were the dominant feature of the market in the initial years of the exchange’ existence. Due to increase in industrial activity in the country following the Second World War impact, more non-mining entities began to make their way into the exchange. This development led the JSE’ premises in Hollard Street to become inadequate. A new building was built on the same site of the old one and opened in February 1961. The last home of JSE in the central business district (CBD) was built at 17 diagonal street in Newtown, Johannesburg - the heart of South Africa’ financial market at the time. For the first time in its history, the stockbrokers and JSE personnel were housed in one building. A feature to be undone again in September 2000 when the exchange migrated its residence to new hub of South Africa’ financial market Sandton’ address - 1 Exchange Square, Gwen Lane in Sandown.
The chief function of the exchange is to assist listed companies to raise primary capital through sale of shares to the public. Companies sell shares in exchange of capital, and the proceeds of the sale are used by companies to establish or expand their business.
Secondly, the exchange provides facilitation of an orderly market to trade previously issued financial shares between buyers and sellers, in terms of rules and regulations of the JSE, with due protection for all parties concerned. Investors buy shares hoping to convert their investments back into cash sometime in the future. When shares change hands from one investor to the next through trading on the exchange, this facilitation is referred to as secondary market. The JSE plays an important regulatory role in this process, ensuring that the market remains credible.
Thirdly, when companies establish or expand their business, employment opportunities are created as a result. In a way the JSE plays a prominent role in job creation as well as general economic growth.
Lastly, investors bring their savings to the market in anticipation to grow the value of their money – thus making the JSE a vehicle of wealth creation to the nation.
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