From Market to Exchange: Early regulation and social organisation on the Johannesburg Stock Exchange, 1887-1892

Mariusz Lukasiewicz (Lecturer in African History at the Institute of African Studies, University of Leipzig) writes a fab post:

This investigation provides new insights on the early local, regional and global development of Africa’s oldest existing stock exchange. Founded in November 1887, the Johannesburg Stock Exchange (JSE) was not an isolated stock exchange in the South African Republic (ZAR), but an increasingly global financial institution attracting members and capital from beyond southern Africa’s expanding colonial frontier. Confronted by an uncertain political environment, the JSE’s first five years of operation tested the institution’s ability to balance the needs of regulation and promoting access to its international capital market.
Although the basic structure of the JSE’s corporate organisation resembled the LSE in many ways and principles, the early JSE pioneers did not intend to replicate London’s stock exchange system in an understandably very different financial climate. Unlike in London, where the powers of the proprietors were already separated from the powers of the subscribers in the early 1830s, the development of the JSE was guided by the rivalry for influence over governance between the General Committee and the JSE’s landlords, the Johannesburg Estate Company. The division between ownership and operation, facilitated the emergence of the JSE’s regulatory sub-committees, investigating disputes and controversies over the rights and obligations of members. Woollan’s JECC was the owner, operator and regulator of the JSE until the formal takeover by Barney Barnato’s Johannesburg Estate Company in April 1889, unleashing a new era of ownership and regulation. Despite having its own General Committee, the JSE was fully dependent on the fixed assets and capital of the Estate Company, leaving it exposed to the regulatory dictatorship of Barney Barnato. Far more interested in membership fees and rent income from offices inside the JSE building, Barnato’s dominance came in direct conflict with the General Committee’s vision of growing the market for JSE-listed securities.
With different stakeholders advocating competing visions of institutional development, the first five years of the JSE’s existence tested the financial institution’s ability to balance the needs of regulation and promoting access to Africa’s largest capital market. Although a number of stock exchanges were already in operation on the African continent in the final quarter of the 19th century, the JSE emerged as a financial industry leader in what soon became the largest and wealthiest city in southern Africa. For all the eagerness and enthusiasm displayed by many Johannesburg-based speculators in expanding the volume and value of securities on the Official List, the development of the Exchange was constrained by the power struggle between the JSE’s General Committee and the Estate Company. By analyzing the JSE’s early rules and social organization, this study contributes to the better understanding of early stock exchange operation and organization in colonial South Africa.
Hmm..
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