Well, afternoon everyone. I really feel that I'm privileged to welcome you to. It sounds like I've got a little bit of an echo here. Is that okay? Thank you. I didn't want to be my own ventriloquist here. It's really a great afternoon in the sense that I believe we have a management team that's going to present some sterling results on the one hand. On the other hand, it's really a sad day, which is why I'm standing here because it's Leila our well-versed CEO's third coming and last set of results. Leila has obviously had a number of stints at the JSE in different capacities, with the final one being as the CEO, over a period of almost seven years. It feels like you came in yesterday, but it's been almost seven years.
During that period, I have had the privilege and the honor to work with Leila, and I think it would be an understatement to say it's been a period full of cross-pollination, incredible amounts of energy and passion, and as a result, so much was achieved. I will have the opportunity to say more this afternoon, so I don't want to make this a long speech. Suffice to say that on this very last swansong on your results, Leila has made an incredible contribution to the JSE. Whatever matrices you may want to look at, and I don't want to bore you with a lot of data, we have achieved a lot. Firstly, in her leading the modernization of the stock exchange, leading to increased diversification of revenues, and operating income, in the company.
Not to mention a whole range of initiatives where she took center stage. Some of them, really in partnership with government, looking at financing and SOEs, projects, Phumelela, which really had a very significant role in really looking at the financial architecture and ease of the financial services in this country playing a very optimum role. It's a long list. It's really just to say, Leila, and we'll discuss this a little bit more this afternoon. On behalf of the board, and I have no doubt I'm also speaking on behalf of 600 staff at JSE and, you know, the other subsidiaries.
You're going to leave a enormous void, and that void is not merely one of strength of leadership, intellect, and so on, but also the human aspect of it, which I think is absolutely fundamental. In fact, without it, we would not have achieved most of what we've achieved. As I said, it's not to make a long speech. It's just to say it is your final results. You may even have a forthcoming, we don't want to be too clairvoyant about the future. Thank you very much. Thank you very much. We'll say more later on this afternoon. I think it's your opportunity now with Fawzia to really, you know, have your place in the sun, quite rightfully, given what you're just about to present. Thank you very much.
Maybe I should also take a minute to say, Valdene, you know, welcome. You seem like you're sitting in the hot seat. I'm sure, you know, you'll do it justice. Thank you very much. Thanks.
Thank you very much, Chair, for your very generous and kind words. Welcome everybody, both online and in the room. In fact, we've had a fantastic turnout. I think I should be bowing out more often. It's absolutely wonderful to have my predecessor and a stalwart in the industry, Russell Loubser, joining us in person today. Erica, who's been the backbone of the broker community for many years. Even Selvan, who is the backbone of BDA and worked alongside me for many years. Okay. Welcome to the JSE's full year 2025 financial results presentation. The JSE enters 2026 with improved performance and sustained strategic momentum.
This reflects both an improved operating environment and the cumulative impact of disciplined execution over the recent years. Today, I'm going to begin with an overview of the group's performance and the key drivers behind our results. Our CFO, Fawzia Suliman, will then provide a detailed breakdown of our financial results, and I will conclude by reflecting on the strategic progress made since 2029, what it means for the positioning of the exchange today, and how it shapes priorities going forward. We'll open the floor for questions. The JSE delivered record results for the year. Operating income increased 14.2% year-on-year, driven by growth across all of our core segments and sustained equity market activity. Importantly, 35% of our operating income is now coming from non-trading sources.
This structural shift improves the stability and the predictability of our revenue base, allowing the exchange to perform more consistently through market cycles. NPAT was up 16.7%, and it crossed the ZAR 1 billion mark for the first time, reaching an all-time high. While we continued with cost discipline and operational efficiency, and our efforts have resulted in an operating leverage, which we're very pleased of, at the end of the year, of 5.9%. Headline earnings per share for the period were ZAR 13.29, up 17.7% year-on-year, while our ROE increased to 22% from 20.2% the year prior.
Reflecting our improved profitability and cash generation, we increased the total dividend to ZAR 10.61 per share, up 28.1% compared to 2024. Operational resilience remains a core asset of the exchange, with market availability of 99.96% and only three priority one incidents during a year of elevated trading volumes. In fact, we haven't had an outage in the equity market, and I'm sure Russell will remember our outages in three years, which is quite a record. Overall, the group has delivered a robust financial outcome characterized not only by growth but by continued improvement in the quality, durability, and diversity of our earnings, alongside sustained progress against our long-term strategic agenda.
Turning to the macroeconomic and market context of this year's performance, South Africa's capital markets experienced a meaningful re-rating through 2025 and into early 2026. This reflects a combination of improved domestic reform momentum, renewed institutional credibility, supportive commodity dynamics, and heightened global capital rotation towards emerging markets. These developments have contributed to the reassessment of South Africa's risk premium and supported renewed international appetite for South African assets. This re-rating was reinforced by several milestones during the period, including South Africa's exit from the FATF grey list, a sovereign rating upgrade, continued fiscal consolidation, and progress across key economic reform programs. South Africa's equity markets responded accordingly, delivering outperformance relative to global peers on the back of increased prices for precious metals, a weaker US dollar, as markets reassessed South Africa's risk premium.
Between the January 1, 2025 and December 31, 2025 , the All Share has grown by 57% in dollar terms, outperforming almost all of global market in equity indices, supported of course by a combination of strong overall market performance, commodity-led gains in major sectors, improved macroeconomic sentiment and structural enhancements to the market infrastructure and listings that support investor interest. As you can see, in the graph next to that, this trend continues this year.
Market activity increased materially with average daily value traded growing 41% and 30% in Q3 and Q4, so much stronger second half than first half, ending on 32% for the full year. This momentum was supported by robust performance across key large-cap and resource counters, reflecting improved earnings expectations and renewed investor confidence. Notable gains were recorded across several of the heavyweight constituents, including from mining Sibanye, which was up 304%, AngloGold Ashanti, which was up 240%, MTN Group up 84%, and Prosus, which was up 37%. Market participation was particularly active during peak trading periods between April and September.
While our non-trading, our non-resident participation increased materially, with foreign investors now accounting for 32% of our holdings, up from 29.3% in the prior year, reflecting, of course, international investor confidence in South African equities. Consistent outperformance in 2025 has supported South Africa's increasing prominence within our global emerging market allocations with pleasingly the country's weighting in the FTSE Emerging Market Index rising to 4.29% from 3.16% at the end of December 2024. As of early 2026, the JSE is the 18th largest market by market capitalization in the world, and that's up from 20th in 2029.
Taken together, these developments reflect a broader structural re-engagement with South African capital markets. Turning now to slide 6. We've seen a high correlation between index valuation and value traded. This is an interesting long-run graph, which indicates that market activity has surged since early 2024, with strong gross growth in indices, market cap, and value traded. This echoes time when Russell was at the helm in the mid-2000s during the commodity-driven boom. Although recent gains signal improved sentiment, it is too early to determine whether these gains are cyclical, structural, or a combination of both. Given the risk of a reduction in trading activity or an external shock, as we're experiencing as we speak, we assess the downside scenarios and stress test impact of lower value traded.
This will guide our cost management responses and also our diversification efforts. ADV growth in between 2025 and 2026 marks the strongest momentum since the 2006, 2007 period, following which we had periods of stagnation. While his-history indicates a precedent for this multiyear growth trajectory, the JSE remains vulnerable to potential global and domestic shocks that could rapidly affect volumes and confidence. Strengthening resilience, preparing for potential reversals in sentiment, and accelerating diversification into non-trading revenues remains a key strategic focus in improving the quality and durability of earnings. Turning now to slide seven. The market momentum created a supportive environment for the exchange, which entered a period of higher quality earnings in terms of our model.
Over the last six years, we've deliberately diversified revenues, and we've increased our non-trading base. Non-trading income has grown materially over the period. You can see 92% nominal growth, and the model now carries a larger annuity-style component alongside our trading activity. Elevated market participation supported a 14% increase in operating performance, while non-trading income grew by 5%. In the first half of the year, we had a more subdued growth, mainly due to the higher base in JIS in the prior period and also the lower interest rates in that period. Non-trading income, which includes market data fees, margin income, colocation, and listing activity, remains an important part of our business, and it ensures that the JSE continues to perform systematically across all market cycles. Now moving to slide eight.
You'll see that the activity across the JSE accelerated, across all areas, reflecting the exchange's role as a systemic anchor in increasingly complex macro and geopolitical environments. Stronger participation across asset classes highlights a deepening investor base and the resilience of South Africa's capital markets. Equities saw the strongest uplift, with value traded up 28% year-on-year. Higher billable equity volumes were supported by a global commodity resurgence, a more stable domestic backdrop, and a recovery in investor sentiment. This performance underscores the continued relevance of South African corporates to global capital flows. Derivatives markets delivered a resilient outcome, benefiting from elevated volatility and a persistent demand for hedging strategies. Equity derivatives grew 14% as value traded increased 15.4%, with index futures dominating activity.
Similarly, financial derivatives advanced 15%, supported by solid appetite for bond-related instruments as rate uncertainty remained a key global theme. Bond market activity was buoyant, with nominal value traded in repos and standard trades rising 9.7%. Net foreign flows reached ZAR 122 billion net inflow, up sharply from the ZAR 82 billion in the prior year, driven largely by attractive SA yields amid global rate volatility and a higher for longer inflation narrative. Despite ongoing geopolitics and domestic macro risks, demand for South African bonds remained stable, supported by foreign and local investors. Currency derivative volumes rose 32%, heightened by the ZAR volatility, which was driven by US tariff developments and uncertainty in the GNU, and this increased the need for tactical hedging, as you can imagine.
Interest rate derivatives saw modest growth with contracts and value traded up 1.2% and 7.2% respectively. Commodity derivatives experienced a bit of a divergence. Physical activities increased by 26%, yet contracts traded declined by 7%, reflecting weaker maize export demand, firmer local currency, and softer global prices. You'll see a bit of a recovery from the first half year performance in that asset class. The primary market delivered steady growth with revenue up 4%. The upcoming pipeline includes several significant names across our sectors. Moving now to slide nine, I think this is where Selvan wakes up. The broad-based growth in trading activity and asset classes that we've just discussed places increasing demands on the JSE's infrastructure.
Ensuring that this infrastructure can support higher volumes, greater product complexity, and deeper participation is central to sustaining market resilience and future growth. A key component of this investment is the modernization of our broker-dealer accounting system, or BDA platform, which is a foundational program that underpins the next generation of post-trade infrastructure at the exchange. In 2025, we successfully completed the pilot phase ahead of schedule, validating the quality and stability of the migrated code, and we commenced full-scale modernization. The bulk of the transformation and testing activities will continue through 2026, with implementation targeted for 2027. To date, approximately 2.2 million lines of code have been modernized with no critical defects identified, which is really an encouraging indication of robustness and quality of the transformation.
Delivery of the remaining modernized components is scheduled for the end of the Q1 of 2026. This will be followed by extensive integration, verification, and mass testing across all functional areas, alongside ongoing engagement with market participants to ensure operational readiness ahead of our implementation. Subject to the successful completion of these testing and readiness phases, the modernized Java-based BDA platform for the equity market is targeted to move into production in 2027. Strategically, this transition enables the JSE to support higher trading volumes at lower cost, introduce new functionality more rapidly, and enhance reporting and analytics capabilities, enhance operational resilience across the post-trade environment. With that, I will hand over to Fawzia for the financial review. Thank you, Fawzia.
Thank you, Leila. Good afternoon to everyone. Looking at our financial performance, operating income increased 14.2% year-on-year, reflecting higher market activity and solid performance across core segments, including information services. OpEx increased 8.3% year-on-year. Excluding cost linked to higher trading activity, underlying OpEx growth was within guidance, and the group delivered a positive operating leverage of 5.9%. As we continue to adopt a balanced approach between strategic investment and operational efficiency. EBITDA margin improved by 1.2 percentage points, with the EBITDA margin improving to 38.7%. Net finance income decreased as expected to around ZAR 197 million as a result of lower interest rates.
Overall, our NPAT increased 16.7%, and our HEPS increased by 17.7%, reflecting both operational delivery and disciplined cost management. Moving on to cash and capital allocation. The JSE is and has always been a highly cash generative business. For the period, net cash generated was ZAR 1.23 billion, an increase of 12.3% versus last year. Capital expenditure was ZAR 141 million for the year, below the prior period, reflecting phasing and timing of delivery. Our financial position remains strong with our cash balance increasing year-on-year by 12.7% to ZAR 3.16 billion. This grants us flexibility to continue to fund growth without compromising shareholder returns.
On this, our total dividend per share increased by 28.1% year-on-year to ZAR 10.61. Our cash conversion remains strong at 1.64, reinforcing the quality of our earnings and the capital light nature of the model. Our ROE increased to 22%, up 1.8 percentage points from the prior year. This slide reflects higher operating income, disciplined cost growth, and stronger profitability. This year we delivered robust revenue growth while maintaining a disciplined approach to cost management, translating into positive operating leverage of 5.9%. Our two biggest OpEx remain personnel and technology, and we continue to proactively manage these costs in a balanced way, being cognizant of the fact that they are critical to our delivery and transformation.
Other income decreased by 80%, this was primarily due to Forex losses in 2025 compared to a gain in 2024. The decrease also reflects the fact that prior year included higher issuer regulation fines as well as VAT recovery income. As I mentioned previously, our revenue performance this year was robust. Capital markets performance was strong, with revenues up 18% as equity market trading activity remained high. As such, we also saw significant growth in post-trade services due to higher billable value traded and an increase in the number of trades. JSE Investor Services revenue was down 7%, mainly because of the high base effect and the unfavorable interest rate environment. JSE Clear revenues increased by 10% on the back of higher fees driven by the equity, currency, and commodity derivatives markets growth.
Finally, information services revenue increased by 10%, reflecting growth in index revenue, terminal subscriptions, and equity derivatives data. On the next few slides, I will unpack the underlying drivers for each revenue segment, starting with Capital Markets and JIS. Capital Markets performance over the period reflects solid revenue growth across all asset classes. Primary markets revenue was up 4%, driven by higher listing fees and ETFs. Trading revenue was up 28% as billable equity value traded up 32%, driven by global commodity strength, improved macro stability, and reinvigorated investor confidence. Colocation revenue was up 15%. While the colo activity to value traded remained flat, we saw an increase in the number of racks to 58 from 56 in the prior year. Equity derivatives revenue grew by 14% year on year, driven by strong hedging appetite.
Bonds and financial derivatives revenue increased by 15%. Bond nominal value traded was up 8%, while contracts traded for currency derivatives were up 32%, as we saw increased volatility in the rand on the back of the news about the U.S. tariffs and concerns over GNU stability. Commodity derivatives revenue was up 6%, with physical deliveries up 26% and contracts traded down 7% as we experienced subdued market volatility following the above-average local and regional maize production. JIS revenue was down 7%, mainly because of lower interest rates, high base impact, and slow corporate actions activity. These were partially offset by an increase in asset reunification revenue as well as the number of customers. Moving on to post-trade services.
Revenue increased by 18% compared to last year. Clearing and settlements revenue was up by 34% due to the increase in billable equity value traded. BDA fees were up 4% year-on-year as the 7% increase in equity transactions was partly offset by a slight reduction in the fee from ZAR 0.73 to ZAR 0.69 per transaction. In 2025, we developed a new BDA fee model. However, implementation was deferred because the market consensus was clear. The operating model and the fee structure must evolve together. As a result, the new fee model remains on hold until we finalize the non-mandated BDA operating model. In light of this, we introduced a mid-2025 fee reduction. The BDA fee per transaction was lowered from ZAR 0.73 to ZAR 0.69, and this adjustment brought the average fee for 2025 down to ZAR 0.71.
For 2026, we have maintained the BDA fee at the 2025 average of ZAR 0.71, ensuring stability and predictability for market participants. Funds under management revenue was up 7%, and this was due to the higher JSE trustees' cash balances. Finally, JSE Clear revenue was up 10% on the back of higher clearing fees and increased activity in equity, commodity and currency derivatives. Information services revenue was up 10%. More specifically, US dollar-denominated revenues accounted for 68% of total information services revenue and translated at an average exchange rate of 17.95 for the year, compared with ZAR 18.39 in 2024. Growth in core market data was driven by indices, terminal subscriptions and equity derivatives data with a mix of once-off and recurring annuity sales.
The core market data franchise continues to be strongly cash generative and delivers healthy margins, although organic growth opportunities are relatively modest. Our modern data platform has now completed its foundational technology build and is moving into a more commercial and product-led phase, currently contributing approximately 1% to the portfolio. We continue to see good underlying performance of our growth strategy, where revenue was up 50%, albeit off a modest base. The JSE delivered positive operating leverage while still investing in strategic priorities. Operating expenses increased by 8.3% year-on-year, 6.5% excluding higher trading activity cost. This means that our OpEx growth is in line with the guidance that we provided at year-end of a 5%-7% increase.
Key cost drivers include personnel costs, which were up 12.5%, but excluding performance-related cost of high LTIP vesting and discretionary bonuses, personnel cost increased 6.5% year-on-year. More specifically, permanent headcount remained flat overall, while salaries increased by an average of 5% year-on-year. Technology costs were up 13% due to the implementation of our growth strategy, the reclassification from CapEx to OpEx of cloud-related spend and inflationary and foreign currency impact on license costs. General operating expenses have remained relatively flat, owing to our continued commitment to disciplined cost management. Our focus remains on driving operational efficiency with a continued emphasis on financial discipline while still directing capital toward our key strategic priorities and investments.
On CapEx, spend was focused primarily on maintaining and protecting the business, including modernization programs and regulatory enhancements, with a smaller portion allocated to growth initiatives such as information services and the bond CCP development. We came in slightly below the guidance range of ZAR 150 million-ZAR 170 million due to savings in infrastructure spend owing to negotiations and the BDA phasing. For 2026, CapEx guidance increases to reflect delivery phasing on the BDA modernization and the work program across our core initiatives. We expect CapEx to be in the range of ZAR 190 million-ZAR 230 million. Let's now look at our cash position as at the end of December.
Over the period, cash generated from operations amounted to ZAR 1.2 billion, the cash and bonds balance as of 31 December 2025 amounted to ZAR 3.2 billion. This reflects a strong liquidity position, meaning that we do not need additional credit lines or external financing, and it speaks to the quality and reliability of our earnings while supporting consistent shareholder returns. Our healthy cash and bond balance highlights the resilience of the balance sheet and the fact that we have maintained a disciplined capital allocation through targeted investment in technology and infrastructure.
This is the breakdown of our cash and bonds balance as at the end of December. Our ZAR 3.2 billion in cash and bonds comprises ZAR 1.25 billion allocated to investor protection and regulatory capital, about ZAR 500 million for CapEx and other expenses, and ZAR 920 million for shareholder returns. We aim to keep around ZAR 480 million as a strategic reserve which includes potential M&A and a share repurchase program in 2026. Let me briefly re-emphasize how we are thinking about M&A. Our approach is deliberately strategic and centered on bolt-on opportunities that complement what we already do well. We prioritize transactions that strengthen our core franchise and extend our value proposition with a clear aim to broaden revenue sources, maximize synergies, and capture growth in adjacent markets and services.
When we assess potential deals, we apply a disciplined framework. We look closely at the expected return relative to our hurdle rates, the standalone growth prospects of the target, and the degree of alignment with our long-term strategy. Delivering tangible synergies is a key requirement to ensure any transaction has real financial value. Moving on to dividends. In 2025, we announced an ordinary dividend of ZAR 9.61 per share, up 16% year-on-year, and a special dividend of ZAR 1.00 per share, which brings the total dividend to ZAR 10.61 in financial year 2025, reflecting an increase of 28.1% year-on-year. This has been an exceptional year given the market conditions, and the JSE has benefited from the resulting impact on ADV and revenue.
Accordingly, the board has declared a special dividend given the excess cash on hand. This translates into an ordinary payout ratio of 78% and a total payout ratio of 86%. We maintain our commitment to our dividend policy of a payout ratio between 67%-100%. This policy enables us to have a flexible approach to balancing the cash between the shareholder returns and the investments in the business. The group is considering a share repurchase program when market conditions permit and factoring in strategic investments and capital allocation priorities. The final size, terms, and timing of any such program will be contingent upon board approval. Any share repurchases will be disclosed as required. Let's move to the guidance for full year 2026. From an operating expense perspective, we continue to guide to cost growth in the 5%-7% range.
This will be dependent on trade-related cost, but the underlying cost mix is expected to remain broadly consistent with investment directed toward our people, technology, and key growth initiatives. On CapEx, we expect it to be in the range of ZAR 190 million-ZAR 230 million, reflecting a continued prioritization and disciplined spend. Lastly, our approach to shareholders remains unchanged. We are maintaining our dividend policy, targeting a payout ratio of between 67% and 100%. Overall, our guidance reflects a balance between cost discipline, targeted investment for growth, and consistent returns to shareholders. Looking ahead, we are on track to achieve our strategic priorities as we continue to protect the core and to grow. In capital markets, the focus is on broadening our product suite and enhancing the trading experience for clients.
This includes further ETP functionality and enhancements to block trading services, all of which are progressing well. We are also working on preparations for the launch of a crypto ETF. Within JSE Investor Services, we are working to scale our client base and to deepen our service offering. In JSE Clear and Post Trade Services, progress continues on the bond CCP and the BDA modernization program, both tracking in line with plan. In Information Services, priorities include building scale on the data marketplace, increasing client uptake of new data products and services, rolling out the SAM replacement for issuers, and transitioning GIBA to Zeronia. From an infrastructure and technology perspective, our attention remains on modernizing core platforms, advancing our AI transformation agenda, and progressing key initiatives such as the JSE Network Alliance, AWS Outposts, and local zones.
Taken together, these initiatives position us well to support future growth while continuing to strengthen the core of the business. With that, I'll hand back over to Leila for the concluding remarks. Thank you.
Thank you, Fawzia. To fully understand the position of our 2025 performance, it's important to place it in the context of our multi-year transformation under Vision 2026. When I joined the JSE in 2019, we launched Vision 2026 with clear objectives: protect the core franchise, improve quality and resilience of earnings, and modernize the business so that the JSE stays relevant and competitive in an increasingly complex and globalized market environment. The delivery of Vision 2026 has unfolded in three connected phases. The first phase focused on fortifying foundations of the exchange. We reset the strategy and operating model around clear pillars of delivery and discipline. We strengthened the operational resilience because trust in the market infrastructure is non-negotiable for an exchange.
We took deliberate steps to rebalance our earnings base, including the JIS acquisition, and to increase this was really to increase the annuity-style components of the model. The second phase centered on capability expansion. We advanced our data and digital agenda, we expanded connectivity and infrastructure services, and we continued to evolve the product set across markets, including sustainability-related initiatives, and reforms that support capital formation. For the third and recent phase, focus has been on converting transformation into measurable operational and financial outcomes. That includes continuing to raise the bar on resilience and service delivery while progressing large-scale infrastructure programmes such as the BDA modernization, which is the foundation for the next generation of post-trade capability in South Africa. Taken together, Vision 2026 has fundamentally strengthened the JSE as a franchise and an institution.
The exchange is today more resilient, operationally more robust, and strategically clearer about where it can create long-term value within South Africa's capital markets ecosystem. Shifting now to slide 28, the financial performance of the JSE since 2019 reflects the deliberate execution of Vision 2026 and the transformation of the exchange's operating model. Operating income has increased to ZAR 3.5 billion in 2025, up 56% versus 2029, reflecting more diversified and resilient earnings model. The quality and durability of earnings have improved. Non-trading income increased from around 29% to around 35% of operating income, reducing reliance on pure trading volumes. The group's operating profile also improved, moving from negative operating leverage in 2019 to positive operating leverage of 5.9% in 2025.
Profitability has increased accordingly, with NPAT now just over ZAR 1.07 billion and ROE at 22%. Shareholders have participated in that progress, with HEPS up from ZAR 8.14 to around ZAR 13.29, and the total dividend increasing from ZAR 730 million to around ZAR 916 million. Together, these financial results reflect the successful transition of the JSE to a more diversified, more resilient, and higher quality earnings model that really positions the exchange effectively for future growth. On my final slide 29, I just want to share a little bit about the JSE entering 2026 from a position of genuine strength and strategic clarity.
Today, the exchange operates within a diversified and resilient earnings model, world-class operational reliability, modernizing market infrastructure, which is designed to support the next phase of growth in South Africa's capital markets. Market participation is deepening, client engagement is entrenching, the investments made under Vision 2026 are now translating into sustained operational and financial performance. The JSE remains well-positioned to support capital formation and long-term economic growth. This is my final set of financial results as a CEO, I would just like to say it's been an immense privilege to lead this organization through one of the most tumultuous and transformative periods in history. Since 2019, we've worked to reinforce the JSE's foundations, modernize its infrastructure, expand its capabilities, improve the quality and resilience of earnings.
Importantly, this transition of leadership takes place at a position and a moment of momentum and continuity. I've got great confidence in Valdene Reddy as she assumes the role of Group CEO. Valdene, as many of you know, brings deep market experience and institutional knowledge, and she too has been central to the transformation that we've delivered under Vision 2026. The JSE has long reflected South Africa's economic journey. Today, it stands stronger in its ability not only to mirror the confidence of the economy, but to convert that confidence into capital investment and growth. Thank you very much for your time. We will now open for questions. Thanks. Shall we start, Romy, with anyone in the room? We've got a couple of roving mics. Anything from anyone in the room?
I know we've got a couple of questions online, I think, queuing up. We've got two questions, I believe. Romy, can we hand the mic to you?
Sure. We've got a question from Catherine Bloesch. She said, "What are the proactive cost management measures you mentioned in the introduction? And what initiatives are in place to drive efficiencies in the business?" Her second question is, "Can you tell us a bit more about the AI transformation agenda you mentioned? Thank you.
Great. Do you want to take the costs?
Sure
... AI.
From a cost perspective and a cost discipline perspective, we've done a lot of work in terms of embedding this culture of cost discipline in the organization. That includes improving the transparency of the costs throughout the organization. We also have a lot more proactive monitoring of cost, challenging of cost, and that includes controllable cost as well as new headcounts, and really any additional cost that we bring into the business. We've also implemented zero-based budgeting, and I think that has also improved our thinking, and the level of scrutiny that we put on cost. Lastly, what we're also doing is we're managing our book of work, and our CapEx spend with a lens of what the impact is going to be on depreciation in the business.
As we implement new projects depending on the delivery methodology, that sometimes has an impact on our technology cost. There's a real level of transparency, I think, an acknowledgement throughout the business of the need to manage the cost, and we've started to see that bear fruit.
Mm-hmm. Thanks.
Leila, we have a second AI question as along the similar veins from Mark Horrist, which you can probably answer with the initial question.
Mm-hmm.
The second one is: where exactly do you plan to start embedding AI in 2026, operations, risk management or products? What early wins are you targeting?
Wonderful. Thank you, Catherine, and thank you, Mark. AI is a very important component in our current strategy and into the future. We have commenced a number of targeted investments in AI capabilities to enhance operational efficiency and support long-term digital competitiveness. The first and most obvious area is the use of AI in the transformation of the BDA initiative. Russell will remember in the early 2000s, the tremendous amount of work that went into the transformation of the BDA project. The ASX has been through a very difficult period over the last three to five years, where they had to impair a project similar to the BDA project.
What we are doing in the BDA transformation project is to use artificial intelligence to rewrite the code from COBOL into a more modernized language, which is Java. That project has, I would estimate, having worked deeply in the post-trade area in my history, that project would normally take five to six years to deliver and probably approximately twice what it is costing us now. We are about to deliver the final batch of code, which is, as I said earlier, 5 million lines of code, and that's been done within just over a year. In addition to the actual writing of the code, we are also using artificial intelligence to test our code with our vendor called Trianz, and that mass modernization testing will begin at the end of February.
Many of the large institutions with big mainframe systems are looking with interest at the project. It's worked out very well so far. We have, we delivered the pilot ahead of schedule, we are on track on all of our other milestones. Looking forward, the JSE's infrastructure and the services that we provide are very infrastructure and technology-heavy. To the extent that we're able to continue leveraging AI in our other areas of transformation, it will most definitely have the potential to reduce costing relating to the number of coders that we have and also the number of testers. We are taking a very comprehensive approach, I have no doubt that Valdene in her Vision 2031 will give you a lot more detail because we're at the beginning of this journey now.
We've got detailed policy frameworks, and we've created an AI center of excellence, which is really focusing on the acceleration of the adoption of AI. We've also established an organization-wide productivity pilot, and that's under the leadership of Alicia, who's sitting in the front here, to identify impactful use cases where we can build organizational expertise. Then the question from Mark was really around where are we gonna use products, et cetera. There is a wide potential. At this point in time, we have initiated a proof of concept to automate listings requirements, processes where we are leveraging AI tools to automate the end-to-end process for issuer regulation, including the automated compliance analysis of listed company annual reports against compliance of listings requirements, which is a very exciting world.
I have no doubt that there is possibility, for this to expand into market regulation in Shaun's area, and into a number of the other areas. I think we're also running a productivity pilot with Amazon Q Developer and GitHub Copilot, and that's supporting the accelerated software development and testing workflows. As you can imagine, the largest or some of the largest costs in our projects, that we execute on and as far back as I can remember, the JSE has always been busy with a large scale multi-year project. These tools introduce the opportunity to rightsize and reduce and make those projects much more efficient. It's really through agentic AI capability.
Of course, looking further ahead, there is potential to build AI into new products, such as in Mark's area, the market data space, contextual AI, which, market participants could use, with JSE as the golden source. We are very excited about the possibilities that AI holds, but it's a very nascent and early part of the journey, although less so with the BDA project.
Elna, I have two more questions on the chat if no one has in the audience.
Anyone in the audience?
Okay. We have a question from Adam.
Sorry.
Oh, go ahead.
We'll take one in the front. Sorry about that.
Sure. Go ahead.
If we can just ask you to state your name and where you're from and, then your question.
Hi, I'm Mike Brown from ETFSA. Just looking at the vision for the JSE, have you got any comments on gradually moving the JSE or graduating in one way or another to a US dollar-based market?
Mm.
significant amount of the-.
Mm
trading that's taking place by local asset managers into global assets.
Absolutely.
Being able to do that on the JSE.
Mm
... would help as well as, of course.
Mm
... international investors. Have you got any comments on that?
Yeah, Mike, thank you for asking that question. It was a topic that I didn't really cover. As some market participants may be aware, I chair and we convened a SA competitiveness committee with some of the top CEOs in the country. We've got Jannie Durand and Johann Holtzhausen, Michael Katz, Daniel Mminele, a number of very important influential participants on that group, and it's called Project Phumelela. We, as private sector, have been working under National Treasury's leadership to encourage and open up opportunities to bring dollar-based listing, collateral, and various other initiatives into our country. We are very delighted, and we strongly endorse and support the announcements made in the budget speech by Enoch Godongwana, where he is, the National Treasury will be introducing the enabling regulatory, I'm gonna call it infrastructure.
It's called a synthetic financial center. What this does is it enables, it will be an enabling policy or legislation that will enable the capital formation, trading, settling, collateral posting in hard currency. The first step is to set up this infrastructure, and the immediate first step after that infrastructure or alongside that infrastructure establishment is the enabling of our buy side, which we're very excited about for them to manage dollar-based or hard currency-based funds onshore. Currently, legislation prohibits that. Any dollar-based funds have to have a domicile outside of South Africa, which really compromises some of our buy side participants. Project Phumelela, and Valdene will no doubt take over from me as I step down.
We have been lobbying and working very hard with the policymakers to try and encourage this. We are hopeful that in the future, in the not too distant future, and I am engaging constantly at the most senior levels and all the way down into the more technical components of National Treasury to encourage this. Just to give you a sense of the scale, I think, and Russell will remember, we introduced the ability of the buy side to invest in dual currency or dual-listed counters which didn't count towards their foreign allowance. That completely transformed the market. That, I think Russell was around. I worked on that project with Srivan around 2004. It was a transformational policy. This will probably be the most transformational policy of the last 20 years.
Just to give you a sense of the numbers, we research estimates that around ZAR 10 trillion worth of assets held by South Africans are invested offshore. Now, if we at this point in time can start to attract those assets back into South Africa, it's job creating buy side, sell side, clearing agents, custodians, all of those participants in the value chain will be able to participate in that flow. We are very excited and we are hopeful that what is initially positioned by the National Treasury and the Minister of Finance as the synthetic financial center will very definitely take us forward. We were dropped from the position number 92 to 94 on the world competitiveness rating.
That is behind Kigali, behind Mauritius, and we need to do more as a country to attract and repatriate funds back into the country and also to repatriate other investors investing in South Africa. The National Treasury right now, if they issue dollar-based bonds, they go to Ru-Luxembourg and list on that exchange. We are very excited about the potential into the future of them listing those dollar bonds on the JSE and enabling flow through our local environment. We welcome what National Treasury is doing, and it's an open-minded and an important step in growing our-- and internationally izing our economy.
We have two questions from Admire Mulvani. He said, "Can you comment on the Competition Tribunal, and is the group going to provision for a potential fine?" The last question he has here is, "What is the listings pipeline looking like in 2026?
Great. Who said that? Was it Admire?
Admire, both questions.
Great.
Thanks for those questions. I'll take the question just on the Competition Commission and also whether or not we're provisioning for it. The JSE confirms that it has filed its answering affidavit with the Competition Tribunal in response to the Comp Com's complaint referral arising from A2X's complaint against the JSE. The JSE categorically denies the Commission's allegations that it has contravened Sections 8C of the previous Competition Act and Section 81C of the current Competition Act. The JSE believes that the merits of the case is poor, and this is obviously on the advice of our legal counsel as well.
In terms of, whether or not we're provisioning, the requirements to raise a contingent liability is dependent on two things, and the first is the probability of the outcome, of this referral, and then the second is the ability to quantify. Now, you've asked the question in terms of which revenue lines we would apply this to. That is completely unclear. The maximum is 10%, and what we've seen, from what's been levied before, that hasn't happened. There's no clarity in terms of which line items it would be applied to. It's, it's impossible to quantify it at this stage, and given the low probability, our view in terms of the low probability of success, there is no requirement for us to raise a contingent liability.
We've obviously discussed this both at board level as well as our external auditors. We haven't raised any provision. We don't believe there's a requirement.
Thanks.
Thank you.
Thanks, Fawzia. Now coming to the question, Admire, on listings. Last year, we saw a couple of notable listings, particularly Boxer and Optasia, both of which were signaling points that market conditions have changed. Listings are very much a function of market confidence and timing. Optasia was the first fintech which was the largest in the EMEA region over, I think it was the last five years. They chose to list on the JSE rather than on the LSE or on the NYSE. That is a very powerful vote of confidence. Boxer was equally well-subscribed and very financially successful in their listing and in the re-rating of Pick n Pay.
This year, looking forward to the year ahead of this year, we're very excited about Coca-Cola Hellenic Bottling, which will be the largest bottling company in the world looking to list here. Fidelity Security, AME, which is a secondary inward listing. Of course, in the more medium term, companies like African Bank, TymeBank and Virgin Active are possibilities. Of course, Canal+, which we all know closed in their takeout towards the end of last year. That would be a second listing. Graeme, this is our time is up signal. I think the market's overheating. Romy, anything else?
We have one final question. It's from Chris Logan. He said, "Well done on the results, and particularly to Leila for going out on a high. Lots of welcome talk about competitiveness. Any initiatives to get MST scrapped with penalizes smaller unsophisticated investors and not payable in the likes of Nasdaq?
We are working with market participants and regulators on a number of initiatives like this. At this stage, I don't think we've got anything, any meaningful updates. Thank you, Chris, for your comments. We've thoroughly enjoyed working with you and appreciate your sentiment.
Outstanding presentation. Well done, guys. Really, it's fantastic to see. You referred to a forthcoming. Can you shed any light on that? While I agree with that, your position on the provisioning with the Competition Tribunal, that's nonsense.
Thank you, Russell.
A forthcoming in terms of.
Yeah
what's forthcoming with me?
For you, yes.
With me. Sorry, that sounded. Well, I, firstly, perhaps, are there any more questions? If there are none, I'll close with this. Perhaps if I can just say an incredibly warm thanks and sense of appreciation to all market participants, our shareholders, our regulators, our policymakers, and importantly, our traders and back office teams. Without you, we have no market. It's been an immense privilege for me, and I've thoroughly enjoyed every minute. Russell's asking now, what next? Although I'm stepping down, I won't be completely stepping away. I still intend to sit on a couple of boards, and I will contribute to academia.
I have a role at the Global Henley board, and I will continue in more academic pursuits, and some of you may know that I spend my weekends rock climbing, and I'm probably gonna swap solids for liquids. Looking to spend a lot more time sailing on the water, but also still very much connected to the country of my birth, and then, of course, a couple of global roles. I will be supporting Valdene and Fawzia from the sidelines, and watching with great joy as they build on this foundation and continue to take the JSE to even greater heights. Thank you. Thank you, Russell. Thank you very much, and please help yourselves to refreshments outside.