Name Description
Active Investing An investment strategy whereby an investor continuously monitors a portfolio with the aim of outperforming a benchmark.
American depository receipts A negotiable certificate issued by a US bank representing a specific number of shares of a foreign stock traded on a US stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs and timely dividend distributions.
Alpha A technical risk ratio that expresses the “excess return” on an investment. Alpha takes the volatility (price risk) of a unit trust fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund’s alpha.
All Share Index An index designed to reflect the movement of the equity market. The FTSE/JSE All Share Index represents 99% of the full market capital value (i.e. before the application of any investability weightings) of all ordinary securities listed on the Main Board of the JSE which qualify under the rules of eligibility. The FTSE/JSE All Share Index contains the leading securities listed on the JSE, measured by market capitalisation.
AltX The AltX (Alternative Exchange) is the JSE’s board for small and medium-sized companies in South Africa. Established in 2003, AltX provides smaller companies not yet able to list on the JSE Main Board with a clear growth path and access to capital.
algorithmic trading A trading system using mathematical models to determine decision-making on the financial markets. Computer-based algorithmic trading is most commonly used by large institutional investors because of the large number of shares they purchase every day. Complex algorithms allow these investors to obtain the best possible price without significantly affecting the stock’s price and increasing purchasing costs.
analyst A trained professional who performs financial and business analysis with a view to making investment recommendations, e.g. buy, sell or hold a particular security.
annual general meeting This is a meeting of the shareholders of a company, which must be held within six months of the end of the company’s financial year and 18 months after the previous meeting. Shareholders vote at these meetings according to the number of voting shares they hold.
annual financial statements Sometimes known as an Annual Report, this is a document required by the Companies Act to be presented once a year at the annual general meeting. The statements must consist of a balance sheet, income statement, directors’ report and auditor’s report. They must be prepared in accordance with International Financial Reporting Standards, and fairly present the state of the company and its profit or loss for the year.
annual results The financial results of a company for a particular financial year. The JSE listing requirements compel companies to produce annual results within a set time.
arbitrage The practice of taking advantage of any price difference between two or more markets, with a view to making a profit, when trading in financial instruments.
asset A tangible or intangible economic resource from which one can expect future benefit. An asset is anything of value that can be converted into cash. Examples of assets include:
Cash and cash equivalents – certificates of deposit, cheque and savings accounts, money market accounts, physical cash;
Real property – land and any structure that is permanently attached to it;
Personal property – everything that you own that is not real property such as boats, collectibles, household furnishings, jewellery and vehicles; and
Investments – annuities, bonds, cash value of life insurance policies, unit trusts, pensions, retirement plans, stocks and other investments.
authorised shares The maximum number of shares of stock that a company can issue. This number is specified initially in the company’s charter, but it can be changed with shareholder approval. Generally a much greater number of shares is authorised than required, to give the company flexibility to issue more stock as needed. Also called authorised stock or shares authorised.
African Securities Exchanges Association An associated founded in 1993 with the aim of establishing mutual co-operation and exchange of information among its member exchanges. For more information please visit
bid The highest price any buyer is willing to pay for a given security at a given time; also called bid price.
block trade A large number of securities being traded.
bond A type of long-term debt that various institutions issue on the understanding that they will pay interest to the holders of that debt. Investors loan money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, governments and state-owned enterprises to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.
bond futures A contractual obligation for the contract holder to purchase or sell a bond on a specified date at a predetermined price. A bond future can be bought in a futures exchange market and the prices and dates are determined at the time the future is purchased.
bond options The option to buy or sell a bond at a particular price either on or before the expiry date of the option.
B-ordinary shares These shares are of a different class to ordinary shares; holders have fewer or no voting rights and may not have a right to payment of capital if a company is dissolved.
bottom up An investment strategy in which companies are considered based simply on their own merit, without regard for the sectors they are part of or the current economic conditions. A person following this strategy will be looking very closely at the company’s management, history, business model, growth prospects and other company characteristics.
BRICS Exchange Alliance An initiative to expose investors to the BRICS economies (Brazil, Russia, India, China and South Africa) by means of their exchanges.
BRICSMART The range of benchmark equity index derivative products created by the BRICS Exchange Alliance providing access to the BRICS market by means of benchmark equity index derivatives.
broker Someone who intermediates between a buyer and seller and receives commission in exchange for executing orders.
brokerage The stockbroker’s fee for completing a securities transaction. Brokerage is usually calculated on a sliding scale depending on the total value of the transaction. Brokerage rates used to be set by the Registrar of Stock Exchanges (in consultation with the Minister of Finance and the JSE) but since deregulation of the JSE in November 1995, stockbrokers have set their own individual rates.
Bubble When share prices are abnormally high because of investor sentiment and are expected to fall back to “normal” levels soon.
bulls and bears Names used to define market sentiment: a bull market indicates prices are rising while a bear market indicates prices are falling.
buy-side Refers to institutions that buy securities exchange services, as opposed to those that sell them (see sell-side).
Capital The money that a company raises against the issue of shares and uses to invest in assets and other resources to produce more money and ultimately profits.
capped index The capped index limits the weight of individual companies on the indices to a predetermined level.
Chicago Board of Exchange The world’s largest options exchange
carbon credit note These products give investors exposure to carbon credits generated by carbon dioxide emission-reducing projects.
central order book An anonymous record of unexecuted orders waiting to be matched. The top priority order is executed before other orders in the book, and before other orders at an equal or worse price held or submitted by other brokers.
contract For difference A leveraged derivative financial product whose value is derived from the value of another asset like a share or market index. When you trade CFDs you take a position on the change in value of the underlying asset over time.
Companies Act Legislation that governs the manner in which companies in South Africa can operate.
Committee on Payment and Settlement Systems The CPSS is a standard-setting body for payment, clearing and securities settlement systems. It also serves as a forum for central banks to monitor and analyse developments in domestic payment, clearing and settlement systems as well as in cross-border and multicurrency settlement schemes.
central securities depository A CSD is a specialist financial organisation holding securities such as shares either in certificated or uncertificated (dematerialised) form so that ownership can be easily transferred through a book entry rather than the transfer of physical certificates.
Can Do Futures and Options These are derivative products that provide the advantages of derivatives but also offer the flexibility of over-the-counter (OTC) contracts.
capital markets Financial markets on which securities are bought and sold.
Clearing This refers to all activities pertaining to an equity security in the trading system, from the moment a commitment is made regarding a transaction to the moment when it is settled.
Close The closing time for a stock exchange, when the trading period has been concluded.
closed period The time period between when a listed company’s financial results are completed and when these are announced to the public. This closed period is meant to prevent any insider trading ahead of the release of the results.
closing auction The final stage in a trading session, determining closing prices following the results of the trading session.
closing price The last price a share is traded at for the day
central order book A stock exchange’s centralised record book, which automatically executes trades when prices match.
co-location Refers to data centres that are in close proximity to a stock exchange’s servers, offering faster access to the equity market at a premium price.
commodity derivative These are investment tools that allow investors to profit from certain items without possessing them.
Commodity Derivatives Market Provides investors with exposure to the grains market in South Africa and Southern Africa; also offers derivatives on precious metals and crude oil.
commodity ETFs Exchange Traded Funds that invest in physical commodities such as agricultural goods, natural resources and precious metals. A commodity ETF may be focused on a single commodity and hold it in physical storage or may invest in futures contracts.
commodity ETNs These Exchange Traded Notes occur when an investor lends money to the issuer (bank). In return the investor will receive a return on the specific commodity benchmark.