Appendix: What is a JSE Stock Broker

In order to buy and sell shares on the Johannesburg Stock Exchange (JSE) you need to go via a broker. A stock broker. This is easier than it sounds.

What does a broker do?

• A stock broker is a member of the JSE. Only they are able to place orders on the JSE to buy and sell shares.
• Stock brokers are the middle man. You give the orders. And the stock broker executes these orders on the exchange.

Think of stock brokers like a Mr Delivery for shares. You place the orders & they deliver the milk and apples - I mean shares - to your front door.

Why do I need a stock broker?

Bottom line is, you are not allowed to enter the doors of the JSE. Only if you have the right badge - the one that says "Formal member of JSE" - will you be given access.

Stock brokers will deal with a lot of petty, dull things such as registering ownership at STRATE (the official record keeping house which keeps share ownership details), corporate actions (dividend payments, rights issues etc). It is a good thing Mr Delivery exists.

What does a broker charge for their services?

Of course, the services rendered by a Mr Delivery stock broker come at a price. All stock brokers charge the following fees:

• brokerage or commission: this is a fee paid by you when buying or selling shares. It is the "delivery fee" paid directly to the stock broker.

• STRATE fees: this is a fee paid to the stock broker. Largest chunk of this fee goes to STRATE. The official record keeping house of who-own-what-share.

• STT: The government also wants its share. This comes in the form of Security Transfer Tax. You will pay 0.25% in taxes when purchasing shares. Again you pay the broker. The broker pays the government.

• FSCA Protection levy: A small fee of 0.0002% is paid over to the FSCA. The FSCA is the regulator. Essentially, they hand out the "badges" (aka licences) to the stock brokers. The FSCA Ombudsman is also paid from this.

Some also charge,

• Admin monthly fees for being part of their platform.