Abstract
M.Com. (Financial Management)
Electronic trading systems are increasingly implemented by stock exchanges instead of
maintaining the traditional floor trading system. This study uses the Historical case study
method to examine original minute book volumes from the archives of the Johannesburg Stock
Exchange (JSE). The purpose of the study is to identify and examine the antecedents and
consequences of the shift to an electronic trading system in the case of the JSE from 1989 to
2000. The study also produces an accurate historical account of the process that the JSE
underwent to implement an electronic trading system, for use in further studies concerning the
shift from floor to electronic trading. The main antecedents identified in the study were the
JSE’s need to automate menial tasks; the need for increased trading capacity; the need for
proper information dissemination; the need to dematerialise physical share certificates;
international trends with regard to electronic trading; the T + 3 clearing and settlement
standard; the establishment of South Africa’s National Payment System; legislative changes
to the Securities Exchange Control Act; the need for market liquidity; and the need for investor
protection. The main consequences of the abolishment of the floor trading system in favour of
the electronic trading system were examined and grouped in four categories, namely the
consequences for society, the consequences for the operation of the stock market, the
consequences for the liquidity of the market, and the consequences for investor protection.
The results of this study could be used as a foundation for a follow-up study to measure the
effects of electronic trading implementation on the liquidity and efficiency of a stock market.