DAVID SHAPIRO: Bid you 565 for 100 Buffels
We’re in the age of the ‘algo’-driven stock market, but not so long ago irascible generals ruled the trading floor
I began my career on the stock exchange on February 1 1972, literally the day after completing articles with accounting firm Schwartz, Fine & Kane.
As a chartered accountant I was probably overqualified for my position as a "desk jockey" with stockbroker Max Pollak & Freemantle, but after three years of reconciling bank statements and vetting journal entries, I passed through the hallowed doors of the trading floor on the seventh floor of the JSE building in Hollard Street. The minute I did, I knew a thrilling world was opening up for me.
My work was basic: I was there to deliver orders to the dealers, book transactions and give prices to clients over the phone. Buy, sell and sales prices were recorded in chalk by a chain of recorders positioned in front of the sector boards.
It took some time to learn where various counters were listed, and naturally, as a rookie, I would receive calls from pranksters on the floor asking me for the prices of fictitious shares like Consolidated Ordinaries or North Western Textiles. I would break out in a sweat, scanning the boards with my binoculars and trying to locate these fabricated stocks, while my colleagues, in on the game, ignored my pleas for assistance. My panic would end only when the caller, blasting me with insults, slammed down the phone.
When markets turned busy, the trading floor exploded with excitement. Noise levels lifted the ceiling. Dealers would rush back and forth to their desks, reporting trades and collecting fresh orders. Tempers boiled over as they juggled scraps of paper and tried their best to maintain a semblance of order, but in these frenzied markets mistakes were common. To survive the turmoil you rapidly developed immunity against the rants of abusive dealers, particularly if you dared question their rambling and incoherent instructions. You learnt fast to keep your nerve.
Back in 1972, computers were huge, lumbering machines that were expensive to maintain and functioned as nothing more than giant bookkeeping machines — processing trades, printing brokers’ notes and updating clients’ accounts.
But, believe it or not, the JSE was ahead of its time. Its mainframe-driven clearing house made it one of the more efficient and modern exchanges in the world. Not only was the JSE a global leader in technology, it was the resource capital of the world — an exceedingly attractive investment destination.
But harsh exchange controls that had been introduced shortly after the Sharpeville massacre in the early 1960s to limit capital outflows severely hampered the growth of our market. In simple terms, it meant a nonresident seller of shares could repatriate the sale proceeds only by exchanging the rands that had been realised with another foreigner who wanted to buy shares. The rate at which this swap was transacted was at a significant discount to the official rand exchange rate. Naturally, this constrained fresh inflows, resulting in the pool of foreign interest being limited to a defined group.
Yet, despite the limitations enforced on our market by exchange controls, offshore trade in mining shares and the occasional industrial such as SA Breweries was vigorous.
Communications at the time were archaic, though, compared with today’s global high-speed voice, messaging and internet links.
In 1972 you could not pick up a phone and make an international call without the assistance of an operator. Direct dialling to London was introduced only in 1978. Instead, brokers connected with their agents or counterparts via telex or even coded telegrams.
It is 23 years since the JSE introduced electronic trading, a move that eliminated the inefficiencies and inconsistencies of the old open-outcry market. Today, our broking firm can handle 1,000 times more trade than in the past with a quarter of the staff and a 10th of the problems. The gold mines are no longer operating and SA Breweries has vanished, but at the touch of a button I can buy Amazon in New York, Royal Dutch Shell in London and LVMH in Paris for clients.
The exhilaration I felt when the opening bell was rung on that first day in February 1972 has long left me. When markets hit peaks I now have to confine my high spirits to a tweet.
Gone too are characters like "General Custer" (Bert Todd), who was welcomed back to the floor every Friday, after lunch, to the beat of tom-toms after once confessing to young dealers that he had had his "last stand" years ago. Or the irascible Bob Fowles, who would slap the back of your head if you asked him if he had an interest in Chics (Corner House Investment Corp).
It’s no use lamenting. We can’t stand in the way of progress. The great-grandchild of that lumbering bookkeeping machine not only generates around 70% of trade on the JSE today, but it is now devising its own investment strategies and voting at company meetings.
I really don’t mind. Honestly. I just wish he or she would play an occasional prank or, at worst, tell a joke.
• Shapiro is deputy chair at Sasfin Securities