Share-trading software cannot bypass brokers, JSE warns

Investors cannot use technical-analysis software to trade directly on the Johannesburg Stock Exchange, despite claims sometimes made by sellers of such products.

A JSE representative explained that share-trading software can help investors analyse movements in share prices, but does not provide independent access to the exchange.

“By law and by the regulations of the JSE, you need to go through a member firm.”

JSE representative

Even online trading platforms remain connected to the systems of an authorised stockbroker. There is therefore no legitimate way for an ordinary investor to bypass a broker when buying or selling shares on the JSE.

Warning to beginners

The representative urged beginners to obtain reliable information before investing and to be particularly suspicious of promises of exceptionally high returns over short periods.

“If it is too good to be true, then it is too good to be true.”

JSE representative

Beginners should consider long-term investing rather than rushing into frequent trading without understanding the risks. An accredited stockbroker can explain the available accounts, investment products and shares in accessible language.

Free alternatives to expensive software

Consumers also do not need to buy expensive software simply to learn how markets work. The JSE provides free educational material through its website, including information about shares and derivatives.

A simulator allows prospective investors to practise with R1 million in virtual money using prices delayed by 15 minutes. The platform includes videos and downloadable educational material.

The JSE advised investors to educate themselves, use authorised brokers and avoid anyone claiming that proprietary software provides direct access to the exchange or guarantees rapid profits.