SA's only licensed exchange, the JSE, will implement new systems that will see trading speeds improve by about 400 times.
The bourse says it has signed a licensing agreement with technology solutions provider MillenniumIT to move its equity market trading activity onto Millennium Exchange. Migration is planned for the first half of 2012.
The agreement will also see the JSE's trading system relocated from London to Johannesburg. Currently, trades are sent from Johannesburg to the London Stock Exchange (LSE) to be settled.
Michelle Joubert, head of investor relations, says the new system will make trading faster, and will also cut out the need to rely on an international link to trade. In the middle of last year, a technical issue with its international connectivity caused the bourse to open an hour-and-a-half late.
The last time the JSE was down for a similar reason was in July 2008, when the market only started trading just after 3pm. Trading hours were extended to 7pm after a network issue resulted in public data for the equities markets not being disseminated to all JSE customers.
In September 2008, trade was halted in the middle of the morning, because of a technical connectivity problem experienced at the LSE.
Technological advances
Joubert says the new system will see trades settled in Johannesburg, which will make trading faster and should aid in growing the number of trades on the equities market. She says that each time the bourse upgrades its technology, trading increases.
The faster technology should also spur growth of electronic trading, where traders rely on computer algorithms to automatically buy and sell stock, Joubert adds.
COO and head of the equity market Leanne Parsons says: “In our experience, whenever we take a step forward with our trading technology, trading volumes also follow. If we want to remain a world-class and relevant exchange in a highly competitive industry, we must remain abreast of technological advances.”
Trading volumes significantly increased after the JSE adopted the JSE SETS trading platform in 2002. Volumes also improved when the JSE moved onto its current platform, JSE TradElect, in 2007. The LSE licenses TradElect, and maintains and operates the platform.
The new system also opens up a potential new source of revenue for the bourse, as it will enable co-location services.
Co-location allows trading firms to place their computer servers near an exchange's matching engine to trim the time it takes for messages to be sent to and from the trading engine. This shaves microseconds off trading times and reduces bandwidth requirements.
MillenniumIT, which has been building technology solutions for the capital markets for over 10 years, is headquartered in Colombo, Sri Lanka, and is a wholly-owned subsidiary of the London Stock Exchange Group.
The bourse has not disclosed the value of the agreement.
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