Johannesburg Stock Exchange (JSE) trading went down for seven hours yesterday.
Yesterday morning, at about 10.20am, the local bourse went offline due to a computer problem in London. While other stock exchanges were unaffected, the JSE's trading system is based in London, effectively crippling the market until about 5.20pm. As a result, trading was extended until 7pm.
JSE COO Leanne Parsons was unavailable this morning, but her office says she will comment on the matter during the course of the day.
Yesterday's downtime comes in the wake of a six-hour systems shutdown in mid-July, after a network problem. The bourse lost about R7 billion in trade on the day, despite extended trading hours. The fault was isolated to the IOS software running on the network switch.
The JSE does an average of R8 billion to R12 billion in trade a day, excluding trader takings.
The bourse brought its IT function back in-house late last year, after outsourcing it to Accenture for two years. However, at the time of the July crash, JSE CEO Russell Loubser said the decision had no bearing on the downtime, as CIO Riaan van Bamelen was well equipped to deal with such situations.
London connection
In April 2007, the JSE went live with TradElect, the London Stock Exchange's (LSE's) next-generation trading system.
The adoption of the system signalled a five-year extension of the relationship between the bourses, with the LSE having supplied the JSE with its trading system on an application service provider basis since May 2002.
Developed in Microsoft's C# programming language and based on the .Net framework, TradElect was expected to deliver high levels of performance and scalability, with reduced latency and increased capacity.
The system was designed to be resilient to hardware failure, with significant reduction in fail-over times, said the JSE at the time.
Off the hook
Norman Muller, head of capital markets at the Financial Services Board (FSB), says - while the JSE would be engaged on how to prevent a similar situation from recurring - it would not be fined.
In fact, he notes, the FSB was happy with the bourse's actions during the downtime.
"We are very satisfied with the JSE's communications. They kept the market up to date on what was happening and, in fact, I think they did better than London in this regard."
All worth it
Muller says it has to be kept in mind that both the JSE and the LSE are busy doing technology updates at the moment, although the JSE, at least, was not doing so yesterday.
"With any new system that is being implemented there is risk, so with two systems implementations, you have double the risk," he says.
The JSE recently went live with a new equity derivatives trading system, and will be implanting a new agricultural derivative platform, and a new yield-X platform in the next 12 months, all through local IT company SST.
Muller insists this upgrade will be worth it in the long-term, as the JSE will be able to handle bigger volumes, at lower transactional costs, with greater reliability.
"The FSB, together with the JSE and National Treasury, are committed to preventing downtimes and complying with international standards," says Muller.
Business Day reported this morning that yesterday was a particularly frustrating day to be offline, as global markets were spurred upwards by news that the US government would rescue mortgage lenders Fannie Mae and Freddie Mac.
Traders were reportedly particularly frustrated, as they could not participate in the bull market yesterday after a week of declines on the JSE.
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