JOHANNESBURG — The Johannesburg Stock Exchange (JSE)’s trading platform is returning from London to Johannesburg, making the system up to 400 times faster, JSE chief operating officer Leanne Parsons says.
The largest stock exchange in Africa was yesterday expected to announce the date of the move, which, according to stock brokers, will increase international interest and trading volumes on the bourse.
The exchange’s platform has been based in London since 2002, when the market and trade volumes grew to the point the JSE’s technology could no longer support them and the bourse could not afford a new system.
The JSE then signed an agreement with the London Stock Exchange to share its technology. Since then, trades have gone through the JSE in Johannesburg to its trading platform at the London Stock Exchange, and then back to traders.
Parsons said since the start of this year, the JSE had conducted about 108 000 trades a day. It relied on the underwater cables SAT3 and Seacom, which run up Africa’s east and west coasts.
In the past trading on the JSE has been suspended due to problems with the cables. “The most reliable cable system . . . has a latency of 190 milliseconds, while the (other) can be up to 400 milliseconds,” Parsons said. The latency period is the time between a trader’s order placement and its execution.
“In-house, this would be 200-400 times faster — 400 milliseconds is a lot in trading terms,” Parsons said.
Brokers agree and are looking forward to the announcement.
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“It means traders will not have to depend on the international pipeline,” Citi’s head of equities for SA and sub-Saharan Africa, Quintus Kilbourn, said on Wednesday.
Peregrine Securities director Warren Chapman said: “Even on a fibre-optic cable, trades are taking — in some cases — about half a second to get from their origins to SA and back.
“This may not sound like a lot, but some international exchanges are processing orders in micro or even nanoseconds . . . High-speed traders have avoided SA because of the high latency period.”
Globally, there had been a reduction in execution speeds, which was becoming more important for international clients, Parsons said. Research by consultancy Tabb Group found high-frequency trade made up 56% of equity trades in the US and 38% in Europe.
