Johannesburg Stock Exchange in growth mode
It is a period of turmoil and consolidation for stock exchanges globally, as competition from rival alternative platforms increases and the pressure is on for constant technological innovation and faster transactions.
The Johannesburg Stock Exchange (JSE), although unchallenged in its position as Africa's dominant player and the only one on the continent to offer markets in equities, equity derivatives, commodity derivatives and interest rate instruments, is keeping up to speed with international best practice and seeking to grow further.
Technology is the key to growth, says Leanne Parsons, chief operating officer: "In our experience whenever our technology evolves, higher volumes follow. The JSE is positioning itself as an investment gateway to Africa. In order to do this successfully we need the technological sophistication and advances that international investors are used to."
The JSE is boosting its equities and derivatives operations and becoming the first African exchange to offer offering co-location services to its members and clients to trim the time it takes to execute trades.
Co-location, which means market participants put their routers and servers as close as possible to the exchange trading systems, "will shave milliseconds off executions speeds." In the first half of 2012 the JSE will move its equity market trading engine from London to Johannesburg so that trades will no longer have to be sent to the London Stock Exchange to be settled.
In the run-up to the move from London to Johannesburg, the JSE is now busy upgrading and enlarging its existing data centre to enable co-location. The JSE says they will "need more people to run the system" but they are not prepared to give definite numbers yet. In the last year IT has been the one sector in which the Bourse was "actively hiring" and this trend may continue.
"The JSE has invested significantly in technology replacement for our back-office environments," says Rian Van Wamelen, the JSE's CIO. "The trading environment is evolving rapidly in our market and given the technological dependence of our business we anticipate further projects in future. Now we are predominantly recruiting where there is staff churn or where we require resources on a contracting basis for specific typically project-driven needs. Our needs range across the full spectrum of IT roles."
The move also creates a new source of revenue for the JSE as it seeks to attract international high-frequency trading firms for the first time. "We believe there is a significant amount of liquidity we can attract to the market and we are hoping our new technological capabilities will attract more flow," says Parsons. "We have already had interest from several high frequency groups following on from our intention to offer co-location."
