The Johannesburg Stock Exchange (JSE) has reached an agreement with MillenniumIT, the technology company owned by the London Stock Exchange (LSE), to implement a new trading platform in the first half of 2012.
The new platform, Millennium Exchange, is currently in use at Turquoise, the LSE-owned multilateral trading facility, and will also be used on the LSE's main UK market from 14 February.
The JSE, which has had partnered with the LSE since 2002, said the new engine will result in execution speeds that are 400 times faster than its current TradElect platform, also supplied by the LSE. The LSE claims that, following tests on Turquoise, Millennium Exchange is capable of achieving average order latency times of 126 microseconds.
Unlike TradElect, Millennium Exchange will be implemented in Johannesburg, which will mean any trading disruptions in London will not have any knock on effects on the JSE. On 8 December 2008, connectivity problems halted trading for the majority of the day on both the LSE and JSE.
“The handful of incidents that we have had requiring the equity market to be halted, with reputational impacts, have been related to our international connectivity links.
By moving the engine to Johannesburg, we eliminate this problem and are able to offer our clients improved service availability and stability,” said Leanne Parsons, COO and head of the equity market, JSE.
Parsons said that operational costs would remain roughly the same, but predicted an increase in equity volumes, particularly from high-frequency traders.
“In our experience, whenever we take a step forward with our trading technology, trading volumes also follow,” she said. “There is much anecdotal evidence to suggest that when exchanges increase their trading speeds they also boost levels of high-frequency trading. This is important in order to deepen a market.”
The JSE plans to develop co-location services in conjunction with the move to Millennium Exchange, which will allow members to locate their services near to the exchange's matching engine in order to reduce latency.