A rise in trading volume and value on the Johannesburg Stock Exchange (JSE), across asset classes, increased operating revenue by 16% to R794m (€60m). Trade volumes on the equity market for the first half of 2013 increased 58%, with total value traded increasing by 22%.
The JSE’s equity, financial derivatives, interest rate and currency market arms saw a similar boost in trading activity, compared to H1 2012. Moves to increase electronification of the market may be responsible for the increased volumes. In July 2012 it adopted the FTSE’s proprietary platform technology, the Millenium Exchange. Since then around 65% of its total volume has consisted of algorithmic trading.
It recently announced plans for a co-location facility, which will cut latency dramatically from 2,400 to 100 microseconds as well as providing additional storage for clients’ computers. JSE said the move was made due to increased demand from international and high-frequency traders.
JSE CEO, Nicky Newton-King, elaborated on JSE’s future plans: “Subject to confirmation on costs and functional fit, we will also be migrating our equity derivatives market to the same trading engine as our equity market and to a new clearing engine. This move will both internationalise this market and increase liquidity on the market as well. This is planned for mid-2015.”
Another external factor driving growth could be demand for foreign BRIC products which are cross-listed on Chinese, Indian, Brazilian and Russian exchanges under the 2011 Bricsmart Alliance. The offering includes Hang Seng Index futures, iBovespa futures and MICEX futures, and forms part of a wider collaborative effort between the countries. China has just signed a letter of intent for an index product licence with a Chinese fund manager to create exchange-traded funds based on the FTSE/JSE Top40 Index.
The Johannesburg exchange also benefitted from tighter internal cost control, which cut operating expenses by 3% to R488m. Newton-King explained: “We have rolled out a new web-based portal through which JSE Market Data clients can report their monthly usage direct to the JSE. This reduces administration and complexity, enabling our sales teams to focus on building the Market Data client base and revenue.”