JSE’s new trading system goes live

18 August 2008

The JSE has unveiled a new equity derivatives trading system that has been specifically designed for the South African market, bringing with it new functionality and greater flexibility for local brokers, fund managers, market makers and other institutional investors.

“It has taken the JSE longer than anticipated to get the new system implemented,” JSE trading director Allan Thomson said in a statement this week.

“However, since this was a total replacement of the 15-year old system we inherited when the JSE bought Safex and not merely an upgrade, we had to be absolutely certain that we’d catered for the needs of the equity derivatives market, which are quite different today than they were 15 years ago.”

World leader

The new system has been specifically designed for the South African equity derivatives market which, in a number of instances, is a world leader as far as these markets are concerned.

The JSE is currently the largest single stock futures (SSF) market in the world in terms of number of contracts traded, while it also recently received recognition from the international derivatives fraternity for developing the Can Do Option, chosen as the most innovative product of the year.

“The flexibility of the new system allows us to introduce even more product innovation and hence should bring increased liquidity to the market, something which any world class exchange strives to achieve,” added Thomson.

The new system brings greater visibility to the market with live on-screen prices for SSFs and Single Stock Options being available to the market for the first time. Traders will also see the narrowing of spreads as a result of the increased functionality of the new technology.

“As the 11th largest derivatives exchange in the world by volume, we’ve always recognised that one of the ways to remain one of the world’s leading exchanges is to ensure that we use technology to our advantage,” Thomson said. “This system replacement is a case in point.”

Locally designed

Thomson pointed out that the new system was wholly designed by local company STT, and that the system was not only cost-efficient, but had applications that were already drawing the attention of other pre-eminent exchanges around the world.

STT were the developers of the original trading and clearing software which has been in place since the start of electronic trading in 1994, but the time had come for the original system to be replaced.

STT managing director Michelle Janke said the systems had to be enhanced to meet the changing needs of the exchange, notably the increased derivative trading volumes. The change would also eliminate a large amount of manual processes and provide the exchange with the flexibility it required, she said.

“Options trading volumes using complex delta neutral products have also been improved,” Janke said. “To attract further liquidity, the system is focused on maximizing the number of prices displayed, by using complex algorithms.”

SAinfo reporter