2 August 2013
The Johannesburg Stock Exchange (JSE) is moving to attract more high-frequency traders to South Africa’s bourse with the construction of a co-location centre that, on completion in the first half of 2014, will offer clients access to the JSE at unprecedented speeds.
The co-location centre will enable clients to rent server space at the bourse, allowing them to reduce the time delay, or latency, of their trades.
“Clients demand faster execution speeds, and exchanges need to offer these in order to compete,” Leanne Parsons, director of the JSE’s equity market, said in a statement on Friday.
“Co-location potentially offers huge benefits for our market in terms of volumes and liquidity, which in turn could lead to better price discovery,” Parsons said, adding that the JSE’s latency levels already compared “very favourably” with international latencies offered by other exchanges.
According to the JSE, co-location will offer 24 times faster access into the equity market, with a latency of 100 microseconds compared to 2 400 microseconds, which is the current fastest latency of JSE members located in Sandton, Johannesburg.
Parsons said demand for co-location had come from JSE members, as well as clients, software providers and data vendors both local and international – particularly from firms based in the UK.
The JSE said the co-location facility would initially provide space, power, cooling, and physical security for 35 racks for clients’ computers. “The racks will be placed in a hot and cold isle layout, a design which is proven to conserve energy and lower cooling costs by managing air flow.
“The room is configured so that all clients experience the same speeds. The JSE will make use of an internationally recognised vendor to monitor latency, and clients will also have access to a centralised portal to view latency updates.”
The JSE’s equity trading platform runs on the London Stock Exchange Group’s MillenniumIT software, using ultra-low latency network equipment and a robust yet simple network design supporting low latency.
In the first year since implementing the system on 2 July 2012, the JSE received almost 1.5-billion orders – the highest on a single day being the 9.3-million orders handled on 20 June 2013.
The JSE completed almost 140 000 average daily trades over this period, compared to 158 000 trades per month in the first year of the JSE’s previous electronic trading system, implemented in 1996.