When it comes to trading and clearing, ‘fast’ is no longer fast enough


Stock exchanges have moved on from the days where they were limited to a single trading venue that provided a platform for price discovery and efficient risk management. Today’s exchanges are far more dynamic, and the underlying technology in this digital era is absolutely critical. Digital technology is changing all the time, and while it can be difficult to keep up with the rate of change, it is even more challenging to meet the market demands in this fast-paced world.

When it comes to trading and clearing, ‘fast’ is no longer fast enough. Some JSE members and participants want to – and need to – see things done in nanoseconds. Seconds are too slow. Many of our clients have algorithms that monitor certain trends and devise trading strategies, creating stimulation in the order book and doing trades on their behalf. Our colo SLA is about 50 microseconds per trade, yet we still have clients asking if we can’t do even better from a latency perspective.

From a tech perspective, the JSE is already on par with other world-class stock exchanges. We are creating an ecosystem of global partners whose technology is tested and proven in other global exchanges. We have partnered with the London Stock Exchange Group (LSEG) in the form of the MillenniumIT trading platform, which is no different to what a developed-world country would offer. Our government bonds trading platform is powered by MTS, which is also part of LSEG.

We have had zero downtime on the MillenniumIT platform; and while this is hugely significant when it comes to speed, it also delivers the other modern-day must-have: reliability.

Similarly, our Cinnober RTC (real-time clearing) platform is also world class. Cinnober is widely used in Europe, and its recent acquisition by Nasdaq suggests that the technology will only continue to improve.

The JSE is currently in a transition phase from our legacy infrastructure to these global technologies. After a number of market dress rehearsals, the JSE is on track with our plans to integrate our trading platform. As we introduce services such as MillenniumIT, MTS and Cinnober through ITAC (the Integrated Trading and Clearing platform), we move ever closer to our vision of being the best global platform in emerging markets.

Our future plans include having all globally accepted trade/order types available on our JSE platform, and addressing speed and latency to global norms. We intend to enhance our technologies with AI, machine learning and blockchain capabilities, keeping us current with international trends, while continuously improving our market quality.

But as we move into a lean environment, reducing complexity and ensuring our ability to respond quickly to the needs of the market, we know that we need to deliver both speed and reliability – and one can often come at the expense of the other.

This challenge lies at the heart of modern digital technology. Like many of our clients, the JSE wants to reduce its physical hardware footprint, and move to the cloud in future. MTS is an example of why you do not need local infrastructure. It is hosted in Milan, Italy, and it works very well for us. It’s an existing platform, so there’s no need for us to build any infrastructure or do a ‘rec and spec’. We simply place the application on top of the platform, do the configuration, buy it as a service and pay a service rate. While the cloud has the potential to enable us to deliver services much faster, there is a slight compromise when it comes to latency.

In a world where speed is counted in microseconds, this can be challenge, and exchanges across the world are grappling with this push-and-pull between speed, latency, location and reliability. It’s a challenge we are excited to take on, as we continue to move into our always-on, fast-as-light digital future

Njabulo Ndaba
JSE Head of IT: Trading and Regulation