KNOWLEDGE ECONOMY - JSE MAGAZINE

KNOWLEDGE ECONOMY

The international data market, in which exchanges supply a diverse and vast range of information to interested parties, has grown into a massive industry

KNOWLEDGE ECONOMY

Trade across various markets – stocks, bonds, derivatives and indices – generates data through-out the day. Intraday there is information produced for valuation purposes, and then at the close of day, post-trade data becomes available. This can include, amongst others, reference and historical data, corporate events and regulatory announcements. Clients use this information for trading, trend analysis, benchmarking, valuations, tracking portfolios and risk management, says the JSE’s Director of Market Data, Ana Forssman.

‘It is one of the fastest-growing industries in most exchanges and a way for exchanges to diversify their business,’ she says. ‘The universe of users is global and diverse, as you service the investment industry across the full value chain.’

Market data includes the provision of all live trading, reference and statistical data. Benchmark data and any other aspects of information required by the investment community is also available. In addition, clients can access company announcements via SENS – the Stock Exchange News Service. It provides information that can have a direct effect on movements in the market. Information on mergers, take-overs, rights offers, capital issues and cautionaries are all available on SENS.

Simply put, any data that can enhance or facilitate investment decisions for corporate and retail investors is useful and potentially marketable. This is with the proviso that the data has to be accurate, reliable, standardised, time-relevant and available to all participants at the same time.

‘The sophisticated technology, from trading platforms to all our downstream systems, is geared to ensure accuracy is paramount, as inaccurate data could lead to inaccurate investment decisions,’ says Forssman. Worldwide, the data market industry is an over $26 billion industry. In SA, market data was first offered just more than 20 years ago, while in the rest of Africa it is still in its infancy.

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‘It is one of the fastest-growing industries in most exchanges and a way for exchanges to diversify their business’

ANA FORSSMAN, DIRECTOR OF MARKET DATA, JSE

Developed exchanges generate between 7% and 30% of their revenues from selling market data to distributors and data consumers.

According to Forssman, a number of African exchanges are considering providing market data and some have installed live data feeds of trading activity. The JSE is not involved in any of the other African exchanges’ efforts in the market-data area. ‘But should the opportunity be viable, we would consider it,’ she says.

The JSE’s market-data service is expanding rapidly and now has more than 770 clients in at least 60 countries around the world. According to Forssman, the growth in demand from international clients is rising by an average of 30% to 40% year on year.

This demand is spread across North America, the UK and Europe. At the end of 2014, around 52% of the JSE’s market-data clients were international and 48% domestic. It’s indicative of the extensive foreign interest in investing in SA and the rest of Africa.

A quarter of the clients are algorithmic players who rely heavily on various types of data and, in particular, low latency feeds. Of these players, the number of US clients has grown 57%, while the number of UK clients has risen by 41%, and SA clients by 30% year on year, at the end of 2014.

Given the extensive interest in the JSE’s market data, the exchange has entered into a partnership with Google to distribute the exchange’s equity-price data globally via Google Finance. The online service provides access to financial information from major stock exchanges worldwide.

‘This partnership benefits the JSE through broadening the reach of information on the equities market, both domestically and globally, with Google being a major global portal,’ says Forssman. All equity-listed instruments on the JSE are provided on Google Finance with a 15-minute delay.

As data becomes more and more important, and technology advances in ways that make working with ‘big data’ even more useful, the JSE’s market-data division is expected to become increasingly crucial.

By Gene Michelson
Image: Fredrik Brodén/reneerhyner.com