SWITCHED ON - JSE MAGAZINE

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Riaan van Wamelen, Chief Information Officer at the JSE, on ensuring that the exchange’s technology continues evolving and the challenge of achieving integrated trading and clearing across all markets

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Q: How do you manage your role as CIO and how does the IT division support the JSE’s overall business? 
A: I believe that one of my primary responsibilities is to ensure that IT is positioned, within the JSE, as a strategic partner to the respective business divisions of the stock exchange. I see the JSE as an electronic hub for capital markets in SA and it is therefore, in many respects, a technology led business and very different to the old days of open outcry. Today the JSE data centre is the open outcry floor of old. In this respect, IT cannot merely be an enabler of business requirements but needs to be a strategic partner that can help shape and deliver business strategy, and which can bring technology led innovations to the JSE.

The IT division is structured to ensure that the day-to-day business operations at the JSE run smoothly by meeting the required service levels and delivering the future capabilities of the stock exchange through projects that transform our technology landscape to deliver our business strategy. The IT division is made up of a variety of specialist disciplines that combine dynamically in a matrix-style structure to deliver our objectives.

Q: What are the main IT projects?
A: The dynamics of the stock exchange industry, combined with the need for the JSE to stay relevant and competitive, means that the stock exchange continuously enhances and replaces its technology platforms, and this results in a significant technology change agenda. Earlier in 2014, we delivered our new co-location offering, which is a new revenue stream for our business. It also offers our members a facility to exploit high-frequency trading opportunities. This year we successfully delivered the second phase of a project that will change the clearing cycle for equity trades from a T+5 to a T+3 settlement cycle. We are currently busy with the final phase of this critical programme.

Our most ambitious project, however, will see the JSE deliver our business strategy, which is to achieve integrated trading and clearing across our markets. This is a challenging programme, which will help us shift our derivatives trading capability onto the same technology platform as the one implemented for cash equities in 2012. At the same time it will deliver an integrated clearing platform across all our various asset classes. While this will replace our core line of business applications for trading and clearing, it will also require the upgrade – and in some instances replacement – of a number of JSE internal systems. Given the complexity of this programme, it will be implemented over a number of years, and delivery will be in phases to reduce business risk.

Q: What are your major challenges and does the current load shedding Affect trade or your work?
A: Our biggest challenge is to ensure the uptime of our current systems to provide a world-class financial market while delivering a technology change agenda for the JSE. The high demand for IT resources in the market-place and the resultant impact on staff retention, combined with the uniqueness of our business in the SA marketplace, complicates this further. This is due to the continuous need to upskill our teams in financial market knowledge as well as the business of our exchange.

Information security or cyber security is another critical consideration for us, given the prominence of stock exchanges in financial markets and the broader economy. This especially holds true with respect to people or organisations that have illegal profit motives or enemies. One example is the hacker group Anonymous, which associated itself with the Occupy Wall Street movement. Fortunately, load shedding is not a great challenge as the JSE data centre is based on Tier III standards, which ensures that power is made available via dual power paths, with an underlying generator infrastructure. Diesel is an expensive way to keep the JSE running so it really just comes down to the increased cost of operations.

‘Information security or cyber security is another critical consideration for us’

Q: The JSE is working towards a fully integrated trading and clearing system. What does this mean for the exchange and how does it compare to global practice?
A: We believe that our strategy of integrated trading and clearing is, in many respects, leading the exchange industry with only a few other exchanges having embarked on a similar journey. We believe we can reap significant business benefits for ourselves and our clients by adopting globally recognised systems across our markets.

We look to drive enhanced product innovation across markets through this new platform, and reduce capital requirements for our clients through efficient asset utilisation, with cross-collateralisation and cross-margining. We will also enhance our risk management and drive out operational inefficiencies.

Q: From a technology point of view, is there perhaps a so-called ‘next big thing’ that you foresee in the world of stock exchanges and at the JSE?
A: The global IT landscape is rapidly evolving and trends such as cloud and big data are influencing the stock exchange industry in the way we provide services to our clients. I anticipate that mobility is likely to play an increasing role, within and beyond the boundaries of our organisation. Our client base is likely to be computer scientists rather than traditional traders in future, as technology is increasingly used to exploit the smallest of trading opportunities.

By Louise Brougham-Cook
Image: Andreas Eiselen/HSMimages, iStockPhoto