JSE Shows Strength in 2011

Terry Flanagan

Daily volume records were among the South African exchange’s primary accomplishments in 2011.

Global market turbulence in 2011 was a mixed bag for exchanges: it was not helpful for investor confidence, but it did result in some banner trading days for exchanges worldwide.

The Johannesburg Stock Exchange handled 230,797 trades on August 10, 2011, topping the South African trading venue’s previous daily record of 205,784 set 14 months earlier.

“The JSE’s focus on serving the needs of issuers and investors doesn’t change, peaceful business environment or turbulent,” Nicky Newton-King, the newly appointed head of the Johannesburg Stock Exchange, wrote in an e-mail to Markets Media.

Newton-King cited a litany of 2011 accomplishments for the exchange, including progress on technological initiatives to enhance trading and back-office operations and joining an alliance to cross-list benchmark equity index derivatives on exchanges in Brazil, Russia, Hong Kong, and India. JSE also launched a power derivatives product, acquired a managed-account platform to provide more transparency for hedge-fund trading, and issued new minimum-size requirements for off-screen derivative trades.

Additionally, JSE was recognized by the World Economic Forum (WEF) Global Competitiveness report for its regulatory strength and credibility. “In a globally competitive environment, markets with strong regulation, solid infrastructure and thriving institutions will be better positioned to attract sustainable capital flows,” Newton-King said.

The precarious global economy over the past few years has slowed exchange listings worldwide, and South Africa has not averted the downdraft, Newton-King noted. “Still, the JSE has seen a number of good quality listings in 2011 and we have a listings pipeline,” she said.

A key challenge for exchanges heading into 2012 is attracting financial instruments from the over-the-counter market, Newton-King said. JSE will focus on this task in 2012, while also working on improving its technological offerings, increasing foreign-investor participation, and implementing a new engine for matching equity trades.

“Delivering in this manner will enable the JSE to position itself well to capitalize in the future on the winds that are clearly blowing through our industry both locally and globally,” Newton-King said. “We continue to grow our product range and trade volumes while keeping a very tight handle on our costs and our fees to clients, despite a fairly fixed-cost infrastructure and significant investment in technology.  This has enabled us to remain competitive to our global counterparts.”

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