Johannesburg - The Johannesburg Stock Exchange has boosted its top line and earnings in the six months to June as it continues to overhaul its tech platform to allow for faster trades.
The bourse, the largest in Africa, said on Thursday afternoon it turned over R1 billion in the first half of the year, a 16% gain, while earnings after tax for 2015 increased by 29% to R430 million.
CEO Nicky Newton-King says the exchange “began 2015 in full force and have had a good first half of the year”. She adds the good results “follows the significant investment we have made in our people and technology which enable the JSE to offer clients the world-class services which they are clearly using more and more”.
By the end of the year, the JSE will have spent R110 million on its new trading system - Integrated Trading and Clearing (ITaC) - which is set to cost it R400 million by 2017.
The new system, currently in phase three, is a multi-year programme of work focused on the introduction of an integrated solution for the JSE’s trading and clearing services.
Its aim is to implement world-class, multi-product solutions to enhance the JSE’s current trading and clearing functions. On the trading side, that means migrating all Derivatives and Cash Bond markets to the MillenniumIT trading platform, while for clearing, it involves the migration of all markets onto the new Cinnober Real-Time Clearing (RTC) solution.
The project was initialised in July 2013 when the bourse implemented Millennium Exchange as a trading platform and moved its trading system from London to Johannesburg.
This shift allows traders to execute trades up to 400 times faster than under the previous TradElect system. The change also allows for increased liquidity and more algorithmic traders.
Newton-King says the bourse “continues to make good progress on a range of our strategic initiatives which will strengthen the business,” especially in derivatives, market data nd post-trade services.
New income
The JSE says new organic revenue contributed R12 million in the first half. This growth came from its collocation service, which was unveiled in the first half of last year and allows clients to place their trading equipment near the JSE for fast access to JSE markets, as well as issuer services and market data.
However, the bourse’s investments have led operating expenses 12% higher to R567 million. It notes personnel, technology and technology related costs (depreciation) continue to be the principal components of its largely fixed cost base.
Staff costs increased by 8% to R210 million, while general expenses increased by 14% to R196 million because of the deliberate decision to launch the tax-free savings account (TFSA), office renovations necessitated by the corporate restructure and increased utility charges.
Separately , the bourse also announced discussions are currently underway between market participants in Nigeria, Kenya and South Africa to launch the cross listing of Exchange Traded Funds (ETFs).
ETFs are a collection of equities, commodities or bonds bundled together in a fund to ensure that investor risks are evenly spread across this range of securities. ETFs are only written off specific index-related securities that are listed on a stock exchange, and this makes it possible to invest in a diverse range of securities through a single exchange traded product.
“ETFs are one of the fastest growing asset-class categories in the world. By collaborating with Africa’s largest stock exchanges, we hope to spearhead this trend in Africa,” says director for Capital Markets at the JSE, Donna Oosthuyse.
The cross listing of ETFs will fulfil two main functions: Investors will have exposure to a diverse range of top performing Nigerian, Kenyan and South African companies and liquidity on the bourses involved will also be improved.
IOL