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Access to trade data from JSE is to increase with the launch of a centre that houses clients’ trading equipment and speeds up the transmission of data.
The collocation centre, which houses equipment and provides space and bandwidth for customers, is the result of demand from local and international clients, data vendors, managed service providers and shared infrastructure providers for faster trading results, said JSE. Most of the international demand came from the UK.
The new centre provides a lower latency connection for trading – which decreases network delay times – and allows for the receipt of real-time data. Offering these services brings in additional revenue for the stock exchange.
“Clients demand faster execution speeds and exchanges need to offer these in order to compete,” said JSE director of the equity market Leanne Parsons on Wednesday.
“Aside from faster trading speeds and updates to market data, which will allow for enhanced response to market movements and deployment of new trading strategies, collocation also reduces the cost of bandwidth for clients.
“It also improves trading resilience, as clients are in the JSE’s data centre, and reduces clients’ dependence on network providers. Apart from the benefits to clients, collocation will open up a new revenue stream for the JSE,” she said.
In-house hosting
JSE chief information officer Riaan van Wamelen said the new centre will initially provide space, power, cooling and security for 35 hosting units for clients’ computers.
“The JSE’s collocation centre levels the latency playing field for members, especially those located geographically far away from the exchange.
“It has been built on lessons learnt from other markets, with a non-exclusive hosting unit leasing policy and the same public data feed available to all clients, whether collocated or not,” he said.
“Faster trading has measurable beneficial impacts on a variety of core market quality metrics, including tighter spreads, increased liquidity and more efficient price formation, among others, for JSE clients,” said Parsons.
Faster trading speeds have demanded that exchanges, JSE included, develop new risk management practices to enhance the integrity and stability of the market, she added.
It’s not just those taking advantage of the centre who will benefit, according to JSE. The stock exchange had to upgrade its software to accommodate the new system, which means the “whole market will now benefit from an improved matching engine speed of approximately 100 microseconds”.