South Africa upgrades trading system

Brokers will now be able to trade anonymously

The Johannesburg Stock Exchange is to switch to a new trading system on Monday in a bid to boost its fortunes.

The 115-year old market hopes to attract new foreign investors and discourage large local companies from listing abroad - as had been the trend in recent years.

It's more functional and reliable and stable

Russell Loubser
JSE Securities Exchange

The stock exchange - officially known as JSE Securities Exchange - will migrate to the electronic trading system used by the London Stock Exchange, called SETS.

SETS will cost the South African exchange 60m rand ($5.8m) to implement and should provide the market with greater liquidity and make trading more robust.

"The new technology... implies more flexibility... It's more functional and reliable and stable," said Russell Loubser, head of the exchange, which sees about 15,000 trades a day.

Anonymous trading

The new system will also allow members of the exchange to trade anonymously. Currently, it is hard for large players to trade big blocks of shares discreetly.

The exchange wants to improve its international profile

"Anonymous trade means people are more comfortable to trade," said a sales trader at a large brokerage.

The JSE is also hoping that the new trading system will polish up its international image.

During the past few years, the market has watched some of its top stocks, including Anglo American, move to larger capital markets in Europe.

Greater efficiency

Behind the scenes, market officials have also been working to tighten up settlement at the exchange.

JSE is in the middle of a project to install straight-through-processing, which increases the efficiency with which trades are settled between members of the exchange.

One other reform that the exchange is working on is to liberalise foreign exchange controls, which are vestiges of the South African regime before 1994.

Mr Loubser said that he would pursue discussions with the financial authorities on relaxing the controls.

Currently, the controls prevent companies from having dual primary listings in Johannesburg and London.

"We are contemplating dual primary listings, so companies don't have to move from South Africa," said Mr Loubser.

A relaxation would also allow South Africans to trade London stocks through local brokers.

Preparations

The JSE will close two hours early at 1330 GMT on Monday to allow the migration to the new system to take place.

Dealers will spend the weekend preparing for the change. President Thabo Mbeki will then give his blessing at an event on the following Friday.