{"id":514190,"date":"2021-08-19T07:42:21","date_gmt":"2021-08-19T05:42:21","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=514190"},"modified":"2021-08-19T07:42:21","modified_gmt":"2021-08-19T05:42:21","slug":"jse-outage-feeds-narrative-that-south-africa-is-underinvested-and-neglected-say-traders","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/technology\/514190\/jse-outage-feeds-narrative-that-south-africa-is-underinvested-and-neglected-say-traders\/","title":{"rendered":"JSE outage feeds narrative that South Africa is underinvested and neglected, say traders"},"content":{"rendered":"<p>Cassie Treurnicht of Gryphon Asset Management caught up with his reading and went for a walk.<\/p>\n<p>Petri Redelinghuys of Herenya Capital Advisors used the time to catch up with clients, while investor Simon Brown kept his eyes on the screens, waiting for trading to resume.<\/p>\n<p>They all agree: the five and a half-hour outage on the Johannesburg Stock Exchange that prevented them buying and selling stocks until well into the afternoon on Wednesday was not a good signal for a bourse that touts itself as Africa\u2019s finest, in a country that needs to attract foreign investment to help fuel growth and reduce unemployment.<\/p>\n<p>&#8220;You know how bad this makes us look,\u201d said Treurnicht, who manages funds out of Cape Town.<\/p>\n<p>&#8220;That dents our credibility and just slots in with the rest of the narrative that South Africa is underinvested and neglected. Pathetic.&#8221;<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Due to elevated trading activity related to a corporate action, equity market opening was delayed this morning. We wish to advise the market that we have resolved all issues arising from yesterday\u2019s record trading activity.<\/p>\n<p>\u2014 JSE (@JSE_Group) <a href=\"https:\/\/twitter.com\/JSE_Group\/status\/1427958569467527168?ref_src=twsrc%5Etfw\">August 18, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Systems at Africa\u2019s oldest and biggest exchange proved unable to process deals stemming from a massive share-swap transaction between Naspers and Prosus in time for Wednesday\u2019s open.<\/p>\n<p>The transaction changed the companies\u2019 weightings on key South African indexes, forcing money managers to adjust their portfolios. The heavy trading that ensued paralyzed the bourse.<\/p>\n<p>Exchange operator JSE said Tuesday\u2019s dealings of R145 billion ($9.7 billion), more than double the previous high in 2017, caused delays in processing on its systems.<\/p>\n<p>It apologized to clients \u201cfor the inconvenience caused\u201d as trading started at 14h30 instead of the usual 09h00.<\/p>\n<p>JSE chief executive officer Leila Fourie said the exchange was working on \u201ccorrective action\u201d to ensure it doesn\u2019t happen again.<\/p>\n<p>While this was a \u201cblack-swan\u201d event, the JSE took some criticism for dated systems that may increase the attractiveness of upstart rivals that have opened in recent years.<\/p>\n<p>The exchange, one of the world\u2019s 20 biggest, has dwindled to 150 listed companies with a combined market capitalization of about $111 billion, from 473 and a capitalization of $183 billion in 2003.<\/p>\n<p><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/08\/JSE.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-514194\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/08\/JSE.jpg\" alt=\"\" width=\"814\" height=\"457\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/08\/JSE.jpg 814w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/08\/JSE-300x168.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2021\/08\/JSE-768x431.jpg 768w\" sizes=\"auto, (max-width: 814px) 100vw, 814px\" \/><\/a><\/p>\n<p>Wednesday\u2019s failure has already prompted calls for more competition in South Africa\u2019s financial markets.<\/p>\n<p>There should be a push to give brokers options other than the JSE\u2019s \u201cBroker Dealer Accounting\u201d system, which was at the heart of Wednesday\u2019s glitch, said Kevin Brady, CEO of A2X Markets, an alternative exchange based in Johannesburg. Ironically, he was on holiday when the chaos struck.<\/p>\n<p>\u201cBrokers should be free to choose what systems they want to use for their post-trade, they should not have to use the JSE one, particularly when it\u2019s 35 years old,\u201d said Brady.<\/p>\n<p>\u201cIf the system goes down, the market is dead. There has to be a push to unlock that hold on the post-trade process.\u201d<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Market participants are advised that A2X is not affected by the start of the JSE equity market being delayed, with the A2X market opening as usual at 09h00.<\/p>\n<p>All stocks listed on A2X will be available for trade from this time. <a href=\"https:\/\/t.co\/QNmkB7wEmH\">https:\/\/t.co\/QNmkB7wEmH<\/a> <a href=\"https:\/\/t.co\/mjE82x5mQt\">pic.twitter.com\/mjE82x5mQt<\/a><\/p>\n<p>\u2014 A2X (@A2X_Markets) <a href=\"https:\/\/twitter.com\/A2X_Markets\/status\/1427886687644966914?ref_src=twsrc%5Etfw\">August 18, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In 2017, the JSE paid out claims from clients and conducted reviews after technical issues prevented equities and derivative trading for an hour and 45 minutes. It hasn\u2019t commented on whether it will do so again.<\/p>\n<p>\u201cIt\u2019s difficult to quantify costs because they relate to the opportunity costs of not being able to access the market until much later in the afternoon,\u201d said Doug Blatch, head of Africa trading at Ninety One.<\/p>\n<p>\u201cIn the event that underlying client flows were not able to be processed due to insufficient liquidity to complete, then that, in turn, can impact other commitments made.\u201d<\/p>\n<p>For many traders, this was a particularly bad day for the exchange to break down.<\/p>\n<p>Naspers, the largest shareholder in Tencent Holdings, often gets used as a proxy trade when the WeChat operator and China\u2019s biggest company releases results, which happened while the JSE was offline on Wednesday.<\/p>\n<p>\u201cThere is really nothing you can do when the JSE goes down,\u201d said Nick Kunze of Sanlam Private Wealth. \u201cYesterday\u2019s re-weighting and the Tencent results &#8211; the timing couldn\u2019t have been worse. But they say it doesn\u2019t rain, it pours.\u201d<\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/finance\/514048\/governments-plan-to-give-basic-income-to-everyone-in-south-africa-and-it-wants-tax-hikes-to-fund-it\/\" target=\"_blank\" rel=\"noopener\">Government\u2019s plan to give basic income to everyone in South Africa \u2013 and it wants tax hikes to fund it<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cassie Treurnicht of Gryphon Asset Management caught up with his reading and went for a walk. Petri Redelinghuys of Herenya Capital Advisors Ltd used the time to catch up with clients, while investor Simon Brown kept his eyes on the screens, waiting for trading to resume.<\/p>\n","protected":false},"author":59,"featured_media":248059,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9878],"tags":[13574,26,107,15103],"class_list":["post-514190","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-a2x-markets","tag-headline","tag-naspers","tag-prosus"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/514190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=514190"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/514190\/revisions"}],"predecessor-version":[{"id":514208,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/514190\/revisions\/514208"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/248059"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=514190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=514190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=514190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}