JSE moves ahead with co-location centre plans

Source: Johannesburg Stock Exchange

The Johannesburg Stock Exchange (JSE) is moving ahead with the construction of its co-location centre to be completed in the first half of 2014. To be built according to best practice Tier III data centre standard and located at the exchange, will offer clients access to the JSE at unprecedented speeds.

"Clients demand faster execution speeds and exchanges need to offer these in order to compete. Co-location potentially offers huge benefits for our market in terms of volumes and liquidity, which in turn could lead to better price discovery. Our latency compares very favourably with international latencies offered by other exchanges," says Leanne Parsons, Director of the JSE's Equity Market.

Co-location will offer clients the fastest execution speeds as well as fastest access to data - speeds will increase execution probability and allow for quick responses to market movements. Co-location will offer 24 times faster access into the equity market with a latency of 100 microseconds compared to 2400 microseconds which is the current fastest latency of JSE members located in Sandton. To put this speed into perspective, there are one million microseconds in a second and one thousand microseconds in a millisecond.
These speeds are made possible by the Millennium IT software, ultralow latency network equipment and a robust yet simple network design supporting low latency.

Demand for co-location has come from JSE members, as well as clients, software providers and data vendors both local and international. The major portion of demand comes from firms based in the UK. Apart from the benefits to the market, co-location opens up a new revenue stream for the JSE.

The co-location facility will initially provide space, power, cooling, and physical security for 35 racks for clients' computers. The racks will be placed in a hot and cold isle layout a design which is proven to conserve energy and lower cooling costs by managing air flow. The room is configured so that all clients experience the same speeds. The JSE will make use of an internationally recognised vendor to monitor latency and clients will also have access to a centralised portal to view latency updates.

Other benefits to members include reduced bandwidth costs and less releliance on network service providers. Co-location will provide client access to all JSE markets. Pricing of co-location offerings will be the same for all client types.

Facts about trading activity on the JSE's Equity Market since Millennium Exchange implementation:

  • Approximately 65% of the JSE's trading activity can be attributed to algorithmic trading activity
  • The first year has seen the JSE receive almost 1.5 billion orders (with the highest on one day being 9,3m on 20 June 2013)
  • A peak of 1941 orders per second
  • A peak of almost 1000 trades per second
  • Almost 140 000 average daily trades which compares to 158 000 trades per month in the first year of the JSE's first electronic trading system (implemented in 1996)
  • 2.5 billion market data messages disseminated
  • 35 million tradesĀ 

Comments: (0)