Johannesburg Bourse Sees Quicker Settlements Boosting Volumes

  • Turnaround on trade settlements cut by two days from this week
  • Improving technology increases trade volume, value, JSE says

The Johannesburg Stock Exchange said quicker settlements on share dealing introduced this week are part of enhancements aimed at increasing trade volumes and attracting foreign investors.

In the latest change, equities will now be delivered in exchange for payment in four days, an arrangement known as T+3, an improvement on the six-day turnaround under the old T+5 system. The move brings the South African exchange into line with international best practice, the JSE said.

The JSE is among the world’s 20 largest exchanges by market capitalization and was ranked second globally for its regulation in the World Economic Forum Global Competitiveness Report for 2015. Future enhancements will include updating the JSE’s derivatives trading platform, with the first phase starting at the end of this year, according to Executive Director Leila Fourie.

“It entails replacing the current trading engine and the current clearing engine,” Fourie said in an interview. “It’s faster and more globally aligned, so international participants can connect to this trading engine more easily. We have certainly seen that when we improve the technology of the trading platforms it increases trade value and volume.”

Daily trading on the JSE averages about 25 billion rand ($1.7 billion) and the switch to T+3 could boost liquidity by as much as 10 percent, the exchange estimates. Reducing turnaround times even further is possible, Fourie said.

“We’ll certainly consider moving to T+2, which is two days after trade, but we need to settle down on T+3,” Fourie said. “To the extent that members meet their obligations in the T+3 cycle and we have less than 5 percent of trades rolling, there’s no reason why we can’t consider initiating a project to T+2.”

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