JSE Equity Market 2012 A New Era for JSE Trading

Report
JSE Equity Market – A New Era for JSE Trading
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JSE Focus 2012
 Regulation and Market Credibility
 Cost Understanding and Focus
 Technology Delivery
 Integrated trading
 Integrated Clearing and Settlement
 Innovative products and services
2
Market Infrastructure
Fully integrated vertical and horizontal market structure
SETTLEMENT
CLEARING
Equity Derivatives
Commodity
Derivatives
Equities
Interest Rate
TRADING
LISTING
3
Market Surveillance
Information Products
JSE Business Model
•
SRO and listed company
•
Listing, Trading, Clearing and Surveillance across 4 Markets
−
Equities – Main Board (ETFs, ETNs, DRs), AltX, BEE Board
−
Equity Derivatives – SSF, index derivatives, can-do options
−
Commodity Derivatives – maize, wheat, soya, sunflowers, and CME-referenced corn, crude oil, gold, and platinum
−
Interest Rate Products - currency futures spot bonds, FRAs/SWAPs
•
Clearing and risk management services
•
Settlement
−
Own just under 45% of STRATE
−
Guarantee of equity trades
•
Information product sales
•
Technology services
4
JSE Products
Wide range of products:
Equities
Equity Derivatives
Commodity Derivatives
Currency Derivatives
Interest Rate Market
Ordinary & preference
shares
Can-Do futures &
options
Grain futures & options
Currency futures
Spot bonds (cash)
Exchange traded funds &
Exchange traded notes
Single stock futures
Chicago corn futures &
options
Currency options
Bond indices (cash)
Warrants
Dividend futures
Crude oil futures &
options
Maxi currency futures
Contract
Bond futures
Depositary receipts
Index futures
Silver & copper futures
Rand index
Options on bond futures
Property unit trust (PUT)
and Property Loan Stock
(PLS) ; Share
Installments & Nil Paid
Letters
International
Derivatives (IDX)
CBOT Soybean complex
futures & options
Jibar futures
Debentures
Equity options
Gold & platinum futures
& options
Index futures
Bonds
White maize futures
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JSE in the global context
300%
NASDAQ OMX
Liquidity
250%
Shenzhen SE
200%
Istanbul SE
150%
NYSE Group
Shanghai SE
Tokyo SE Group
Deutsche Börse
100%
OMX Nordic
Hong Kong
Exchanges Australian SE
Egyptian SE
50%
Bursa
Malaysia
National Stock
Exchange India
JSE
TSX Group
London SE Group
Bombay SE
No. of listed companies
0%
0
6
1,000
2,000
3,000
4,000
5,000
6,000
JSE International Achievements
World Economic Forum ranking (SA position out of 142 countries)
Category
2011
2010
Regulation of Securities Exchanges
1
1
Strength in accounting and auditing standards
1
1
Protection of minority rights
3
6
Soundness of banks
2
6
Financing through local equity markets
4
7
Availability of financial services
3
7
(Source: WEF Global Competitiveness Report 2011)
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Revenue drivers - H1 2012
Issuer Regulation
5%
8%
Equity Market
11%
4%
1%
26%
3%
Back-office services (BDA) and
Equities risk management
Equity Derivatives
Interest Rate Products
Currency Derivatives
9%
Commodity Derivatives
Data Sales
33%
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Funds management fees
Equity Market summary– July 2012
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Companies Listed & Market Cap– July 2012
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WFE Rankings– July 2012
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Equity Market Activity Timeline
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Equity Market – Trading Technology

Equity Market Trading Technology change
•
JSE migrated from JSE TradElect™ to Millennium IT trading software (400 x faster), on 2 July
2012.
•
Average Latency on the Native Trading Gateway @ 349 microseconds.
o 1 million microseconds in a second - orders are matched in 0.000349 seconds.
o JSE TradElect™ averaged between 200 and 400 milliseconds due to the system being in
London
•
Fast Facts “Pre Go Live”
o Dress Rehearsal Pass Rate - 5 May: 63%,19 May: 97%, 2 June: 91%, 23 June: 100%
o Average Trade to Order ratio: 70%
o Highest orders per second: 1333/s
o Traders that attended training : 776
o Total Hours of Conceptual Training: 152 Hours
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Equity Market – International Access Points and
Connectivity Strategy

JSE Point of Presence (PoP) in UK
•
On 15 December 2011 the JSE and Fixnetix announced that the JSE chose Fixnetix as the
Managed Service Provider (MSP) of the JSE’s PoP in London at the Equinix Data Centre, LD4,
Slough (LD4)
•
Initially, access to the JSE’s Equity Market Customer Testing Service and real time data
services will be available via the JSE PoP provided by Fixnetix
•
The UK PoP will be extended to include trading of JSE equities and this agreement could be
expanded to include access to other JSE markets

Co-location Services
•
The JSE has been involved in detailed discussions with co-location experts and is in the
process of working on the details of this offering
•
The JSE has also given notice to current tenants of the intended co-location data centre space
so that this space can be vacated mid next year
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Equity Market – Billing

Equity Billing Model Review
•
A new hybrid value based billing model was implemented on 1 March 2010
•
Current model parameters are: 0.0055% on value of trade with R4 floor and R20 ceiling, with
R15bn discount threshold (per month) and 20%discount rate
•
The JSE continuously refines the new billing parameters where the intention is to widen the gap
between the floor and ceiling charges in order to:
o Improve predictability for clients by moving toward a pure value based billing methodology
for transaction charges; and
o Ensure minimal impact for clients already faced with increased overall trading costs over
the past 2 years due to the increased number of hits per trade
•
Investigations into models to enhance predictability, e.g. a pure value based model and a model
based on the total value executed per order are underway
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Equity Market Products Focus
 Expand product base
•
Exchange Traded Funds (ETFs), Exchange Traded Notes (ETNs), Structured
Products, Share Installments, Warrants & South African Depository Receipts (SADRs)
•
Product issuer forums, New Products Committee submissions/regulator discussions
(where applicable), new products/structures research, new/changed listing rules,
listing/trading fees review, new/changed trading/industry segments & dedicated Client
Liaison officer
 Public education Initiatives
•
We are constantly educating the public on the basics of investing as well as equity
market products
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Equity Market Products Focus (2B UPDATED…)
 Exchange Traded Funds (ETFs) Growth
•
As at end August 2012 there were 38 ETFs (YoY listings growth 19%)
listed on the JSE with a market capitalisation of R36 billion
 Exchange Traded Notes (ETNs) Growth
•
As at end March 2012 there were 20 ETNs (YoY listings growth 33%)
listed with a market capitalisation of R3,9 Billion
 Structured Products Growth
•
YoY market capitalisation decreased 15% & value traded growth 304%
 Warrants Growth
•
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YoY market capitalisation increased 84% & value traded growth 51%
Africa Focus

JSE Africa Board has been integrated into the overall JSE trading spectrum
•
The exchange already offers trade in a wide range of investment instruments focused
on Africa outside of South Africa.
•
To enhance this, the JSE’s Africa strategy will now include companies listed directly on
the Main Board and AltX as well as offering depository receipts and a broader range of
exchange traded funds and debt instruments

African market exposure opportunities:
•

12 listed Companies, 4 Bond issuers, 1 Exchange Traded Note, 2 Africa Indices
2012 Focus: SADRs on African shares
•
DRs will provide a way for African companies to raise capital on the JSE without
requiring a secondary listing
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BRICSMART
 A joint initiative to expose investors to the
BRICS economies, through cross-listing
products
•
The Initial, 1st phase offering, now gives investors
access to derivatives on Brazil’s IBOVESPA, Russia’s
MICEX Index, India’s SENSEX Index, China’s Hang
Seng and Hang Seng China Enterprises Indices and
South Africa’s FTSE/JSE Top40 Index
•
Apart from cross-listing products, other opportunities
will be explored to promote greater development and
understanding amongst the respective markets
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Equity Market Growth Initiatives
 Retail Broker and Investor Strategy
•
In collaboration with retail brokers and ETF issuers, the Equity Market will drive out a
retail focussed campaign with ETFs offered as the low cost entry level product
•
The campaign entails various educational interactions, showcases and an expo
 High Frequency Trading (HFT) Strategy
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JSE has seen increased HFT trading and will formulate a strategy in relation to this
 International Customer Strategy – BRICS alliance and beyond
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The team continuously focuses on:
• Increasingly giving the JSE exposure globally to ensure increased trading activity
• Identifying other business development or growth opportunities (including new
product listings and additional JSE service offering opportunities)
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Equity Market Growth Initiatives

Equity Market Membership Structure review
•
Strategic review of the equity membership model and its associated impact on
clearing, risk management, regulation, settlement, etc.

Equity Market Structure review
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Equity Market Trading Structure Workshop
o Central Order Book trading and Reported
o Various market/trading models and sessions - liquidity provider/market making
programs and admittance for trading platform
o Transaction billing model
o Global & local regulatory impacts on market e.g. HFT and OTC trading on market
o Lit versus dark trading
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Questions
Equity Market Business Development
[email protected]
+27 11 520 7000
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