The Johannesburg Stock Exchange (JSE) was forced to “pause” market trading on Tuesday between 10.39am and roughly midday on account of problems with international links between it and its London-based trading engine.

Similar problems affected the JSE on a number of occasions last year but the bourse says it is developing a new trading system, which will be located in Johannesburg, which should bring an end to the issues with the international link. The new system, which is slated to go live on 12 July, will also speed up the execution of trades.

David Shapiro, director at Sasfin Securities, says Tuesday’s downtime has affected heavy traders who are exposed to international markets. He says most of trade on the JSE doesn’t come from individuals but from big traders dealing in financial instruments like derivatives.

He says interruptions to trading can create “havoc” for traders, particularly as many SA shares like those of Anglo American, British American Tobacco and SABMiller also “trade in foreign markets”. He says this sort of service interruption can be damaging for those involved in large orders where a few cents can make a big difference.

“It’s always a pretty serious situation when the JSE goes down,” he says.

Shapiro says SA is a “price taker not a price maker” in that it is very closely tied to activity in international markets. He says that during downtime, there is nothing traders can do other than watch international markets. “If you need to cover a position, it’s very difficult, especially when the market is doing so well.”

He says exchanges like the JSE have to upgrade their systems constantly to deal with growing demands.

Despite the glitches, the JSE’s All Share Index reached a new all-time high on Tuesday, adding to morning gains after the bourse’s links were restored. — Craig Wilson, TechCentral