The evolving use of technology in the South African capital markets
Date
2014-01-21
Authors
Comninos, Alexis
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Abstract
Since the move from floor to electronic trading, technology has played an
increasingly important role in the capital markets. Current economic and capital
markets developments are driving changes in technology use with several
implications for the industry. A series of semi-structured interviews was
conducted with participants in the South African capital markets to explore the
evolution of technology in the South African capital markets. Key findings are
as follows: 1) There is a shifting focus in technology use from cost reduction to
competitive advantage 2) Regulatory reforms resulting from the 2008/09
financial crisis are driving increasing use of technology 3) Algorithmic trading
and Direct Market Access (DMA) are increasing, but care orders are still a
significant part of most brokers’ business 4) High Frequency Trading (HFT) is a
niche market and the JSE is pursuing initiatives to grow HFT in the South Africa
markets 5) Participants’ views on the impacts of HFT on market quality are
mixed 6) Risks of a technology related failure such as the US flash crash are
somewhat less in the SA market, but need to be mitigated 7) The increasing
use of analytics and big data technologies is potentially one of the next major
trends in the capital markets
Description
MBA thesis
Keywords
Johannesburg Securities Exchange, Electronic trading, Information technology