The JSE, Africa’s largest stock exchange and one of the continent’s oldest, was left red-faced when it was forced to delay the start of equities trading by hours on Wednesday after it was unable to complete the processing of large trade volumes from the previous day.
The unusually large volumes stemmed from a share swap involving Naspers and Prosus that was first announced in May, ironically to help reduce the internet investor’s oversize impact on the local market. The local bourse suffered a systems glitch but eventually resumed equity trading around 1.30pm, more than four hours late.
“Due to a corporate action we experienced around seven days worth of trading in a single session ... more than double what we experienced in any day during the height of the pandemic,” JSE CEO Leila Fourie told Business Day.
“While we anticipated and planned for high volumes, we unfortunately experienced a systems glitch in our equities clearings system, which caused a knock-on delay,” she said.
Reputation
In an earlier statement, the JSE said it struggled to process trading volumes that reached a record R145bn after a “large corporate action”.
Naspers and Prosus completed a share swap on Monday, part of a broader plan by CEO Bob van Dijk to reduce the effect of the firms’ stakes in China’s Tencent.
The completion of the transaction moved ownership of the bulk of their international assets to Amsterdam, where Prosus is listed, significantly altering their individual index weightings on the JSE. The deal reduced the number of Naspers shares available for local trade, while increasing those of Prosus.
Greg Davies, head of wealth at Cratos Capital, said the delay in equities trading would have hurt the JSE’s reputation. “The JSE needs to spend money to improve systems,” he said.
While some analysts also questioned the integrity of the JSE’s accounting and settlement systems, Wayne McCurrie, a portfolio manager at FNB Wealth and Investments, said it was the economic consequences of the trading halt that mattered. “The majority of the shares listed on the JSE are only listed locally, so if the exchange is closed you can’t trade,” said McCurrie.
With Lindiwe Tsobo
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