JSE potentially loses billions

By Christelle du Toit, ITWeb senior journalist

Johannesburg, 14 Jul 2008

The JSE this afternoon resumed trade at about 3.15pm after having lost almost an entire day's trading - and billions of rands.

Speaking to ITWeb this afternoon. JSE CEO Russell Loubser said the problem that had brought the bourse to a standstill had finally been identified and resolved, and trade has resumed.

Trading hours were to be extended until 7pm, but traders were sceptical about whether the kind of volumes normally seen on the bourse could be made up in a few hours.

While officials had earlier put the problem down to a hardware issue, Loubser said it came down to a network problem, which could be either hardware, software or a combination of the two.

However, he was at pains to point out that it was not the trading system that was down.

"The trading system has not been down in six-and-a-half years and the network has been up for 99.6% of the time over that time period," he said.

Loubser says the JSE was down for a long time before this occasion in 1996, when the system was "on and off" for a period of five days.

"We hope we've solved the issue though, and we won't see something like that again - we think we've resolved it," said Loubser.

Asked why the entire network failed and a backup system did not kick in when the problem was first detected early this morning, he said: "These problems are complex and when something goes wrong, you first have to find out what went wrong and then find out how to fix it."

He said a decision by the JSE late last year to bring its IT function back in-house after two years of outsourcing it to Accenture had no bearing on the problem as the bourse's CIO, Riaan van Bamelen, was well equipped to deal with the issue at hand.

Billions in trade

Barnard Jacobs Mellet head dealer Hobs Mojalefi says the JSE trades between R8 billion and R12 billion a day. Minutes before the bourse was to go live again, he said there was no way it would make up this kind of volume, even in extended hours.

This amount excludes the salaries of traders, which Mojalefi cannot disclose, as it is commercially sensitive information.

He says the day has been frustrating as "European markets have been very active. This certainly is a bad advert for the JSE."

South African brokers have to go via the JSE to deal on foreign bourses.

Afrifocus Securities portfolio manager Ferdi Heyneke says while it is too early to tell, the financial losses incurred due to the downtime could be significant.

He, too, says the extended trading hours will not be enough to compensate for lost trading, particularly since not all traders will stay at work until 7pm.

"The guys are not happy," he says, "and reputationally it doesn't go down well internationally."

Loubser said the JSE was sorry for any inconvenience caused and would apologise to stakeholders in the appropriate fashion.