South Africa’s full service securities exchange, the JSE Ltd (www.jse.co.za), on 17 May recorded 205,748 trades valued at more than R20 billion (US$2.6 billion). This coincided with the JSE’s equity futures “close out” when trades in derivatives called futures contracts had to be settled.
It is the first time in its 123-year history that more than 200,000 trades have been done in a day. On 7 May 2010 the previous record number of trades was 189,253.
According to a press release, Leanne Parsons, Head of Equities Trading at the JSE, explained: “This increased activity occurred on yesterday’s futures close-out as traders closed out their derivatives positions and purchased the underlying shares.”
Close-outs happen 4 times a year in March, June, September and December and usually bring a spike in trading activity.
A general rise in average daily trade numbers in 2010 also contributed to the record. According to the latest JSE monthly trading statistics published for May 2010, the number of equity trades is up by 24% year-on-year, from a total of 8.2 million trades in the first 5 months of 2009 to 10.1 million in the same period of 2010. There has been an average of 99,128 trades each day in the first 5 months of 2010, compared to average daily trade numbers of 46,216 (in 2007), 69,295 (2008) and 84,018 (in 2009).
On the JSE’s equity derivatives market, volumes of futures contracts traded rose nearly 7% during the first five months of 2010 on the previous period (2010: 51.3 million; 2009: 48.1 million). The number of futures contracts traded in May alone was 6.8 million. Allan Thomson, Head of Derivatives Trading, said in a press release: “This year-on-year growth is pleasing.” Trade in index futures increased 101% year-on-year off a low base.
The number of commodity futures contracts traded on the JSE’s commodity derivatives market increased by more than 8% in the first five months of 2010, compared with the same period in 2009 (2010: 662,000; 2009: 610,000). In the same period, volumes traded in commodity options have grown 27% year-on-year.
In the JSE’s interest rate market, cash bond volumes remain stable with volumes reported to the exchange in the month of May slightly below R1.4 trillion compared to R1.1 trillion in April. Year-to-date volumes also remain in the same range as 2009 with the 2010 reported trade number at R5.85 trillion compared to R5.83 trillion in 2009.
“Given the stable interest rate outlook and the continued issuance by National Treasury and state-owned enterprises there is no reason to anticipate any major market volatility with regard to price or volume movements. June and July will present some volume pressure due to the soccer world cup; however volumes should return to normal after the event,” commented Graham Smale, Director: Interest Rate Products.
Positive growth continues in the market for listed interest rate derivatives. Contracts traded during the 3 months ended May grew nearly 45% year-on-year, off a low base. “We will continue to focus on building a successful exchange-traded interest rate derivatives market,” added Smale.
The JSE connects buyers and sellers in 4 different financial markets: equities, equity derivatives, commodities derivatives and interest rate instruments. The JSE Ltd says it offers the investor a first-world trading environment, with world-class technology, surveillance and settlement in an emerging market context. It is amongst the world’s top 20 largest equities exchanges in terms of market capitalisation.
The JSE’s equity market has been particularly volatile recently in line with turbulent global markets. This volatility is represented in numeric form by the JSE’s South African Volatility Index (SAVI) which rose from a low of 18% in April to a high of 33% in May before subsiding to 26% by close of trade yesterday.
The JSE’s introduced a new billing model on 1 March 2010, which aims to incentivise increased trade and to recognise retail and algorithmic investors, both important target markets for the JSE.
Trading statistics for the 17/06/10
Value R20,839, 256K
Number of trades 205,748
Trading statistics for previous record number of trades 7/05/2010
Number of trades 189,253