Tue | Oct 17, 2017

JSE trading platform a headache for brokers

Published:Friday | July 7, 2017 | 12:00 AMSteve Jackson
Marlene Street Forrest, managing director of Jamaica Stock Exchange Limited.
The Jamaica Stock Exchange at Harbour Street on the Kingston waterfront.
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A unified trading platform deployed by stock exchanges across Jamaica, Trinidad and Barbados is under fire by brokers in their messaging forums, at least one of whom got frustrated enough to put the concerns in writing to the Jamaica Stock Exchange.

Marlene Street Forrest, managing director of Jamaica Stock Exchange Limited, JSE Group, says the technical difficulties are being addressed.

“The trading platform is not without a few problems,” said Street Forrest. “We are making efforts to resolve this.”

The new platform was launched in February and is managed by the offshore vendor who built it on behalf of the three exchanges. But since the migration to the current system, brokers have experience delayed trading reports, slow interface, and at times a non-functioning circuit breaker.

The latter problem is said to have resulted in the unwinding of several trades.
Typically, the circuit breaker is triggered if a stock price moves more than 30 per cent up or down on the previous day’s closing price. It’s triggered in movements of 15 per cent, the first of which pauses trading for an hour, and the second would end trading for the day.

Brokers have reportedly been putting through trades that would normally have triggered the breaker. The Financial Gleaner was advised that the JSE is actively policing the system for such transactions and cancelling them as they are detected, but the exchange is yet to say how many trades have been reversed over the four to five months in which the new platform has been in operation.

Stocks valued at tens of millions trade daily on the Jamaican exchange, while overall stock market wealth is around $1 trillion.

The letter by the trader detailing the problems that have cropped up was written in June.
Street Forrest, who acknowledged receiving the letter, said it is not uncommon to encounter “teething pains” when migrating between platforms.

The trader who wrote the letter acted alone but his comments were putatively endorsed by other brokers.

“While it was not a letter written or signed by all of us, we are a tight community and the views discussed in the letter pretty much reflect the difficulty we're having with the platform," said a trader who spoke on condition of anonymity. He described the platform as "clumsy and slow".

Street Forrest says the JSE has been working with the South African vendor, Securities Trading Technology, to resolve the issues as they arise, in consultation with the brokerage community.

The Financial Gleaner understands from sources close to the JSE that issues prioritised for resolution include the circuit breaker, and the identification of brokers who execute block trades for clients.

Up to press time, the Financial Gleaner was unable to verify whether brokers in Barbados and Trinidad & Tobago were experiencing similar problems.

It's understood that the Jamaica Securities Dealership Association, whose membership includes the stockbrokerages licensed by the JSE, has discussed the failings of the platform with the JSE.

However, JSDA president Steven Gooden declined to speak on the issue due to his board position on the JSE Group. He referred comments back to the JSE executive management.

Representatives of the stockbrokerages have nine seats on the 16-member JSE Group board.

The new platform underwent trials in its test phase, a key source said, but the timeline and parameters for testing were unknown up to press.

In February, JSE, Barbados Stock Exchange and Trinidad & Tobago Stock Exchange migrated to the new web trading platform, which brought the exchanges closer together, with the option of further integration in the future.

It was a concrete step toward the eventual implementation of the Caribbean Sock Exchange - dubbed CXN - the idea for which has been in gestation since 1989.

The new platform allows for the trading of multiple asset classes from a single interface and also allows the exchanges to more rapidly add new products for trading.

steven.jackson@gleanerjm.com