The Johannesburg Stock Exchange to facilitate anonymous block trading

The Johannesburg Stock Exchange to facilitate anonymous block trading

The Johannesburg Stock Exchange (JSE) is close to launching on-exchange anonymous trading functionality. Called Block X, it will allow for complete anonymity in the execution of large trades through hidden order functionality in the central order book.

Dark Pools are valuable to traders who want to transact large numbers of shares without revealing all the information to the market, whilst using many of the efficiencies associated with trading on exchanges’ public Central Order Books. In an era in which the average transaction size is declining on the JSE and worldwide, Block X will reduce the market impact costs of trading large orders.

Leanne Parsons, Head of Equity Market at the JSE, says that the development of Block-X is the JSE’s response to market demand when trading in large volumes. The JSE is hopeful that Block X will prompt increased transactions in the local market, building on recent growth in trade figures which may have been buoyed by a revised equities billing system.

The billing system, implemented to recognise both low value and high volume traders, has been effective since 1 March 2010. In March 2010, the number of cash equity trades climbed 8% on the previous period. Also during last month, the exchange recorded the highest number of trades ever traded in the exchange’s 123 year history. 172, 433 trades valued at more than ZAR26.1 billion were executed on the exchange.

Developing an anonymous block trading facility is only one of the JSE’s initiatives to attract trade and increase liquidity.