Perseus Lays LiquidPath Managed Data, Connectivity at Johannesburg Exchange

Perseus has provided low-latency connectivity between London and JSE’s matching engine in Johannesburg for two years, but decided to offer its LiquidPath managed service—which provides raw datafeeds, market connectivity, hosting and co-location, as well as Perseus’ High-Precision Time atomic clock—in response to client demand.

Before rolling out LiquidPath at the exchange, Perseus carried out due diligence to ensure there would be significant enough levels of takeup. “JSE is the largest stock exchange in Africa and the nineteenth-biggest in the world by volume, so it is a very important marketplace,” says Perseus chief executive Jock Percy.

The service is now available within JSE’s co-location center, and Perseus is carrying market data between JSE’s co-lo and the London Stock Exchange with one-way latency of 79.2 milliseconds. Perseus can typically on-board clients to LiquidPath in a matter of weeks or even days, depending on what hardware they already have deployed.

JSE is currently growing its customer base among foreign investors and high-frequency trading firms, and is rolling out initiatives to appeal to these types of clients. For example, the exchange opened a new co-location center on its premises in May last year to reduce network latency for clients from 2,400 microseconds to about 100 microseconds. “JSE is actively targeting Perseus’ customer base [with these initiatives], so it made sense for us to build our presence there,” Percy says.

One-fifth of shares listed on JSE are dual-listed on another exchange—such as major multinational companies, including British American Tobacco, SABMiller, and BHP Billiton—so LiquidPath will likely be used to support the trading activities of international firms executing arbitrage strategies between the JSE, the LSE, the Australian Stock Exchange and Canadian exchange group TMX, Percy says.

In addition, JSE has a licensing deal in place with Chicago-based exchange operator CME Group, and signed an agreement in February with European exchange group Euronext to list Euronext’s flagship Milling Wheat contract, which lends itself to intermarket trading strategies between JSE and CME, and between JSE and Euronext, he adds.

The JSE rollout is a continuation of Perseus’ strategy—announced last September—to expand LiquidPath to primary market centers worldwide, followed by second-tier and frontier markets based on client demand. So far this year, the vendor has deployed the service at the Tokyo Stock Exchange, Bolsa de Santiago in Chile, and is now at JSE, with a roadmap of 25 other cities scheduled for 2015.

“We have 25 markets left to go, which is a significant undertaking. Some of the new markets are brand new to us, while others we already have connectivity to,” Percy says. “Much of the expansion will be in Asia-Pacific, but the plan is to get to all the tier-one and tier-two financial markets, then we’ll quantitatively decide what’s next.”