TALKING
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Historically , Africa has been perceived as a continent brimming with untapped potential . Yet in recent years , significant strides in technology , infrastructure , and regulatory frameworks have propelled it into the spotlight of international financial markets . Today , Africa stands at the intersection of opportunity and innovation , leveraging its vast resources , growing consumer base , and strategic geographical position to forge new pathways in global financial trading .
Countries on the continent have been working in the background , building sophisticated electronic trading capabilities – powered by historical and real-time data – to strengthen the bridge between Africa and other global markets , offer more bespoke trading solutions to clients , and meet evolving requirements . The Johannesburg Stock Exchange is one of the world ’ s 20 largest stock exchanges today and the region ’ s trading infrastructure is on par with its more developed counterparts .
At the forefront of electronic trading in Africa is South Africa , where brokers are harnessing the power of machine learning to gain deeper insights , optimise trading strategies , and enhance key decision-making processes – such as risk management , text analysis , and microstructure analysis .
While South Africa has successfully positioned itself to rival developed markets , access to and between other African markets has previously proven challenging for global buy-side institutions . What is more , like several other jurisdictions , many African markets have witnessed a decline in liquidity over the past year as investment flows shift towards the United States , Asia , and the Middle East .
Yet liquidity moves in cycles , and international investors are prepared to seek out long-term investment trends and opportunities across a variety of different markets . We are witnessing a growing trend where investors require electronic access to markets across the continent .
The digital wave is placing the South African ecosystem as the ideal venue to function as a hub of connectivity throughout Africa , enhancing transparency and presenting a wealth of opportunities for savvy brokers and investors .
Digital applications boosting trading
Data can be likened to the lifeblood of trading strategies – fuelling decision-making , helping to give
deeper insights into market trends , and mitigating risk more effectively . One of the most powerful tools at the disposal of traders in the South African market is the use of algorithms . This technology enables investors to make informed , yet automated decisions and executions based on a wealth of historical and realtime data .
Armed with advanced analytical tools , traders can have 360-degree visibility over how a stock is performing during certain periods : data which can then be collected to help clients make more strategic investments , input into research , or form the basis of a trading strategy .
Trade automation and enrichment are also sweeping through South Africa , driving the region forward to the next stage of electronic trading and bringing the market to a level playing field with other , more developed nations . South African brokers are harnessing the power of machine learning to automate crucial steps within the trade lifecycle and smooth out key processes into streamlined digital workflows .
Fast access to quality , accurate data is also crucial in managing risk . As firms become more sophisticated in their trading practices , regulation often follows suit , and rules around pre-trade checks and risk monitoring are expected to become tighter in South Africa to align with global norms .
For brokers , this means that internal or client automated trading strategies must be completely separate and independent from the risk management layer to ensure appropriate risk controls , with full knowledge that it will introduce a few nanoseconds of additional latency in the order entry and execution report paths .
Merlin Rajah , Head of Equities Electronic Product , Absa Corporate and Investment Banking
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