The pace of trading has changed and technology decides who keeps up

South Africa’s equity market has long supported a high standard of trading activity, with infrastructure that global participants recognise and trust. That has made it easier for different types of capital to enter over time, and the mix of participants now reflects that. 

Global tier-one banks are deploying capital into the country with greater consistency, alongside sophisticated asset managers and high-frequency trading firms whose models rely on ultra-low latency and highly optimised execution. Their participation comes with established operating models, where trading systems, data, and execution are closely integrated and calibrated to very tight performance thresholds.

What the market is seeing today is that orders are increasingly handled closer to the point of decision, with clients getting access directly through algorithms, vendor tools, or execution capabilities provided by the bank, because they want the ability to control how their trades are executed. It is not that different to what happened in banking more broadly, where there was a time when customers had to go into a branch and speak to someone at a desk for everything from home loans to vehicle finance, and that now sits in an app. The trading environment has been moving in a similar direction, at least over two decades.

Clients are also showing interest in different types of trade activity, with some requiring low-latency access and placing value on execution speed at a very granular level, while others focus on managing large orders over time using algorithms to interact with liquidity as it develops through the trading day. And this activity often extends beyond a single market, with clients seeking access across multiple jurisdictions through a single point of entry, typically facilitated through global counterparties that allow local platforms to connect into a broader set of markets without direct presence, which means all of these different ways of interaction sit within the same trading environment and need to be supported at the same time.

What keeps those working in this space up at night is how complex the environment has become, and the premium this places on technology.

Not every firm locally has the capability to build and maintain the kind of trading technology these participants expect, and while third-party providers from outside the country can step in to fill some of that gap, they tend to operate at a distance from the local nuances that influence how trading actually plays out. That matters more than it might seem at first, because execution is not only about speed or access, it is also about how well systems respond to local liquidity patterns and regulatory conditions. At Absa CIB, we are investing to bridge this gap, combining globally competitive trading technology with a deep understanding of how the local market behaves.

Those that are able to combine that local understanding with the level of speed and execution capability expected by international participants are the ones more likely to succeed over time. 

There isn’t one silver bullet here when it comes to technology. Institutional clients come through more established setups, where FIX hubs and integration into their own systems are expected and well understood. Move into the latency-sensitive end of the market and it becomes far more nuanced, with only a handful of brokers locally able to support that type of activity in a consistent way. And it is not only about speed or connectivity. Technology is part of how risk is managed, how reporting is delivered, and how all of that holds together when volumes pick up.

So, it becomes a more holistic question, across how banks and brokers support clients through the different systems and integrations they rely on, especially as the pace of change continues to pick up.

 The bar is being set by the type of participants now coming into the market, and that bar does not stand still. Keeping up with that is not a once-off investment or a single build, it requires constant innovation, and those who do not keep pace will find it increasingly difficult to stay relevant.

Merlin Rajah is the Head of Equities Electronic Product at Absa CIB