Cost-cut­ting a con­cern

Finweek English Edition - - MARKETPLACE SIMON SAYS -

The an­nounce­ment from the JSE that it will be re­trench­ing up to 60 staff is sad news. It’s never good when peo­ple lose their jobs. The sec­ond half of its cost-cut­ting strat­egy in­volves a “re­duc­tion in the JSE’s tech­nol­ogy oper­at­ing ex­pen­di­ture by a min­i­mum of R70m over a two-year pe­riod” and this could be of con­cern. I have writ­ten be­fore that the JSE is deal­ing with some ma­jor tech­ni­cal chal­lenges where its bro­ker dealer ac­count (BDA) sys­tem is con­cerned and that it needs up­grad­ing. This is es­pe­cially true as tech­nol­ogy is where the new ex­changes are able to sig­nif­i­cantly com­pete against the in­cum­bent. Less tech­nol­ogy spend may leave the bourse fur­ther be­hind the new tech­no­log­i­cal sys­tems of the new ex­changes. The big­ger pic­ture is that vol­ume on the JSE is well down in 2017 and this hurts its rev­enue. It also makes it harder for the new en­trants to gain crit­i­cal mass. My con­cern is that I do not con­sider our mar­ket large enough for four ex­changes and while the JSE will with­out doubt sur­vive, the days of easy prof­its may be over.

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