Cost-cutting a concern
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.