South Africa’s equity market is undergoing a structural shift as global banks, high-frequency trading firms, and sophisticated asset managers raise the performance bar for execution technology, creating a growing challenge for local brokers that cannot match international standards.
Writing in a bylined piece, Merlin Rajah, Head of Equities Electronic Product at Absa Corporate and Investment Banking (CIB), says the market now serves a broad and demanding mix of participants simultaneously. Global tier-one banks are deploying capital with greater consistency, while high-frequency traders require ultra-low latency infrastructure calibrated to margins measured in microseconds.
The shift mirrors what happened in retail banking, where branch-dependent services gave way to digital self-service. Trading has followed the same trajectory. Clients now want direct control over execution through algorithms, vendor tools, or bank-provided platforms, rather than routing orders through intermediaries manually.
Latency-sensitive clients represent the most demanding segment. Only a small number of local brokers can service that activity reliably, and the gap between those firms and the rest is widening. Institutional clients arrive with established setups, expecting Financial Information eXchange (FIX) protocol connectivity and tight integration into their own systems as a baseline requirement.
Cross-border complexity adds further pressure. Clients routinely seek access across multiple markets through a single connection point, typically through global counterparties that link local platforms into wider networks. That means brokers must support multiple client types, execution styles, and jurisdictional requirements within the same infrastructure.
Rajah cautions that third-party technology vendors from outside South Africa can partially fill the gap but often lack the granular understanding of local liquidity patterns and regulatory conditions that shapes real-world execution quality.
Technology, he argues, is no longer just an execution tool. It underpins risk management, regulatory reporting, and operational resilience during high-volume periods.
“The bar does not stand still,” Rajah notes, warning that firms that fail to sustain continuous innovation will lose relevance progressively.
Absa CIB says it is investing to close the capability gap by combining globally competitive trading systems with local market knowledge, positioning itself to serve both institutional and latency-driven clients as participation in South Africa’s equity market continues to deepen.
