The Johannesburg Stock Exchange (JSE) has embarked on a R190 million programme to modernise its IT systems. The project, codenamed Project Orion, is managed by IT consulting firm Accenture.

Industry players believe this is the most significant IT investment made by the exchange since the closure of its trading floor in 1996 and the subsequent change-over to the London Stock Exchange's Stock Exchange Trading System (SETS) four years ago.

JSE president Russell Loubser says the upgrade will focus mainly on the back-office systems and will not affect SETS. However, it will entail the replacement of the Automated Trading System (ATS) that is used on the exchange's futures and derivatives markets. Johannesburg-based Securities and Trading Technologies originally developed ATS nine years ago. Loubser was speaking at the JSE chairman's report-back session in Cape Town last week.

"World-class trading can only be done with a great IT system. Project Orion will transform all the JSE's IT over a 27-month period. There is no scope to fail," Loubser says.

Explaining the rationale for the IT transformation, Loubser says the new system would "give the JSE a ticket to play". He adds that the exchange is totally dependent on its IT infrastructure but has reached the point where patches can no longer keep up with the demands being made on the system.

Project Orion will be implemented in three phases. The first, which will focus mainly on the JSE's own internal systems, will be ready by the end of July. The second, which will replace the back-office systems used by the stock brokers, is due to be implemented in the last quarter of this year. The final phase, which will focus on the ATS, is scheduled for the first quarter of 2006.

The upgrade will not affect Strate (Shares Transactions Totally Electronic), which manages the share settlement system and is a joint venture between the JSE and the four largest commercial banks, Absa, First National Bank, Standard Bank and Nedcor.

"Since Strate was implemented almost five years ago, we have had zero mismatched trades and that has improved our standing in the global marketplace tremendously," Loubser says.

The JSE originally invested R93 million in the establishment of Strate and initially owned 51% of the operation, which has since been reduced to about 46%.

Modernising the JSE's IT infrastructure will be a key requirement should the exchange decide to demutualise and find external shareholders. Loubser says the JSE is in talks with the National Treasury over the payment of tax (from which the JSE is currently exempt), after which it will decide how to proceed with its demutualisation plans.