Wed | Jul 15, 2020

JSE glitch values Proven higher than Ja’s economy

Published:Friday | December 13, 2019 | 12:00 AMSteven Jackson - Senior Business Reporter
Street Forrest
Street Forrest

Investors in Proven Investments Limited on Wednesday morning witnessed an apparent hundredfold rise in the share price, which would have rocketed the company’s market capitalisation to US$25 billion, or nearly twice the GDP output of Jamaica, based on a single trade that was misread by the system.

That and other glitches have been ongoing since last week when the Jamaica Stock Exchange, JSE, began migrating to the Nasdaq system.

On Wednesday morning, the JSE ticker registered a trade of just over 1,270 units of Proven stock. It moved the price from US$0.30 to US$40 per share which could have moved the value of the over 625 million units from a market capitalisation of US$187 million to over US$25 billion.

Comparatively, Jamaica’s GDP stands at some US$14 billion. The combined value of ordinary stocks trading on the JSE is also about $2 trillion, or around US$15 billion.

As valuable as Proven became in the moment, the JSE website also reflects zero value and no shares in issue for a multiplicity of stocks listed on the exchange – a situation that was unresolved up to Wednesday night. Cross-listed MPC Caribbean, for example, was valued at US$11.4 million on the USD side of the market, but at zero on the JMD side. Proven, which is also cross-listed, was valued at zero on both sides.

Still, institutional traders who spoke to the Financial Gleaner about the transition to the Nasdaq platform say the back-end of the system performs just fine, with no disruptions to trading.

The JSE instituted its new platform on December 2. At least one market report at the end of that week showed no trades occurring on the day. JSE Group Managing Director Marlene Street Forrest indicated that those issues are now sorted out.

As for the Proven glitch, the false value resulted from an error in the dollar denomination of the trade, Street Forrest said. In this instance, the trade should have registered as Jamaican dollars and not US dollars.

“The variance seems to be reading the US dollar information for the computation,” she said.

JSE is swapping out a platform sourced from a South African vendor in 2016. That system, at implementation, saw traders complaining of difficulties executing stock trades.

Traders intimate with the new Nasdaq platform are generally pleased with the transition.

“It has a fairly flawless roll-out. Nothing on our end,” said one trader at a Hope Road-based firm, who requested their name be withheld as they were not cleared to comment by their company.

“Just few issues, but it is just teething pains,” added an adviser at a large firm based in New Kingston, after consulting with a trader.

There are also more options for retail investors using the JSE online Jtraderpro website, who can now buy and sell bonds and US-denominated local stocks. Before, such activities would require order requests to brokers by email or phone conversations.

Street Forrest says the JSE will eventually roll out stock shorting under the new platform. It means that investors will have more opportunities to profit from stock trades: whether the stock price increases, by holding long positions; or when it is in decline, by shorting.

“We can confirm at this time that the platform has the capabilities for trading short,” Street Forrest said.

She added that the JSE would still enforce the circuit breaker, which polices the daily limit at which the price of a stock price is allowed to move.