JSE Limited, the company that operates the Johannesburg Stock Exchange (Africa's largest one), is building its own colocation data center at the site of the exchange in Sandton, a Johannesburg suburb.

The plan is to build out a data hall for about 35 server racks and to sell space in those racks that will be in close proximity to the exchange servers. This, according to JSE, will provide traders much lower latencies when playing in the light-speed high-frequency trading market.

JSE is following a trend set by some of the world's leading stock exchanges, who provide colocation services at premium prices because of the physical proximity to exchange servers. These players include IntercontinentalExchange-owned operator of the New York Stock Exchange NYSE Euronext, Nasdaq OMX and London Stock Exchange (LSE), among others.

Leanne Parsons, director of JSE's equity market, said the difference in latency between what LSE's data center will offer and what some of the exchanges most technologically advanced members can achieve on their own will be huge. “Colocation will offer 24 times faster access into the equity market with a latency of 100 microseconds, compared to 2,400 microseconds, which is the current fastest latency of JSE members located in Sandton,” she said.

Sandton took over Johannesburg's role as South Africa's business and financial center in the '90s, when many companies moved their offices there from Johannesburg's business district.

JSE members and clients, as well as other local and foreign technology companies, are whom the exchange operator is counting on to fill its colocation space. The company expects UK companies to take a big chunk of the space.

JSE is planning to use a third-party firm to monitor latency on its customers' networks. Customers will have access to a centralized portal for latency updates, the company said.

The operator is attributing a major part of its reported latency gain to the Millennium Exchange IT platform it replaced its trading infrastructure with in 2012.

Millennium Exchange is an integrated IT infrastructure package for electronic trading, made of InfiniBand-interconnected servers. MillenniumIT, the LSE subsidiary behind the product, describes it as a trading platform that “can be configured to trade virtually any product in any type of market.”

LSE bought MillenniumIT (founded in Sri Lanka) for £18m in 2009 and switched its own infrastructure to the company's technology from its previous platform TradElect soon thereafter, becoming both a user and a vendor of the product.