A2X Markets (A2X), South Africa’s newest stock exchange, made its debut on Friday with three listings and four of the industry’s leading brokers on board.
The exchange is the third new bourse to go live this in 2017, following the launch of 4 Africa Exchange (4AX) in September, and ZAR X in February.
A2X said it competes directly with the Johannesburg Stock Exchange (JSE) and provides an alternative platform for companies to secondary list and trade their shares.
Financial services companies, African Rainbow Capital Investments (AIL), Peregrine Holdings (PGR) and Coronation Fund Managers (CML) are the first counters to take advantage of a secondary listing on A2X.
Stockbrokers RMB Morgan Stanley, Peregrine Securities, Investec Securities and Avior Capital Markets have been approved, while Nedbank Securities, SBG Securities and Sinayo Securities have applied and look set to follow shortly, the new exchange said.
A2X said it has appointed Strate as its central securities depository and will operate within the proven and reliable South African settlement structure.
RMB Stockbroking Operations and Computershare Outsourcing have also been approved as settlement agents, to perform a critical part of the post trade process where brokers elect to outsource their settlement services.
A2X CEO, Kevin Brady, said that the issuer pipeline is strong with significant corporate interest in a secondary listing on A2X. “In addition, we are working closely with many of the remaining top ten stockbroking firms to have them signed up before the end of the year.
“By using the latest technology and free of the legacy business practices that hamper efficiency, we have been able to materially reduce the cost of transacting and this benefits all participants including the end investor and pensioner,” he said.
Peregrine Holdings acting CEO, Rob Katz, said that the company expects its A2X listing to enable better price discovery and to broaden the base of shareholders, given that trading costs on A2X are significantly lower.
“Peregrine Securities is a key player in SA capital markets and therefore if we are supporting the initiative from a trading perspective, it made sense to support A2X from a listing perspective too.”
Brady said that A2X’s business model is dependent on throughput – the more trades processed via the exchange, the greater the revenues for A2X. “A2X’s model aligns with the objective of growing the overall market in South Africa – lowering costs, improving liquidity and being both innovative and responsive to market needs,” he said.
A2X uses technology developed by the UK’s Aquis Technologies, a division of Aquis Exchange, which includes proven exchange matching and surveillance systems and a clearing platform custom-built for A2X.
Aquis Exchange is authorised and regulated by the UK Financial Conduct Authority (FCA).
A2X said its exchange and surveillance systems are fast and efficient ensuring that any anomalies are detected early. They also allow for cross market surveillance which will be a first in South Africa.