Three years after launching with just three listings and four brokers, South African stock exchange A2X Markets now has 37 securities listed, five of the country’s top six brokers trading on the exchange and a combined market cap of over R2.1-trillion, it acclaimed in an October 27 media release.
A2X offers an additional platform for companies or issuers of exchange-traded products (ETPs) to secondary list their shares or units for trade.
“In the three years since our launch on October 6, 2017, we have recorded about 80 000 trades with a combined value of some R5.7-billion, as at October 6, 2020. We are thrilled at the development of the business which has grown from the challenger to a 130-year monopoly to being named the fastest growing South African stock exchange by the 2020 Global Banking & Finance Awards,” noted A2X CEO Kevin Brady.
“After three years, the savings achieved through the narrower spreads and lower fees on A2X are clear. Our vision for A2X as a fast, fair, efficient exchange has now become reality just as it did when competition was introduced in other markets,” he added.
Before competition was introduced in South Africa, brokers only had one venue on which to trade, which meant they could not ‘shop around’ for a better price when transacting in shares, the company noted.
In August, A2X undertook an in-depth study on savings available to the market, which involved capturing 564 000 data points for each A2X-listed security. The analysis found that R125-million in savings was made available through narrower bid/offer spreads on A2X when August data was extrapolated over 12 months, for the nine Top40 stocks that have a secondary listing on A2X.
Had all JSE-listed stocks been secondary-listed, the available savings pool would jump to over R1-billion yearly, posited A2X.
Further, it said that a further R72-million in savings was available on account of lower exchange fees for A2X-listed companies.
“The numbers are hard to ignore. If you are listed and want to save your shareholders money, you should be listed on A2X. If you are an asset manager or broker looking to increase returns, A2X provides an opportunity to cut costs,” enthused Brady.
In the past year, A2X was granted approval for the secondary listing of ETPs, which was followed by a further licence extension to include inward listings early this year.
As a result, foreign companies with a primary listing in an approved jurisdiction can now inward list on A2X.
Absa also became the first major South African bank to invest in A2X.
Some of the challenges brought about by legacy broker infrastructure, which was designed for a single exchange, have now been addressed.
“In a joint venture with local tech firm MCI, we launched an A2X-hosted post trade solution that allows brokers to allocate and settle trades across markets with minimum impact to existing systems and processes.
"We’ve also partnered with Iress to create a starter package deal for midtier brokers that currently use Iress products. The package combines all the components required, including a smart order router, to enable a broker to cost-effectively and easily transact across markets and achieve best execution for their clients,” informed Brady.