A2X CEO Kevin Brady said South African investors could save millions by using their exchange rather than the Johannesburg Stock Exchange (JSE).
A2X is a South African capital markets exchange, which was established to bring competition to the local capital markets by secondary listing public shares for trade.
Brady said a secondary listing on A2X offers significant benefits to investors of the listed company and the capital markets industry.
The savings A2X brings to the industry are done in two ways.
- Direct savings, where A2X’s fees on the cost of trade are about 50% lower than the JSE fees.
- Indirect savings, whereby an investor can capture price improvement via transacting against the narrower bid/offer spreads quoted on the A2X platform.
A2X also attracts additional liquidity – the share volume available at the best bid and offer price – which is not available in other markets.
These advantages have helped A2X grow its trade value 40-fold from 2017 – from R657 million in its first year to over R26 billion in its fifth year.
Brady said A2X’s efforts to grow cost savings achieved momentum this year when the Financial Services Conduct Authority (FSCA) and industry players reached a landmark agreement in April.
The agreement enabled brokers to move their trading positions from one exchange to another as they issued a single contract note.
It involved a new trade type, called the Matched Principal, which partly enables investors to capture the additional liquidity and price improvement benefits offered on A2X.
However, for the intended benefits of this solution to be fully realised, further work still needs to be undertaken and divergent interpretations resolved.
Listing momentum grows
A2X grew the number of securities listed by 55% this year. It now has 88 securities available to be traded on the exchange.
The combined market cap of all securities listed on A2X is almost R4.8 trillion and ranks it as the second largest exchange in Africa.
A2X has seventeen Top 40 constituents listed with Remgro, Nedbank, AngloGold, Implats, and Discovery listing in 2022.
Seven property companies are listed, representing over 50% of the property sector as measured by market cap.
Attacq has announced that they, too, will make their shares available for trade on A2X on 16 November, bringing the total to eight.
Five of the top six brokers in South Africa, representing approximately 60% of total activity in South Africa, are members and trading on A2X.
There is also a growing number of exchange-traded funds (ETFs) listed on A2X.
Local ETF issuers, including 1nvest, Absa, and Sygnia, have opted to secondary list 34 of their ETFs on A2X. It represents over 50% of the local ETF markets by market cap.