A2X chief executive officer Kevin Brady. Photo: Supplied
A2X chief executive officer Kevin Brady. Photo: Supplied

A2X Markets confident it will enter 2021 with a good pipeline of listings

By Dineo Faku Time of article published Nov 24, 2020

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JOHANNESBURG - South Africa’s alternative exchanges are betting on improved market sentiment next year as the market adapts to the “new normal”.

A2X Markets, the independent securities exchange that offers an alternative trading venue for equities, was confident it would enter 2021 with a good pipeline of listings.

Chief executive Kevin Brady said that despite 2020 being a challenging year due to the Covid-19 pandemic, A2X, as a fintech business, had operated remotely throughout the lockdown.

“While our rate of growth slowed as the industry dealt with the crisis, it has picked up again over the past four months, and we expect the rate of adoption from corporate South Africa to accelerate as we go into the new year and activity levels on our platform to continue to grow,” Brady said.

A2X was launched in 2017 with a business model focused on cutting transaction fees for investors and brokers.

The exchange has provided secondary listings for well-known companies including Naspers, Exxaro Resources, City Lodge, Standard Bank, Ascendis Health, Mr Price Group and Santam.

Yesterday, it reported that Famous Brands, which has a market capitalisation of R4.4 billion, would be added to its list of secondary listed companies.

The listing of Famous Brands next week will bring the number of securities available to trade on A2X to 38, with a combined market capitalisation of more than R2.2 trillion.

Brady said 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.

“Now brokers can look across markets to secure the best available deal and save money. We see transformation happening here just as it did when competition was introduced in other markets around the world,” said Brady.

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, Brady said.

The analysis found that R125 million in savings was made available through offer spreads on A2X when the August data was extrapolated over 12 months, and this was just for the nine Top 40 stocks that have a secondary listing on A2X, said Brady.

A further R72m in savings was available on account of lower exchange fees for A2X-listed companies.

“Had all JSE-listed stocks been secondary-listed, the available savings pool would jump to over R1bn per year,” said Brady.

In 2017, A2X joined other new stock exchanges in the form of 4AX and ZAR X, Equity Express Securities Exchange (EESE) that were challenging the entrenched dominance of the 130-year-old JSE.

EESE’s head of risk and compliance, Flynn Robson, said yesterday (MON) that EESE had four black empowerment schemes – Phuthuma Nathi, Ukhamba1, Ukhamba2 and Welkom Yizani – with a market cap of R8.7bn.

EESE could list unrestricted shares and was pursuing a number of unrestricted listings, Robson said.

He said the Covid-19 pandemic had made investors were fearful.

“It’s watch and see what happens at the moment. We hope for investor confidence to return. We have seen an increase in trading volumes as people return to work and come to terms with the new way of working within the confines of Covid-19. The availability of vaccines may be a game-changer in the future,” Robson said.

BUSINESS REPORT

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