The impressive growth of South Africa’s A2X stock exchange

Numerous prominent South African businesses and exchange-traded funds (ETF) now offer secondary listings on the A2X stock exchange.

Launched in October 2017, A2X has added 68 listed instruments with a combined market capitalisation of R4.3 trillion.

At the time of publication, the highest daily value traded on the exchange was R417.3 million, while the highest monthly value was R3.86 billion.

Among the major tech companies on the exchange are EOH Holdings, Huge Group, Naspers, and Prosus.

In 2022, the exchange added the following nine listings:

• AngloGold Ashanti
• Fairvest
• Implats
• Motus
• Nedbank
• PBT Group
• SA Corporate Real Estate
• Sygnia Itrix New China Sectors ETF
• Remgro

When combined, these companies have a market capitalisation of around R450 billion.

The company saw double-digit listing additions for each year since its launch, except between 2019 and 2020, when the onset of Covid-19 severely disrupted markets.

The table below shows how many new listing instruments A2x has added each year since launch.

A2x told MyBroadband it was excited about how the business has developed over the past four and a half years.

“Starting an exchange to compete with an incumbent that has been a monopoly for over 130 years was never going to be easy, but through the use of technology, an experienced team, support from many industry players and perseverance, we have managed to overcome the many barriers to entry,” A2X stated.

To list on A2X, businesses must have a primary listing on another exchange — such as the JSE, CTSE or an approved international exchange.

A2X said the secondary listing model has been very successful in Europe and the US, providing first competitor exchanges a fair chance to compete with long-standing single service provider exchanges.

“Competition between exchanges creates a more dynamic and responsive capital markets environment for all users,” A2X stated.

“It also makes the exchange which was the sole service provider before the entry of competition reconsider its approach resulting in increased innovation, a reduction of that market’s fees in an attempt to close the savings gap with the new entrant, and better service provision generally.”

Kevin Brady, A2X CEO

A2X said its primary benefit over exchanges like the JSE was using newer technology that brought down pricing and added liquidity for investors.

“Brokers can extract savings of up to 50% on exchange fees, and lower friction costs drive a better-quality market as measured by narrower spreads and increasing liquidity,” A2X explained.

“These savings flow to the brokers and investors and are estimated to be upward of a R1 billion per year.”

The exchange said it conducts an ongoing internal study which showed that a narrowing of 1 cent per trade on both the bid and offer prices in its 68 securities could lead to a significant annual saving to market participants and the end investor.

“As of the end of May 2022, the savings made available to the industry by A2X were over R700 million,” the company said.

In addition, narrow spreads and deeper liquidity pools can lower the cost of raising capital.

Finally, A2X offers contingency should one market experience an outage.

The table below shows all the companies listed on A2X, alongside their associated listing codes.

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