BUSINESS MAVERICK: How are SA’s new stock exchanges doing?

X marks the spot with the local incumbent stock exchanges. ZARX, A2X and 4AX, and the one “non-x” EESE, are all reporting taking great strides underpinned by advances in technology over the past few years and calls for less risky and cheaper ways to access capital markets.Of the four new competitors, ZARX, A2X and 4AX, and BEE-focused Equity Express Securities Exchange , three have adopted a stand-alone exchange model and target a previously untapped issuer market.

Brady says 2019 has already proved to be a stellar year for the exchange, after ending off 2018 with a bang by bringing AVI, Standard Bank and Naspers’ secondary listings to market.It created a great base for our product,” he says, “and our turnover was five times that in March 2019 compared with December 2018.”

Back home A2X only holds 1% of the market, but Brady says it is still early days, and as it develops the market, it is targeting a stronghold of closer to 20% in the next three to five years.It is not just about eating the JSE’s lunch,” he adds. “We are looking at growing the overall market.” A2X cutting-edge technology platform allows it to dramatically reduce the cost of trading and with improved prices come greater liquidity and narrower spreads.

Fellow exchange ZARX has embraced a much wider scope from its induction three years ago this past March. It currently hosts the primary security listings for Senwes and TWK Investments, and CEO and co-founder Etienne Nel says they have interesting companies in the pipeline looking to come to market in the food, property and renewable energy space. The company is also in talks with the banks in bringing asset-backed securities into play.

Nel also alludes to the online onboarding project they are working on now. He says it will be an electronic portal for issuers – a “listings in a box” feature, which will make it easier for issuers to come to market. “We don’t want to impose any additional requirements other than what the Companies Act prescribes,” he says. “We want to improve the user experience and ease the burden of listing and raising capital. The company will make an announcement in this regard in the next month or so.

Like the other alternative exchanges, the end goal for 4AX is to run a stock exchange that will become a vehicle for diversity and real economic inclusion – and ultimately drive transformative growth and development of South Africa, and Africa as their business grows and offerings grow, she says.

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