A2X Markets set to increase threat
• Permission sought to list exchange-traded products
A2X Markets looks set to become an even bigger threat to the JSE, as it trains its sights on the bourse’s R83bn exchange-traded products market.
A2X Markets looks set to become an even bigger threat to the JSE as it trains its sights on the bourse’s R83bn exchangetraded products (ETP) market.
The challenger exchange — which in April listed one of the country’s largest companies, Sanlam — has applied to Financial Services Conduct Authority to amend its licence to enable it to offer secondary listings to exchange-traded funds (ETF) and exchange-traded notes (ETN).
This process was in the public comment phase and A2X hoped to offer a secondary listings platform to ETPs in the coming months, CEO Kevin Brady said on Tuesday.
This comes after Sanlam got a secondary listing on A2X in April, delivering a fivefold increase to the start-up exchange’s market value. It now has a market capitalisation in excess of R200bn. This is still a fraction of the JSE’s R11.8-trillion valuation, but many times the size of newer rivals.
A2X Markets is one of four exchanges to launch in SA in the past 18 months, ending the JSE’s decades-long reign as SA’s only stock exchange.
Altogether of 93 ETPs were listed on the JSE, offered by 11 providers, said Nerina Visser, director at etfSA.co.za. Of these, 73 were ETFs and 20 were ETNs. Absa’s commodity ETFs were the largest, she said.
Absa had spoken to new exchanges about listing its ETFs and structured notes, said head of ETF distribution at Barclays Africa Leonard Jordaan.
“We’re open to it, if it makes sense from a cost perspective, but the extent to which brokers are actually trading on these exchanges is limited,” he said.
Although ETPs helped exchanges from a liquidity perspective, they required a base level of liquidity to be efficient, Jordaan said.
On Tuesday, A2X Markets announced the secondary listing of its first healthcare company, Ascendis Health.
Ascendis Health CEO Thomas Thomsen said the secondary listing was “an opportunity to attract potential new investors through the lowercost trading structure and broaden our shareholder base”.
There was no cost to the secondary listing or any additional regulatory compliance, Thomsen said.
It was 40%-60% cheaper to transact on A2X relative to the JSE, said Brady.
Unlike its newer rivals, A2X’s primary strategy is to provide a secondary listings platform to the JSE’s largest companies. This helps it keep costs contained as it need implement only lighttouch regulation.
Currently, it can list only equities and no debt or derivatives. A2X was considering a move into the primary listings market in the next 18 to 24 months, Brady said.