A2X expects to break even by 2023, says CFO Otsile Matheba

A2X Markets has seen two record trading months and growing interest in secondary listings in South Africa.

As A2X Markets celebrates its fourth birthday, CFO Otsile Matheba expects the exchange to break even by 2023 as trading in the secondary listings it offers takes off.

“As part of our annual strategy process, A2X models the outlook for the future and, based on our current position, along with visibility of future broker enablement and future issuer listings, we expect to break even sometime during the course of 2023,” Otsile says.

He adds that, encouragingly, brokers are increasingly seeing the benefits of transacting across markets to not only achieve best execution for their clients, but also the savings made available by transacting on a lower cost platform. A2X exchange fees are 50 percent below those of standard rates.

“A key focus of A2X has been to roll out its post-trade system, MeCRAS, as this enables brokers to seamlessly trade and settle across exchanges in a cost-effective manner,” Otsile says, adding that this has historically proved a major challenge given the brokers’ reliance on the JSE-mandated post trade system, BDA.

“It is important we continue to focus on educating issuers on the benefits of a secondary listing and how multiple exchange markets function,” he says. “Fortunately, our growing list of large and well-known companies is making this process easier.”

Otsile explains that getting these two factors right has resulted in a sharp increase in trading activity on A2X. “August was a record trading month for A2X and in September we saw five times the trade that took place in August. The momentum is definitely building and the need and urgency to access the additional liquidity that A2X brings to the market is growing.”

The value of stocks and funds on the exchange platform has more than doubled to R5 trillion in the past 12 months, with Tiger Brands and EOH among the latest to complete their secondary listings on A2X.

“This hasn’t happened overnight, and the achievement is really the culmination of four years of hard work,” Otsile says. “International experience has proven our model and the resultant benefits to both the market and the end investor. We are seeing those same benefits materialise in South Africa and all our hard work bearing fruit!”

Otsile says that it is “hugely exciting” to see the current growth that the company is experiencing. “We have built a solid team that is responsive, has experience, is innovative and is focused on delivering what’s best for the different stakeholders in the market.”

Asked if A2X has set its sights on becoming a primary listing platform, Otsile says it remains focused on ensuring that the areas it chose to compete in when A2X started remain its main goal for the moment. “That is to be a credible secondary exchange that is able to offer fast, fair and efficient trade on a consistent basis.”

Beyond this, he explains that there are a number of innovations that A2X has brought to the market, including new trade types, cross-exchange listing, as well as inward listings. “In the short term, we see greater liquidity coming into South Africa as a result of investors being able to trade at cheaper rates on our market,” he adds. “In the longer-term, we may offer primary listings to complement all our secondary markets.”