A2X Markets, one of four exchanges to have launched in SA in the past two years, has won over another JSE-listed financial services company, Anchor Group, as it looks to build critical mass.
Effective on July 10, Anchor will be the ninth firm to have a secondary listing on A2X.
Anchor, headed by Peter Armitage, said on Tuesday it would retain its primary listing on the JSE’s AltX exchange, and that its issued share capital would be unaffected by its secondary listing. Armitage said A2X would help to lower trading costs for investors.
Anchor’s shares, which reached highs of more than R18 in late 2015 but have since slipped to R3.50, will be tradable on both the JSE and A2X from next Tuesday.
While Anchor’s secondary listing was unlikely to have a meaningful effect on the group in the short term, "if you take a medium-term view, it just gives brokers more options and it supports free market principles", Armitage said.
"There’s no downside or cost for us. It’s nothing for or against the JSE. We just think it makes sense to support people who are bringing overall costs down."
A2X took a major step towards building critical mass when it listed one of the country’s largest companies, Sanlam, in April. That helped push its market capitalisation to more than R200bn.
The challenger exchange, which is less than a year old, has so far found success primarily in the financial services sector.
A2X CEO Kevin Brady said this was likely because financial services firms "grasp the concept of multiple exchanges quite quickly, and the benefits they can bring, I think because they’re closer to the action".
However, A2X was in talks with companies in various other sectors, including industrial, mining and property groups. "We do have a lot of other hot prospects," Brady said.
A2X would probably reach critical mass when three or four of the JSE’s top 40 companies had signed up, he said.
"I’d say that’s probably the tipping point for us. There’s generally very positive sentiment towards what we’re doing with A2X, but I think there’s a huge education process we’re going through in terms of how having additional stock exchanges works … and how this brings benefits," Brady said.
Meanwhile, A2X has applied to the Financial Services Conduct Authority to amend its licence so that it can offer secondary listings to exchange-traded products.
During the public comment phase, an objection was raised, though the company was "dealing with that objection" and was "confident that it’s going in the right direction".
A2X would also consider a move into the primary listings market once it had built a reputation in the secondary markets segment. "It’s definitely on our radar but probably not for the next two years."
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