There is a new stock exchange in town. A2X is the third stock exchange launched this year in South Africa. It made its debut on the 6th of October with three listings, African Rainbow Capital Investments (Which was listed on the JSE last month and has invested in A2X), Coronation Fund Managers Limited and Peregrine Holdings Limited. Their cost of transacting are relatively lower than those of the JSE thanks to their latest technology developed by UK’s Aquis Technology.
A2X offers secondary listings to companies that are already listed on the JSE, they are targeting the JSE’s top 100 companies therefore competing directly with the JSE. However JSE CEO Nicky Newton-King believes that competition in the relatively small market could harm investors. She was quoted in a Biznews.com article as saying “Fragmenting price discovery will increase the spread on shares. Settlement risk increases. For the market as a whole there are some serious negative potentials”.Well I don’t believe in a monopoly stock exchange. Competition is good for investors and they should be given more choices so I think it should be a free market. But I guess in this case, only time will tell. As the largest stock exchange in Africa, the JSE has nothing to worry about. They need to use this opportunity to improve/innovate their technology and services. People tend to be a little sceptical about new comers in any business so loyalty and trust will definitely keep the JSE on top.
I am excited about A2X because I’m fairly new to this investing/stock exchange environment and the JSE can be intimidating. Because A2X is still small, it is easier to understand and to navigate through their website. It gives me a clearer understanding of stock exchanges and so a few years from now I will be able to discuss, in depth, where they started and how they grew.