Absa lists metal ETFs on A2X

In a significant development for the alternative stock exchange A2X, Absa has become the first company to offer three metal exchange-traded funds (ETFs) on the platform. A2X CEO Kevin Brady sat down with CNBC Africa to discuss this milestone and the future prospects for the exchange. Brady acknowledged the milestone, noting that A2X had received approval to expand its license to include the secondary listing of ETFs earlier this year. He highlighted the importance of aligning technical aspects to ensure market activity before introducing these products. Despite the initial wait, the addition of the metal ETFs from a leading supplier in precious metals marks an exciting development for A2X. The discussion also touched on the pipeline of ETFs and listed companies on A2X. Brady shared that the platform currently boasts seven top 40 stocks, with a combined market capitalization of about two and a half trillion rand. The exchange has successfully attracted major players such as Standard Bank, Aspen, and Mr. Price, indicating a healthy growth trajectory. Brady elaborated on the benefits of the newly added ETFs, including exposure to precious metals in an efficient manner. He emphasized the cost advantages of transacting on A2X, which offers lower fees compared to other platforms. This cost efficiency, coupled with improved market quality and liquidity, enhances the appeal of A2X as a trading destination. The conversation also delved into A2X's future plans, with Brady outlining the exchange's aim to continue attracting both listed companies and ETF issuers. He expressed confidence in the pipeline of potential listings, projecting a rate of about one new company per month. The addition of Absa's metal ETFs is expected to pave the way for higher adoption rates among other key issuers. Brady highlighted the dual focus on both the ETF and secondary listing spaces, underscoring A2X's commitment to fostering competition and driving capital market development in South Africa. He stressed the value proposition for companies considering a secondary listing on A2X, emphasizing the benefits for investors and shareholders. Looking ahead, Brady hinted at the possibility of expanding A2X's offerings to primary listings and other asset classes. While the primary market remains a future consideration, the focus for now is on solidifying A2X's reputation and credibility in the secondary market. Addressing the potential for expansion into Africa, Brady acknowledged the opportunity but highlighted the complexities associated with post-trade settlement across jurisdictions. Despite the challenges, he expressed optimism about the prospects for taking A2X's model beyond South Africa in the future. In conclusion, A2X's partnership with Absa to list metal ETFs signals a significant step forward for the exchange, reflecting a growing presence in the South African capital market landscape. With a focus on enhancing market efficiency, lowering costs, and driving competition, A2X is poised to shape the future of trading in the region.