A2X CEO on competition in SA's exchange space

South Africa's alternative stock exchange, A2X, has been making waves in the financial market with its significant cost savings for investors and brokers. According to CEO Kevin Brady, A2X has saved investors and brokers approximately R900 million per year in lower exchange fees and indirect savings. This data is backed by an independent research report commissioned by BMLL, shedding light on the impact A2X has had since its establishment in 2017. Brady believes that if all the companies listed on the Johannesburg Stock Exchange (JSE) were to list on A2X, investors could potentially save up to R1.32 billion a year. This substantial figure underscores the potential benefits of choosing A2X as an investment platform. In a recent interview with CNBC Africa, Kevin Brady delved into the details behind these impressive numbers. He explained that the calculations are based on the savings accrued over a 12-month period, driven by the number of securities listed on A2X. The savings come in two forms: direct savings through lower exchange fees and indirect savings when investors can secure better prices for their trades. Brady illustrated this concept with an example of purchasing shares at different prices on various exchanges to highlight the potential cost differences that investors can benefit from. Regarding projections for future savings, Brady highlighted that A2X currently has 183 securities listed, representing 74% of total trade volume. By aiming to reach 100% of all traded companies, Brady estimates that the savings could rise to over R1.3 billion. These projected savings have a tangible impact on the returns for pension funds and asset managers, emphasizing the role A2X plays in enhancing investment opportunities in the market. Despite economic challenges, A2X has seen remarkable growth in attracting new listings over the past year. With 88 new securities added, including 31 top 40 companies, A2X has positioned itself as a competitive player in the stock exchange landscape. Brady attributed this success to a strategic shift in working closely with sponsors to onboard new companies, in addition to reaching a crucial point where the benefits of A2X are widely recognized and embraced by investors and businesses. However, the issue of delistings poses a challenge not only for A2X but for the entire South African market. As a secondary venue, A2X is affected by delistings from the JSE or Cape Town Stock Exchange. While smaller companies have delisted, there is optimism that the trend could be reversed with improvements in economic growth and concerted efforts to attract listings. Brady acknowledged the impact of elevated costs on staying listed and the allure of private equity investments amid market uncertainties, highlighting the need for a supportive environment to retain listed companies. In response to the delisting trend, A2X is strategizing to bolster its market presence and offer innovative solutions to maintain liquidity and attract dormant capital. By expanding its licensing to allow inward listings from offshore exchanges and diversifying the range of products available, A2X aims to broaden its offerings and appeal to a wider investor base. While there have been inquiries for inward listings, no deals have materialized yet, indicating a potential shift in the market climate that could pave the way for increased international participation. As A2X continues to forge ahead in the competitive exchange space, Kevin Brady remains optimistic about the future of the platform and its capacity to drive cost savings, attract new listings, and expand its market reach. With a commitment to innovation and strategic partnerships, A2X stands poised to shape the financial landscape in South Africa and offer investors a compelling alternative for their investment needs.