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GROWTH

South Africa’s new exchanges ZAR X, 4AX and A2X explained

The X Factor For decades there was only the JSE – and then in the last two years, three new stock exchanges received licences and another one has applied. Our senior editor Toni Muir chatted to the founders and some of the first listed companies to find out who’s got the real X Factor. By Toni Muir

As in all industries, we believe that competition is an important ingredient in creating a healthy, efficient and responsive market,” says Rob Katz, CEO of A2X secondary listed Peregrine Holdings. “I suspect in time we will see growth in the overall market as the various players compete on price, service levels, innovation, and so on. This has to be good for all participants; issuers, brokers and the end investor.” Eddie Fivaz, CFO of ZAR X-listed TWK, echoes this sentiment, adding that a more flexible and practical process will ensure greater simplicity. “I think there are great companies with great values that will list on these platforms to ensure value is unlocked. I think it will really progress, especially now in the New Year,” he says.

Kevin Brady

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A2X CEO Kevin Brady agrees that competition is a good thing, and believes the increased competition

CFO MAGAZINE • CFO.CO.ZA

will do well to open and grow South Africa’s market. “International experience has shown us that competition between exchanges drives down the costs of doing business both directly and indirectly,” he says, also noting that lower transaction costs not only help boost liquidity but also helps narrow the bid/offer spread – thus improving the price discovery process. Furthermore, it lowers the hurdle for potential new investors and makes existing providers – in this case the JSE – more cost conscious, service oriented and innovative. Kevin also says that while the FSB has issued four new exchange licences in a 16-month period, the models of each entity are different, and each has its own distinctive value proposition. His colleague Fay Mukaddam, CEO of 4AX, agrees there could be better clarity on the differences between operating licences. To understand the nuances, she says it’s important to look at the licences themselves and the conditions reflected therein. She also expresses concern at the space becoming overcrowded, given the number of licences which have been issued in the last few years, and new ones in the pipeline – something the FSB is investigating. “My concern lies in, if something happens to any of the exchanges, we are all tarred by the same brush.

Profile for CFO South Africa

CFO Magazine 2018 - 1st Issue  

The first issue of CFO Magazine in 2018 looks at SA's new stock exchanges, highlights the launch of Workday in Africa and introduces the 25...

CFO Magazine 2018 - 1st Issue  

The first issue of CFO Magazine in 2018 looks at SA's new stock exchanges, highlights the launch of Workday in Africa and introduces the 25...

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