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CEO and co-founder of the A2X, Kevin Brady, shared his insights on the innovation and efficiency needed in order to compete with the ‘monopoly’ that is the JSE, on the BizNews Power Hour. The A2X has been making significant strides in the last few years, with many of the Top 40 companies choosing the exchange as their preferred secondary listing. The exchange has a combined market capitalisation of over R6trn and accompanies household names such as Naspers, Prosus, Mr Price, Aspen and Standard Bank. Although their business model was built specifically seeking secondary listings, Kevin says there are ambitions to compete on a primary listing basis when regulations allow. This is great news for issuers and investors alike. The beauty of competition. – Justin Rowe-Roberts
Kevin Brady on the JSE Limited’s struggles and where the A2X fits in:
I would say that obviously South Africa does face its own challenges. And as an investment destination, having the macro environment right is a very, very important area of the growth. Our role as we see it is that, you know, we’ve only ever had one supplier or one provider in terms of stock exchanges, whereas in many parts of the world, clearly regulators came in and opened up the gap for competition and they specifically did this and they started in the secondary market to create a benefit. The brings competition in. That’s efficiency, that’s cloud service, that’s innovation. All those good things.
On the A2X’s business model:
Our model is to focus on the secondary market. We did a lot of research into into various models around the world and challenger exchanges who had been successful. And there’s no doubt if you look at the breakdown of where the money is at the moment, it’s in the secondary market. But we’re very conscious that for any market to continue growing, you do need to offer primary. So we just doing it incrementally.
On the need to constantly innovate:
We need to innovate faster than they can change. Look, I think in terms of there’s two sides to it. I think one is the listing. How much product do we have on our market? One of the things in South Africa that makes it difficult is regulation is not in line with international best practices yet. And so we have no alternative venue or model in South Africa. So we have to get the permission of every company to encourage them to have a secondary listing, which really is complementary to your primary listing. But that takes time. We feel we’ve got critical mass on on the product side.
On being the incumbent with no legacy issues:
I think, you know, in terms of the incumbent, those those those points are very true and yeah, very similar in terms of, you know, we can we can introduce all the types who can change settlement cycles. We can bring on many more companies in terms of listings. We just have a lot of that flexibility which does allow us to be a lot more responsive to a changing environment and the customer needs. We all hold back to some degree by oversight and regulation, which takes a bit of time. But, you know, it does put us in a very strong position.
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