Kevin Brady. Picture: SUPPLIED
Kevin Brady. Picture: SUPPLIED

A2X Markets will provide a secondary listing to African Rainbow Capital (ARC) Investments and Peregrine Holdings on October 6, giving the JSE rival a market value of more than R14bn on its first day of trade — a fraction of the JSE’s R11.8-trillion market capitalisation but many multiples larger than fledgling peers.

A2X had signed on Peregrine Securities, SA’s second-largest stockbroker, and anticipated signing the country’s largest stockbroker, RMB Morgan Stanley, in the coming weeks, said CEO Kevin Brady.

The exchange was on track for a soft launch on October 6, which meant it was "going live but gently" in terms of broker trades, he said on Thursday.

Nedgroup Securities, Avior Capital Markets and Sinayo Securities had applied to be members on the exchange, while Investec Securities and Standard Bank Group Securities had expressed the intent to do so, Brady said.

A2X will be the third new exchange to go live in SA and challenge the JSE’s decades-old dominance. ZAR X went live in February and 4 Africa Exchange (4AX) is due to go live on September 28, listing agricultural co-operative NWK.

ZAR X, which has listed agri-businesses Senwes, Senwesbel and TWK Investments, has a market capitalisation of R3.3bn.

The Financial Services Board granted a fourth exchange licence to Equity Express Securities Exchange (EESE) in September. EESE was born out of over-the-counter trading platform Equity Express, used by large broad-based black economic empowerment schemes, including Phuthuma Nathi.

EESE, which would not begin trading before December, would target B-BBEE schemes and smaller companies that wanted to list their shares, said CEO Anthony Wilmot.

Its strategy is similar to ZAR X and 4AX, which are targeting restricted schemes, companies that trade over the counter and smaller issuers.

A2X’s strategy is distinct in that it plans to provide a secondary listing platform for the JSE’s largest stocks.

Chairman Ashley Mendelowitz and nonexecutive director Sean Melnick are part of the founding team of Peregrine Holdings. ARC Investments, which debuted on the JSE on September 7, has a 20% share in A2X, with the option to increase this to 25%.

A2X hoped to sign on additional issuers before October 6, but there was still a natural caution to "see what happens on day one", Brady said.

"We will have a nice pipe-line once the exchange is upand running."

Time would tell whether the South African market could support so many exchanges, Wilmot said. "If not, I think we will see some consolidation."

ziadyh@businesslive.co.za

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