A2X Markets, South Africa's alternative stock exchange, has announced a positive outcome on the conclusion of its 90-day enforceable undertaking with the Financial Sector Conduct Authority (FSCA).

Of the 43 companies that were listed through an opt-out admission process between February and October 2023, 40 companies will remain listed on A2X, including all major large-cap and highly liquid securities.

Key large-cap companies which have chosen to maintain secondary listings on A2X include Richemont (CFR), Glencore (GLN), Gold Fields (GFI), Harmony Gold Mining (HAR), Bid Corporation (BID), Mondi (MNP), Clicks Group (CLS), Bidvest Group (BVT), Shaftesbury (SHC), Quilter (QLT) and Redefine Reit Ltd (RDF).

Kevin Brady, CEO of A2X, says, "The decision by 40 companies, including all our major large-cap issuers, to remain listed demonstrates corporate South Africa’s support of the tangible benefits A2X and competition deliver to South African capital markets."

FSCA’s enforceable undertaking related to an opt-out admission process that A2X implemented in 2023. Eligible companies for secondary listing on A2X were identified and invited to list. Companies were listed if they accepted the invitation or if they did not actively opt out of the listing. An administrative penalty of R700,000 has been imposed by FSCA, which will be settled by A2X within 30 days.

The 43 companies listed through this process had been trading, clearing and settling on A2X for over fifteen months. All affected issuers were notified of the FSCA investigation and outcome, providing the opportunity to remain listed or request delisting.

“We welcome the clarity this process has brought to our listing procedures and look forward to enhancing South Africa's capital markets with the FSCA. Thank you to the brokers, asset managers, issuers and market participants who supported the process and recognised the value of maintaining competitive choice in South Africa's equity markets.”

This outcome allows A2X to focus on delivering meaningful competition that benefits all market participants, according to Brady.  Competition in capital markets enhances market efficiency, increases liquidity, and drives innovation.

Adds Brady, “A2X's competitive presence has driven down direct trading costs through advanced technology and streamlined processes, while A2X’s competition for passive liquidity has also helped reduce indirect costs by narrowing bid-offer spreads, resulting in substantial savings for investors.”

Increased liquidity naturally follows from efficiency gains, as reduced friction costs encourage greater trading activity.

Competition also spurs innovation, shown by A2X's development of new order types that reduce signalling risk and support lower market impact costs for large orders.