KEVIN BRADY: Efficient stock exchanges drive inclusive economic growth

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Four new bourses have been licensed over the past five years or so in SA, with A2X focusing on facilitating secondary listings

Efficient and cost-effective capital markets are key to economic growth and wealth creation. By matching resources with economic opportunities, they support productive enterprises and form the nucleus of free markets.

Across the globe, secondary stock exchanges have become an established capital markets phenomenon. While we in SA may not have been exposed to the same extent, the reality is that dual or multiple listings of a particular share are common practice internationally. Furthermore, the increased liquidity in the share supports price discovery and price formation as bid and offer spreads are narrowed. This also gives the listed entity access to additional capital as it draws more investors.

These amounts are not insignificant: in 2021, in the A2X universe of 56 securities, A2X created available direct savings , and indirect savings , of a little more than R400m. These pension funds buy and sell a range of equities to create an appropriate risk/return-adjusted portfolio. Narrowing bid/offer spreads leads to better price discovery and efficiency, which translate into savings for clients.

 

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