Seven African exchanges band together to boost depth and liquidity

Rick Steves

The order-routing system will be used to link the seven leading venues and boost pan-African investment flows, bringing more liquidity to African markets.

The African Securities Exchanges Association (ASEA) comprised of seven of Africa’s leading securities Exchanges are working together in the African Exchanges Linkage Project (AELP) which includes the procurement of an order-routing system.

The order-routing system will be used to link the seven leading venues and boost pan-African investment flows, bringing more liquidity to African markets.

In order to facilitate cross-border trading between African securities exchanges, ASEA selected DirectFN for the design and rollout of the AELP Link technology platform for routing orders and trade confirmations between stockbrokers on the seven Exchanges participating in the pilot phase of the AELP.

DirectFN, is a fintech firm with clients across the Middle East and many emerging and frontier markets, was awarded the contract after a competitive bidding process that attracted applications from top international suppliers in 18 countries.

The linkage project is a joint initiative by ASEA and the African Development Bank (AfDB) aimed to address depth and liquidity in the markets, promoting innovations that support diversification for investors, and unlocking Pan-African investment flows.

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AELP is funded by a grant from the Korea-Africa Economic Cooperation (KOAFEC) Trust Fund managed by the African Development Bank.

The AELP link will intermediate investor orders between stockbrokers in foreign markets. African Listed Securities to be accessed through the AELP Link include all securities that are available for cross-border investors.

Equity investments include more than 1,050 listed stocks, but the project will also establish access to corporate and government bonds, exchange-traded funds (ETFs), and derivatives where these are listed on the participating Exchanges and the sponsoring stockbroker provides access.

The seven AELP exchanges are Casablanca Stock Exchange, The Egyptian Exchange, Johannesburg Stock Exchange, Nairobi Securities Exchange, Nigerian Exchange, Stock Exchange of Mauritius and Bourse Régionale des Valeurs Mobilières (stock exchange for the West African Economic and Monetary Union’s eight West African countries).

Nigeria has recently taken a significant step toward derivates trading, with the SEC’s approval of seven derivatives contracts from Nigerian Exchange Limited (NGX).

Felix Edoh Kossi Amenounvé, President of ASEA and CEO of the BRVM, said: “We are excited with this big step towards free movement of investments across Africa and free flow of capital. Our aim is to open new opportunities for individual and institutional investors to invest productively into Africa’s growth story. The Exchanges continue to support African enterprises and governments to raise long-term capital for African jobs, business growth, infrastructure and development.”

Walid Al Ballaa, the Managing Director, of DirectFN, commented: “With innovative technology and focus to bring digital maturity in building digital relationships through the AELP-Link technology platform establishment, DirectFN feels equally excited to assist practically in realizing the goals across the participating African Exchanges and to enable the African capital market ecosystem digitally to create positive impact on the overall economy.”

 

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