• Nigeria, South Africa, Egypt, Kenya, 10 others linked

• Remove language, currency barriers

Africa’s dream of creating a continental marketplace came alive at the weekend with the switch on of a continental trading engine that allows on-line trading across Africa’s securities exchanges.

With this, investors can buy and sell shares listed on the continent’s largest economies and capital markets while companies and government can raise funds across the markets seamlessly.

At the switch on of the continental trading link at the weekend, seven securities exchanges serving 14 African countries were hooked to the system, which provides trading data in three major languages of English, French and Arabic.

African countries participating in this first phase of the cross-border trading include Nigeria, South Africa, Egypt, Kenya, Mauritius, Casablanca, Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo.

The exchanges in the first phase include Nigerian Exchange (NGX), Bourse Régionale des Valeurs Mobilières (BRVM)- which serves eight West African countries; Casablanca Stock Exchange (CSE), The Egyptian Exchange (EGX), Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE) and Stock Exchange of Mauritius (SEM).

BRVM is a regional stock exchange serving eight West African countries of Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo.

Botswana Stock Exchange (BSE) and Ghana Stock Exchange (GSE) are expected to be added under the second phase in 2023.

The cross-border trading project, known as African Exchanges Linkage Project (AELP), allows investors to access all Africa-listed securities through the AELP Link include all securities that are available for cross-border investors. The AELP is a collaboration between the African Securities Exchanges Association (ASEA) and African Development Bank (AfDB) with approvals of relevant securities markets’ regulators.

President, African Securities Exchanges Association (ASEA), Dr. Edoh Kossi Amenounve described the switch on as great milestone towards achieving ASEA’s mission of engaging African capital market ecosystems in order to foster capital mobilisation, promote sustainability, and enhance financial inclusion for the benefit of Africa’s economic development.

According to him, trading infrastructure harmonisation through the link is expected to ease existing trading processes and potentially reduce the cost of trading across African capital markets.

“I, therefore, congratulate all the participating exchanges and the respective brokers for being front-runners in this great pan-African integration initiative,” Amenounve said.

Read Also: NNPCL petrol stock decline by 5,481,239 litres as scarcity lingers

Chief Executive Officer, Nigerian Exchange Limited (NGX), Mr Temi Popoola said the AELP was a testament to the will of African capital market participants, particularly exchanges to effectively collaborate and drive cross-border trading and capital formation.

“It will significantly facilitate capital flows between African countries and further move us closer to the accomplishment of the goals of the African Continental Free Trade Area Agreement via the fusion of our respective financial markets,” Popoola said.

Organising Secretary, African Stockbrokers and Securities Dealers Association (ASSDA), Mr Willie Njoroge noted that the live trading was a historic moment for Africa, to finally actualise the linking of stock exchanges across Africa after many unsuccessful attempts over the last two decades.

The AELP test environment had been operational since July 2022 enabling the stockbrokers and securities dealers to familiarise themselves with the platform and execute mock trades. This culminated in the completion of the user acceptance testing on November 7, 2022, paving the way for the technical go-live at the weekend.

In July 2021, ASEA had signed a contract with DirectFN Ltd for the design and implementation of the AELP Link trading system in the seven markets. The link, which is hosted on Oracle Cloud Infrastructure (OCI), was designed to integrate with exchange and broker trading systems, and it is available in English, French and Arabic.

The link aggregates live market data from the exchanges and enables brokers to access information and see the market depth and liquidity of the foreign market of interest.

Through the coordination of the exchanges and ASSDA, each exchange will connect five stockbrokers or securities dealers to the AELP Link. In the first phase of the project 33 stockbrokers have connected as at weekend.

Participating stockbrokers from Nigeria include Cordros Securities Limited; FBNQuest Securities Limited; Stanbic IBTC Stockbrokers Limited; Chapel Hill Denham; Cardinal Stone Securities Ltd and RMB Stockbrokers.

The selection of participating stockbrokers and securities dealers was based on agreed criteria, and expression of interest by approved licensed dealing members from each of the participating exchanges.

The participating stockbrokers have already embarked on signing counterparty broker agreements between different markets. Under the arrangement, the sponsoring stockbrokers enable access to their domestic markets to sponsored stockbrokers from other markets and vice versa. The sponsoring broker will clear and settle trades in the host market using their local currency in compliance with the host market’s rules and practices.

A ceremonial launch of the first phase and demonstration of live cross-border trades will be held alongside the 2022 ASEA Annual General Meeting & Annual Conference on December 07W, 2022 in Abidjan, Cote d’Ivoire.

Future phases of the project may include automated cross-border payment systems, participation of additional ASEA’s member exchanges and their respective brokers and additional brokers from the current participating exchanges after the pilot phase.