Seven African Capital Markets Begin Cross-border Trading

By Aduragbemi Omiyale

Last Friday, the African Exchanges Linkage Project (AELP) successfully integrated seven African capital markets by facilitating cross-border trading and free movement of investments in the continent through the AELP Link platform.

The go-live happened when the platform was officially switched on at 0000 UTC, allowing the trading of exchange-listed securities across the participating securities exchanges.

The AELP, a flagship project of the African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB), is aimed at facilitating cross-border trading among seven participating Exchanges and select broker firms.

The seven exchanges participating in Phase 1 of the AELP are Bourse Regionale des Valeurs Mobilieres (BRVM), Bourse de Casablanca, The Egyptian Exchange (EGX), Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE), Nigerian Exchange Limited (NGX), and Stock Exchange of Mauritius (SEM).

In July 2021, ASEA 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 the Oracle Cloud Infrastructure (OCI), has been designed to integrate with exchange and broker trading systems and is available in English, French and Arabic.

It 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.

In the project’s first phase, 33 stockbrokers have connected as at go-live based on agreed criteria and expression of interest by approved licensed dealing members from each of the participating exchanges.

They have already embarked on signing counterparty broker agreements between different markets. 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. The regulatory bodies in all the participating markets are therefore apprised of the progress. Participating trading license holders from Nigeria are FBNQuest Securities Limited; Stanbic IBTC Stockbrokers Limited; Chapel Hill Denham; Cardinal Stone Securities Ltd; Cordros Securities Limited; and RMB Stockbrokers.

Commenting on the go-live, the ASEA President, Dr Edoh Kossi Amenounve, said, “The go-live today of the AELP Link is a great milestone towards achieving ASEA’s mission to engage African capital market ecosystems in order to foster capital mobilization, promote sustainability, and enhance financial inclusion for the benefit of Africa’s economic development.

“Trading infrastructure harmonization 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.”

Speaking on the successful live integration of the AELP, the CEO of NGX Limited, Mr Temi Popoola, lauded the efforts of stakeholders in the actualisation of the project.

“The AELP Link is 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.”

The ASSDA Organising Secretary, Mr Willie Njoroge, observed that “this is a historic moment for Africa, to finally actualize the linking of stock exchanges across Africa after many unsuccessful attempts over the last 2 decades.”

Business Post learned that the AELP test environment has been operational since July 2022, enabling the stockbrokers and securities dealers to familiarize themselves with the platform and execute mock trades. This culminated in the completion of the User Acceptance Testing on November 7, paving the way for the technical go-live on November 18.