A project by the African Securities Exchanges Association (ASEA) which started in 2016 to facilitate cross-border trading and settlement of securities will link seven exchanges including the Nigerian Stock Exchange (NSE) by the first quarter of 2021.
The project would join the African exchanges to increase capital flows between the bourses and boost liquidity in the capital markets, as well as, improve investment flow into the continent.
“This initiative is supported by the African Development Bank, which has contributed funding of up to $1 million, notably for the system that will help us connect the seven exchanges and also the project management officer who is already on board,” Karim Hajji, president ASEA, told Bloomberg.
Nigerian Stock Exchange (NSE), Johannesburg Stock Exchange (JSE), the Egyptian Exchange (EGX) Nairobi Securities Exchange (NSE), Casablanca Stock Exchange (CSE), Côte d’Ivoire’s Bourse Régionale des Valeurs Mobilières SA (BRVM), and Stock Exchange of Mauritius (SEM) are the participating bourses.
These seven bourses participating in the first phase of the project represent about 85 percent of Africa’s securities market capitalization (made up of 27 exchanges). The other exchanges would join the project in the long-run.
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Hajji said the International Finance Corp. is funding a study that could pave the way for state-owned enterprises to be privatized through partial listings on African stock exchanges.
Such listings would boost capital-market development, raise funds for governments and the companies to carry out investment programs and broaden investor participation, he said.
The project known as African Exchange Linkage Project (AELP) will see the creation of a central trading platform linked to exchange trading systems.
This would facilitate the free flow of trading information between linked exchanges, broker access to the linked trading platform, and aid the creation of products based on securities from the participating exchanges.
The project will also help harmonize rules across jurisdictions to aid capital flow and encourage inflow into African markets.
AELP will result in a collective market capitalization of over US$1.4 trillion, stimulate intra-African flows and provide opportunities for investors and trading participants in over fourteen African countries, Hajji said earlier in the year.
“With the expected outcome of boosting liquidity in African capital markets, the AELP will unlock the powerful potential of African markets to access and redistribute domestic capital for economic development,” he said.
The linkage would also provide an opportunity for investors to diversify and tap into opportunities in other markets outside their home country.
