The African Securities Exchanges Association (ASEA ) recently held the first African Exchanges Linkage Project (AELP) roundtable meeting for brokers on the sidelines of the 22nd Annual ASEA Conference hosted by the Nigerian Stock Exchange (NSE) at the Oriental Hotel in Lagos, Nigeria.
The theme of the conference “Champions on the Rise: Africa’s ascension to a more sustainable future” aligns with the goals of the AELP which include: (i) The creation of a central trading platform linked to exchange trading systems; (ii) The free flow of trading information between linked exchanges; (iii) Broker access to the linked trading platform; and (iv) The creation of products based on securities from the linked exchanges.
The African Exchanges Linkage Project (AELP) is a co-initiative by ASEA and the African Development Bank (AfDB) to enable and facilitate cross-border trading and settlement of securities across participating exchanges in Africa. The goal is to boost Pan-African investment flows, promote innovations that support diversification needs of investors in Africa, and help address the lack of depth and liquidity in Africa’s financial markets.
The AELP will in its initial phase create linkages between six (6) African capital markets that represent ~85% of Africa’s market capitalization. The participating Exchanges are: i) Nigerian Stock Exchange (NSE); ii) Nairobi Securities Exchange (NSE); iii) Johannesburg Stock Exchange (JSE); iv) Casablanca Stock Exchange (CSE); v) Bourse Régionale des Valeurs Mobilières SA (BRVM); and vi) Stock Exchange of Mauritius (SEM).
The project in November 2018, received a grant of USD 980,000 from the Korea-Africa Economic Cooperation (KOAFEC) fund via the Africa Development Bank (AfDB). The Manager, Capital Markets Division of the African Development Bank (AfDB) Mr. Emmanuel Diarra said: “Pan African integration of financial markets is of priority for the AfDB. As a co-initiator of the AELP along with ASEA, we are committed to supporting ASEA through the implementation of the AELP and we look forward to working with ASEA to comply with the requirements of the Bank and KOAFEC in order to execute quickly”
While making his presentation, the former President of ASEA and CEO of the Nigerian Stock Exchange, Mr. Oscar N. Onyema OON urged the market intermediaries to support the project by providing ASEA with feedback and recommendation to advance the project, engage their clients and with one another to determine the buy and sell side appetite, participate fully in the capacity building technical workshops, and support the project in identifying the optimal order routing technology option to facilitate the project. According to him: “The AELP will start off with the six (6) markets participating in the pilot with the goal of onboarding other markets in Africa who meet the minimum requirements. The countries participating in the AELP pilot phase are strategically spread across the continent as this will become instrumental in the scaling up of the project. The model for the linkage will be Sponsored Access, meaning that the cross border trades will be required to pass through the risk management system of the sponsoring broker before flowing to the Exchange. We believe that this model will minimize the disruption to the local market and provide confidence for all stakeholders. Thus we anticipate that the initiative will be welcome by all stakeholders and will support ASEA’s goal of boosting intra Africa capital market trading activity. ”
The President of ASEA and CEO of the Casablanca Stock Exchange Mr. Karim Hajji who chaired the session noted that ASEA is committed to driving the project to completion and said: “On behalf of ASEA, we thank the AfDB and the KOAFEC fund for believing in the project and for the handwork in securing the funding for the AELP. We look forward to working with AfDB more closely and fostering a more connected African capital market.”