A2X Markets says it has concluded an enforceable undertaking issued by the Financial Sector Conduct Authority, confirming it will settle a R700 000 administrative penalty and that most of the issuers affected by its “opt-out” listing process have chosen to remain on its platform.
In a statement on 27 November, the alternative stock exchange said that 40 of the 43 companies admitted under the opt-out mechanism between February and October 2023 would retain their secondary listings. These companies have been trading, clearing, and settling on A2X for more than 15 months.
The exchange described the outcome as positive, noting that all major large-cap and highly liquid issuers were among those staying.
Kevin Brady, the chief executive of A2X, said: “The decision by 40 companies, including all our major large-cap issuers, to remain listed demonstrates corporate South Africa’s support of the tangible benefits A2X and competition deliver to South African capital markets.”
A2X confirmed it will pay the administrative penalty within 30 days, in line with the FSCA’s order of 27 November.
The penalty stems from an FSCA investigation into A2X’s “opt-out admission process”, implemented in early 2023. Under this process, A2X identified companies eligible for secondary listing and invited them to list. Companies were then listed if they accepted the invitation or if they did not actively opt out of the listing.
The regulator found this mechanism breached both the Financial Markets Act and A2X’s listings requirements, according to the FSCA’s enforceable undertaking issued in March this year. The FSCA viewed the admission process as non-compliant because companies were listed without explicit consent, even though the exchange stated that all issuers had been notified and had continued trading for more than a year.
The enforceable undertaking imposed a R700 000 penalty on the exchange and required remedial action within 90 days to prevent the possibility of further action.
Central to the corrective measures was direct engagement with all issuers affected by the opt-out process. A2X was required to notify each of the 43 companies of the FSCA’s investigation and its outcome and provide them with the opportunity either to remain listed or to request delisting.
Last week, A2X announced that this process has been completed, and 40 issuers have elected to stay listed, while three have opted to leave.
Brady added: “We welcome the clarity this process has brought to our listing procedures and look forward to enhancing South Africa’s capital markets with the FSCA.”
With the regulatory process finalised, A2X said it intends to refocus on strengthening competition in South Africa’s equity market, stating that competition in capital markets enhances market efficiency, increases liquidity, and drives innovation.
Brady said A2X’s competitive presence has driven down direct trading costs through advanced technology and streamlined processes. Its competition “for passive liquidity has also helped reduce indirect costs by narrowing bid-offer spreads, resulting in substantial savings for investors”.
