South African alternative stock exchange A2X Markets has retained 40 of the 43 companies listed through its 2023 opt-out admission process following the conclusion of its 90-day enforceable undertaking with the Financial Sector Conduct Authority (FSCA).

The FSCA has imposed an administrative penalty of R700 000 on A2X, which the exchange will settle within 30 days.

A2X said the companies were given the opportunity to remain listed or request delisting after being informed of the FSCA’s investigation and its outcome. The exchange confirmed that 40 companies chose to remain on its platform, including all major large-cap and highly liquid securities.

These issuers include Richemont, Glencore, Gold Fields, Harmony Gold Mining, Bid Corporation, Mondi, Clicks Group, Bidvest Group, Shaftesbury, Quilter and Redefine Reit.

“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 CEO Kevin Brady said on November 27.

The FSCA’s enforceable undertaking related to an admission process introduced by A2X in 2023 in which eligible companies for secondary listings were identified and invited to list.

As part of this process, companies that accepted the invitation or did not actively opt out were admitted to the exchange. These 43 companies had been trading, clearing and settling on A2X for more than 15 months before the FSCA investigation was finalised.

A2X said all affected issuers were notified of the FSCA findings and were provided the option to stay listed or ask for their securities to be removed.

“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. Thank you to the brokers, asset managers, issuers and market participants who supported the process and recognised the value of maintaining competitive choice in South Africa's equity markets,” A2X said.

Brady said the conclusion of the process would allow A2X to continue its focus on competition in the market.

“A2X's competitive presence has driven down direct trading costs through advanced technology and streamlined processes, while A2X’s competition for passive liquidity has also helped reduce indirect costs by narrowing bid-offer spreads, resulting in substantial savings for investors,” he said.

Brady added that increased liquidity would follow from efficiency gains because lower friction costs would encourage greater trading activity.

A2X noted that competition would also support the development of new order types that would reduce signalling risk and help lower the market impact costs associated with large transactions.