A cross-border order-routing platform linking seven leading African securities exchanges has gone live today, 18 November. The African Exchanges Linkage Project (AELP) technology allows 33 stockbrokers across Africa to send client orders to each other and brings the brokers live data from each of the exchanges.
The AELP platform was officially switched on at 00:00 UTC, according to this announcement .
The African Exchanges Linkage Project is a flagship project of the African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB) to facilitate cross-border trading of securities in Africa. It aims to boost liquidity in securities trading on African stock exchanges and support capital markets development in Africa.
The seven stock exchanges involved in AELP Phase 1 are: Bourse Régionale des Valeurs Mobilières (BRVM), Casablanca Stock Exchange (CSE), The Egyptian Exchange (EGX), Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE), Nigerian Exchange Limited (NGX) and the Stock Exchange of Mauritius (SEM).
The go-live comes after 16 months after ASEA signed a contract with DirectFN Ltd (see our story here) for the design and implementation of the AELP Link trading system to seven marketplaces in July 2021. The AELP Link is hosted on Oracle Cloud Infrastructure (OCI is available in English, French and Arabic. It was designed to integrate with exchange trading and brokerage systems. It. It brings together live market data from the seven exchanges and allows brokers access to information and to see the market depth and liquidity of the foreign market they or their client is interested in.
Coordination between the Exchanges and the African Stockbrokers and Securities Dealers Association (ASSDA) has coordinated the involvement of the stockbrokers and securities dealers who are central to the linkage. In the first phase, 33 stockbrokers are connected as at go-live.
Each exchange will connect five stockbrokers to AELP Link. Each participating stockbroker sends client orders to a sponsoring broker on a market where the client wants to buy or sell securities. The sponsoring stockbroker will execute the trades and clear and settle them in the host market using its local currency in accordance with applicable rules and practices. Securities will be held in the host market.
The Botswana Stock Exchange (BSE) and the Ghana Stock Exchange (GSE) will start AELP Phase 2 and are expected to have technical connectivity in 2023. Future phases may include automated cross-border payment systems, participation of additional ASEA member exchanges and their respective stockbrokers and additional brokers from the current participating Exchanges after the pilot phase.
ASEA President Dr. Edoh Kossi Amenounve commented on the go-live of the platform: “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”.
The exchanges selected the stockbrokers and securities dealers based on agreed criteria and expressions of interest by approved licensed dealing members from each of the participating exchanges. ASSDA Organizing Secretary, Mr. Willie Njoroge said: “This is a historic moment for Africa, to finally actualize the linking of stock exchanges across Africa after many unsuccessful attempts over the last two decades.”
AELP Phase 1 is funded by a grant from the Korea-Africa Economic Cooperation Trust Fund (KOAFEC) managed by the African Development Bank. It could be a key step in developing Africa’s capital markets.
The AELP test environment has been operational since July 2022 so that the stockbrokers and securities dealers could familiarize themselves with the platform and execute mock trades. This culminated in the completion of User Acceptance Testing on 7 November, opening the door to today’s technical go-live.
Participating stockbrokers have been signing counterparty broker agreements between different markets. According to the announcement, the regulatory bodies in all participating markets have been kept informed.
The ceremonial launch of Phase 1 and demonstration of live cross-border trades will be held alongside the 2022 ASEA Annual General Meeting & Annual Conference on 7th December 2022 at 9:00am GMT in Abidjan, Cote d’Ivoire.
(Disclaimer, writer was AELP Project Manager from 2019-2021)