The AELP today launched the integration of African capital markets by facilitating cross-border trade and the free flow of investment on the continent through the AELP Link platform. The commissioning took place when the platform was officially switched on at 0000 UTC. The interconnectivity platform enables trading of listed securities on 7 participating stock exchanges.
Commenting on the commissioning, APUA President Dr. Edoh Kossi Amenounve said “Today’s commissioning of the AELP Link is an important step towards achieving ASEA’s mission to engage Africa’s capital markets ecosystems to foster capital mobilization, promote sustainability and improving financial inclusion for the benefit of Africa’s economic development. Harmonization of trading infrastructure through Link is expected to facilitate existing trading processes and potentially reduce the cost of transactions in African capital markets. I therefore commend all participating exchanges and respective brokers for being at the forefront of this great pan-African integration initiative.”.
The AELP, a flagship project of the Association of African Securities Exchanges (ASEA) and the African Development Bank (AfDB) aims to facilitate cross-border trade between seven participating stock exchanges and selected brokerage firms. AELP Phase 1 is funded by a grant from the Korea-Africa Economic Cooperation Trust Fund (KOAFEC) managed by the African Development Bank.
The seven exchanges participating in Phase 1 of the AELP are: Bourse Régionale des Valeurs Mobilières (BRVM), Casablanca Stock Exchange (BVC), The Egyptian Stock Exchange (EGX), Johannesburg Stock Exchange (JSE), Nairobi Stock Exchange (NSE), Nigerian Exchange Limited (NGX) and Mauritius Stock Exchange (SEM).
In July 2021, ASEA signed a contract with DirectFN Ltd for the design and implementation of the AELP Link trading system on all seven marketplaces. The Link, which is hosted on Oracle Cloud Infrastructure (OCI), was designed to integrate with exchange and brokerage systems, and is available in English, French and Arabic. It aggregates live market data from exchanges and allows brokers to access information and see the market depth and liquidity of the foreign market of interest.
Stockbrokers and stockbrokers are key players in the bonding process. Through the coordination of stock exchanges and the African Securities Dealers Association (ASSDA), each stock exchange will connect 5 stockbrokers or securities dealers to the AELP link. In the first phase of the project, 33 stockbrokers were connected from the start.
The selection of participating stockbrokers and broker-dealers was based on agreed criteria and expressions of interest by licensed licensed trading members of each of the Participating Exchanges. The ASSDA Organizing Secretary, Mr. Willie Njoroge, observed that “this is a historic moment for Africa, to finally actualize the linkage of stock exchanges across Africa after many failed attempts at over the past two decades”.
The AELP test environment has been operational since July 2022, allowing stockbrokers and securities traders to familiarize themselves with the platform and execute fictitious trades. This culminated in the completion of user acceptance testing on November 7, paving the way for technical go-live today.
Participating brokers have already engaged in signing counterparty brokerage agreements between different markets. Sponsoring brokers allow access to their home markets to sponsored brokers from other markets and vice versa. The sponsoring broker will clear and settle trades in the host market using its local currency in accordance with the rules and practices of the host market. Regulators in all participating markets are therefore kept informed of progress.
A Phase 1 Launch Ceremony and Live Cross-Border Transaction Demonstration will take place alongside ASEA’s 2022 Annual General Meeting and Annual Conference on December 7, 2022 at 09:00 GMT in Abidjan, Côte d’Ivoire.
Future phases of the project may include automated cross-border payment systems, participation of other ASEA member exchanges and their respective brokers, and additional brokers from current participating exchanges after the pilot phase. The Botswana Stock Exchange (BSE) and the Ghana Stock Exchange (GSE) will launch AELP Phase 2 with technical connectivity to the link expected to commence in 2023.