The African Exchanges Linkage Project (AELP) is now live, integrating the African capital markets by facilitating cross-border trading and free movement of investments on the continent.
The interconnectivity platform enables trading exchange-listed securities across seven participating securities exchanges.
“The go-live…is a great milestone towards achieving ASEA’s mission to engage African capital market ecosystems to foster capital mobilization, promote sustainability, and enhance financial inclusion for the benefit of Africa’s economic development,” ASEA President Dr Edoh Kossi Amenounve said,
“Trading infrastructure harmonization through the Link is expected to ease existing trading processes and potentially reduce the cost of trading across African capital markets.”
The AELP, a flagship project of the African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB), aims to facilitate cross-border trading among seven participating exchanges and select broker firms.
The AELP Phase 1 is funded by a grant from the Korea-Africa Economic Cooperation (KOAFEC) Trust Fund, managed by the African Development Bank.
The seven Exchanges participating in Phase 1 of the AELP are Bourse Regionale des Valeurs Mobilieres (BRVM), Bourse de Casablanca (BVC), The Egyptian Exchange (EGX), Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE), Nigerian Exchange Limited (NGX), and Stock Exchange of Mauritius (SEM).
In July 2021, ASEA signed a contract with DirectFN Ltd. to design and implement the AELP Link trading system in the seven markets.
The Link, hosted on the Oracle Cloud Infrastructure (OCI), has been designed to integrate with exchange and broker trading systems and is available in English, French, and Arabic. It aggregates live market data from the exchanges and enables brokers to access information and see the market depth and liquidity of the foreign market of interest.
Selection of Stockbrokers and Securities Dealers
Stockbrokers and securities dealers are critical stakeholders in the linkage process. By coordinating the exchanges with the African Stockbrokers and Securities Dealers Association (ASSDA), each exchange will connect five stockbrokers or securities dealers to the AELP Link.
The selection of participating stockbrokers and securities dealers was based on agreed-upon criteria, and expressions of interest by approved licensed dealing members from each participating exchange.
AELP test environment
The AELP test environment has been operational since July 2022, enabling stockbrokers and securities dealers to familiarize themselves with the platform and execute mock trades. This culminated in the completion of the User Acceptance Testing on 7 November.
Future phases of the project may include automated cross-border payment systems, the participation of additional ASEA member exchanges and their respective brokers, and other brokers from the current participating exchanges after the pilot phase.
Botswana Stock Exchange (BSE) and Ghana Stock Exchange (GSE) will kick off Phase 2 of the AELP with technical connectivity to the Link expected to commence in 2023.