The entrance of ZAR X, South Africa’s new stock exchange, appears to have rattled the country’s stockbroking community. Having worked with only one stock exchange for the past 58 years, stockbrokers appear now to be unsure of how to operate in a multi-exchange environment.

In fact, it could be said that some are actually reluctant to do the comparatively small amount of groundwork needed to enable additional access to issuers for their retail and institutional clients.

Their hesitancy is a clear indication of just how badly competition has been needed in the market.

For comparatively little investment of financial and human resources, brokers have been able to make a good living off the monopoly. Complacency has taken a firm hold.

The great irony is, however, that a multi-exchange landscape actually reduces the amount of work stockbrokers need to do while potentially increasing their revenue streams.

This is magnified when the additional exchanges are fintechs, able to use technology to strip complexity out of the selling and buying of shares. Digital platforms enable streamlining and integration of processes and broaden and speed up data flow. They place all brokers in possession of vital market information in a symmetrical and equitable manner that can be used to the benefit of their clients. With greater insight into market movement and trends, they can trade more shares and also trade more frequently, which improves liquidity.

That ought to be a winning outcome for everyone concerned.

But, the inertia that we’re seeing might indicate that the criticism of an informal old boy’s club often levelled at the industry is warranted.

Taking a more objective view, it’s possible that broking firms felt they should wait to see what types of companies the new exchange would list. Why bother to register if the new exchange is not going to list anything in which our usual investors would be interested. Right?


Inherently, additional stock exchanges broaden the market, reduce costs, and increase liquidity. They bring new companies and asset classes into play. Stockbroking clients need access to them.

More to the point, modern exchanges must aim to function as economic enablers. One might argue that an exchange cannot justify its existence if it doesn’t proactively ensure financial inclusion, increase access and aid in the entrenchment of a national savings culture.

Nowhere is that responsibility more transformative than in South Africa, where the financial markets have tended to be elitist in terms of access across race, gender, and class.

As the middleman connecting the investing public and institutions with stock markets, stockbrokers are an integral link in the enabling value chain. They have the means, by consciously taking full advantage of every cost saving and productivity advantage to themselves that fintech stock exchanges offer, to ensure South African society at large benefits.

In addition, the country’s new stock exchanges will not just offer the ability for dual-listing of conventionally traded shares. They will add new investment options via restricted share offerings, new wave passive investment structures, venture capital, tax efficient structures, and a fully transparent fixed income market. By exploiting these options, stockbrokers will play a seminal role in broadening the market and providing access to it.

It’s difficult to understand, therefore, why stockbrokers wouldn’t jump at the opportunity to be social benefactors if, by doing so, they reduce their own costs and increase their revenue streams. They have nothing to lose and everything to gain.