In a sign of the changing shape of global financial markets, a stock exchange best known for its pioneering digital listings has registered the world’s fastest growth rate.
In contrast with shrinking capitalisation globally, the World Federation of Exchange’s latest data show that MERJ Exchange expanded by 325% in the past year to US$1.2 billion. The pace surpasses even the 318% for Tadawul, which listed Saudi Aramco as the world’s most valuable company last year. Most of the world’s 83 stock exchanges have seen capitalisation decline, on average by 7%, according to the data compiled by the WFE for the 12 months to the end of February.
Along with equity listings from America, Africa and Asia in the past year, MERJ Exchange became the first stock market globally to list digital versions of shares, or tokenised equity. The structure combines the highest regulatory compliance with distributed ledger technology to vastly reduce listing and administrative costs.
Located between growth markets in Asia and Africa, expansion for the national stock exchange of the Seychelles is set to continue, with three new companies waiting to list, including another tokenisation.
“This tremendous growth we’re seeing is a reflection of the rapid pace at which financial markets are shifting towards more efficient structures,” said Edmond Tuohy, CEO of MERJ Exchange. “MERJ is disrupting the traditional stock exchange model, breaking down cross border barriers and streamlining processes, ultimately reducing costs for both investors and listed companies”
Listings on MERJ Exchange in the past year have ranged from US consumer finance group Investment Evolution Corporation to Chinese agricultural company Burdock Industry Limited and African venture fund Minervest.
During the past decade, the Seychelles has successfully created a financial services sector with a regulatory framework that is recognised by the International Organization of Securities Commission (IOSCO), the Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF). The alignment of regulatory standards with major markets around the world has positioned MERJ Exchange to become a full member of ANNA, meaning it can issue ISIN identifiers, the standard codes found on stocks and bonds.
Created in 2012 as TropX, the exchange operating group set out to build a borderless capital market that leverages technology to reduce unnecessary cost and red tape, whilst maintaining the highest governance standards.
One of the ways all of this is achieved is through distributed ledger technology, which is used as a tool to simplify a number of the complexities of operating a cross-border multi-currency platform. In addition, investors can either access the exchange directly via web or mobile app or through more traditional broker and member channels. The efficiencies created mean that companies from the world’s fastest growing economies can list securities at a much earlier stage than would be economic on traditional markets, taking advantage of the benefits of a full exchange listing and a diverse global investor pool.
While coronavirus is inevitably disrupting many IPOs worldwide, companies listing on MERJ Exchange are often motivated by a recognised framework for liquidity rather than raising fresh capital. If anything, that need is greater during an economic downturn, said Bobby Brantley, the exchange’s co-Founder. “Our job during these uncertain times is to enable the market liquidity that keeps the wheels of the global economy turning.”
