Ghanaian SecondSTAX Technology Allows Investors to Access Capital Markets Outside Their Countries, Raising $1.6 Million • TechCrunch

African capital markets are in silos, with many exchanges within the continent inaccessible to investors outside their home countries. For example, a South African investor wishing to diversify his investment portfolio outside the Johannesburg Stock Exchange may find it difficult to invest in the Nigerian Stock Exchange.

Not only does this limit investors’ access to high-growth securities, but it also limits access to capital that has grown by leaps and bounds over the past two years. According to reports, major regional exchanges in Africa have raised more than $80 billion in capital markets and $240 billion in debt capital markets.

While local retail apps like Bamboo and Chaka offer US and foreign stocks to individual consumers, they are as restrictive as traditional brokers when it comes to helping consumers buy stocks and bonds across the various capital markets within Africa. However, there is a startup that is peeking at the challenge and aiming to tackle it with a market data portal, multi-asset order routing and cross-border: Ghanaian fintech SecondSTAX (Securities Exchange and Aggregate Exchange).

The platform, which will allow brokers and dealers, asset managers, pension funds, and institutional investors to access markets outside their countries, announced its launch to the public today. To further its efforts, it has also raised $1.6 million in seed funding from private investors and venture capital firms, including LoftyInc Capital and STEMeIn.

SecondSTAX co-founder and CEO Eugene Tawia brings tremendous experience to managing such an ambitious project. In addition to spending more than a decade at Goldman Sachs, he has managed various advisory and technical positions for companies in the financial services and capital markets.

In 2018, a landmark event transformed his journey to build SecondSTAX. That was the year MTN Ghana, a local telecom operator, launched a public telecom operator in the West African country after raising about $237 million. “I was in conversations with the heads of the trading desks and there was a feeling that during the MTN IPO, even though one has a pool of money to invest, if you are not in Accra, there is no way to get into that IPO or buy into it,” Al-Taweya told TechCrunch. On a phone call. “So was the concept I had in mind, if I stay in Lagos, or Nairobi, or somewhere else outside of Accra, how do I access these offers and be able to trade them?”

Tawiah co-founded the company with Duke Lartey. SecondSTAX provides access to debt and equity securities across many African bonds and exchanges. Similarly, the B2B capital markets infrastructure platform says it will help investment firms outside Africa who want to invest in the continent’s emerging and frontier economies. The fintech said that the investment firms on its platform can also hold assets in different currencies, thus reducing the risks of the single currency and reducing the volatility of its returns, whether in Africa or elsewhere.

Detailing how SecondSTAX works, Tawiah says he thinks of his company’s platform as a layer in a series of concentric circles. The first and second circles consist of institutional investors from developed markets and those located in Africa, respectively, who are interested in investing in the various stocks and bonds available on African stock exchanges. SecondSTAX is the third circuit and acts as a gateway to the fourth circuit, the Exchanges.

“You have exchanges where the securities are traded in every country. Nigeria is a silo, same with Ghana, Kenya, South Africa etc. SecondSTAX is actually the aggregation of these exchanges across the continent. It is that only platform that connects them all together. And then, as an institutional investor Like Goldman Sachs in New York, Bank of America in the UK, or a small business in Singapore, they can access this platform to connect with each of these exchanges.”

SecondSTAX Team

According to the CEO, once the fintech infrastructure is operational, it will consider expanding its capabilities to support B2C investment management applications. Retail investors in and out of Africa will then be able to access and trade cross-border stocks and bonds via white-labeled apps launched by traditional brokers and powered by SecondSTAX or third-party wealth technology apps such as Bamboo, HashApp, Robinhood and Hisa.

“We do not differentiate between brokers; It could be brick and mortar or startups. Our potential client base is much wider than one type of organization; As long as the broker has a digital game, they can use our infrastructure to access African exchanges.”

The fintech, launched in 2020, targets the capital markets of Ghana, Kenya, Nigeria, South Africa, Morocco and Egypt. However, when launched, it will be launched on the first two, allowing market orders to be routed for all stocks across Ghanaian and Kenyan exchanges and allowing cross-border transactions in both capital markets through the sponsoring broker partnerships.

Al-Taweya says the funding will see SecondSTAX launch in additional countries by the end of the year and implement the activities that come with that, particularly on regulatory and licensing issues. There are also plans to increase the size of its staff and strengthen its technology by developing more features that its customers demand. “We anticipate that within the next 18 to 24 months, revenue from these customers will begin to become increasingly influential in terms of being able to shift us from a startup mode to an actual operating concept that generates meaningful revenue,” the CEO added.

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