SA grants first stock exchange licence in 100yrs – ZARX to compete with JSE

From Reuters

JOHANNESBURG, March 30 (Reuters) – South Africa has issued its first stock exchange operating licence in more than 100 years, paving the way for a local company to compete with the Johannesburg Stock Exchange (JSE).

JSE_October_2015ZAR X Stock Exchange said on Wednesday it would start operating in September after securing approval from the Financial Service Board (FSB).

The bourse will be the second exchange after the more than a century old JSE, Africa’s biggest and most liquid stock market.

ZAR X plans to facilitate listings of restricted share schemes, currently trading over-the-counter (OTC), which the FSB ruled were in contravention of capital markets regulations.

ZAR X media statement

ZAR X (Pty) Ltd announced today (Wed. March 30) that it has been granted a stock exchange licence by the Financial Service Board (FSB). The licence enables the company to operate a fully-fledged, independent stock exchange and provides an exciting alternative to companies that want to list their securities on a licensed exchange.

Investors are able to trade securities across a state of the art technology platform that permits transactions to be executed on a T+0 or same day settlement of trades, said ZAR X CEO Etienne Nel. The current timeframe is T+5 or five days between matched trade and settlement and clearing into an investor’s account. The ZAR X model is world leading and significantly reduces settlement risk as all transactions are pre-funded.

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“We also make investing simpler and affordable for the public – especially the lower income groups,” Nel added. The innovative technology enables investors to undertake trading via their mobile devices.

A key-driver he said, was to foster the financial inclusion of lower income South Africans who have largely been excluded and to foster a savings culture. In addition to the time and cost-saving features of the ZAR X Stock Exchange, a unique innovation is free safe custody facilities for investors.

The founders of ZAR X and pioneers of the new approach to investing and listings are Etienne Nel, who previously set up and operated an established over-the-counter (OTC) trading platform, and Geoff Cook and Graeme Wellsted, ex-Investec alumni who are experienced compliance and legal advisors.

Nel noted: “ZAR X have no historical practices and legacy systems which drive up costs and slow down transaction times. Our platform is specifically designed to give businesses a flexible, transparent and affordable way to list their shares. In particular, the exchange is especially well positioned to facilitate listings of restricted share schemes, currently trading OTC, which the FSB ruled were in contravention of the Financial Markets Act.

“A more flexible and practical listings process will ensure greater simplicity and less complexity for companies making use of the ZAR X Stock Exchange.”

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Three ZAR X boards are available to issuers:

  • A main board for company listings, with compliance documentation significantly reduced when compared to the traditional model following a shift from a rules-based to a principles-based dispensation.
  • A ‘restricted market’ – a formalised version of previous OTC platforms for the trading of BBBEE shares and other securities that can only be bought and sold within a limited marketplace where issuers require some control over the liquidity in their shares.
  • An investment products market – a platform for the trading of structured products and preference shares.

Nel added: “The FSB licence ushers in a new era in which the barriers to full economic participation by previously excluded sectors of the population are significantly reduced.

“The emergence of the ZAR X Stock Exchange is a signal that the rigid structures of the past are being dismantled, helping to clear the way for new entrants to the formal economy, especially black investors and entrepreneurs who are eager to make a bigger contribution to job creation and wealth generation.”

Trading on the ZAR X Stock Exchange is expected to begin on September 1.