South Africa is to get its second stock exchange, after the Johannesburg Stock Exchange has dominated trading in the country for more than a century. ZAR X has been given a licence to operate, and it plans to be up and running in September.
South Africa is to get its first new stock exchange in more than a century. ZAR X Stock Exchange announced yesterday that the Financial Services Board (FSB) had granted it conditional approval for a stock exchange licence.
The licence had been granted under the Financial Markets Act and the conditional approval was granted subject to certain suspensive conditions being met to the satisfaction of the Registrar of Securities Services, said ZAR X.
The Johannesburg Stock Exchange has been South Africa’s only bourse. It was founded in Johannesburg in 1887, during the Witwatersrand gold rush. It is Africa’s biggest and most liquid stock market.
ZAR X intends to start operating in September, and aims to enable more lower- income investors to trade shares. According to the company, ZAR X will help “you to grow your financial potential through investment and saving”.
ZAR X, the company explains, is a platform that will let “everyday South Africans transact shares quickly, cheaply and conveniently, even if they have never formally invested money or opened a bank account before. The platform is designed to empower those who don’t have skills or experience in investing, to easily and safely build a brighter financial future for themselves and their families.”
It will also give business enterprises a flexible, transparent and affordable way to list their restricted or limited share offerings, so that ordinary South Africans can take advantage of them. The idea will be to give South Africans access to restricted share listings, to help them secure investment opportunities in order to build financial security.
Bloomberg news agency reports that ZAR X plans to run three sections: a main board for company listings, an over-the-counter stock-trading business, and an investment products market.
“A more flexible and practical listings process will ensure greater simplicity and less complexity for companies making use of the ZAR X Stock Exchange,” chief executive officer Etienne Nel said in a company statement. “We also make investing simpler and affordable for the public, especially the lower income groups.”
In a Moneyweb report, Nel said a big cost advantage for investors was that there would be no custody fees. These are fees paid by investors towards brokers who execute trades on their behalf. Although there will be brokers on the ZAR X, investors will not have to execute trades directly through them. Instead they will be able to log their trades via a call-centre, online, or through a mobile app, the online financial news portal reports.
ZAR X will be based in Bryanston, Johannesburg, although there will not be a central market itself. Investors will be able to monitor the performances of their shares on the company’s website.
It will be in good company. The JSE rates among the top 20 exchanges in the world by market capitalisation.
The JSE is regarded as a mature, efficient, secure market with world-class regulation, trading, clearing, settlement assurance and risk management. It has harmonised its listing requirements, disclosure and continuing obligations with those of the London Stock Exchange and offers superb investor protection.
The World Economic Forum’s 2015-16 Global Competitiveness Index rates South Africa first in the world – out of 140 countries – for financing through the local equity market, and second for the regulation of securities exchanges.
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