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New exchange wins R3.5 trillion backing

Dec 13 2012 15:06 Byron Messaris

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Cape Town - Several finance stakeholders have supported an application for the establishment of an alternative exchange in South Africa.

The alternative exchange, the South African Financial Exchange (SAFE), is currently in the application phase with the Financial Services Board (FSB) and will list venture capital and small, medium, and micro enterprises (SMMEs).

SAFE’s licence application is reported to be supported by several financial institutions, banks and brokers with some R3.5 trillion in assets under management.

The JSE already has a similar alternative exchange, the AltX. It is a division of the exchange and provides listing for small and medium businesses not yet able to list on the JSE main board.

Former JSE senior manager Noah Greenhill, who was instrumental in establishing AltX in the early 2000s, welcomed the idea of alternative exchanges in South Africa, but notes the challenges.

“There is nothing wrong with competition. Competition means that everyone has to up their game,” Greenhill said.

Mark Wetherell, director at Quote Africa Group, of which SAFE is a member, said the exchange will compete with the incumbent JSE with an eye for listing SMMEs.

Head of investor relations at the JSE Michelle Joubert affirmed that South African regulations allow for potential competitors.

"The potential of another exchange in South Africa is always a possibility," said JSE CEO Nicky Newton-King.

"Competition is not new to the JSE. The JSE constantly competes with other exchanges around the globe," Newton-King said.

While Greenhill agreed that alternative exchanges could help SMMEs, which are more vulnerable to market cracks than bigger businesses, he said there would need to be a "compelling proposition" to set up such an exchange.

SAFE’s application is set to be heard before the FSB Appeal Board in early 2013.

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jse ltd  |  nicky newton-king  |  jse  |  smes  |  altx

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