Township exchange an edge closer

The fifth prospective stock exchange in the country, the South African Financial Exchange (Safe), is a step closer to opening its doors for business after it got the thumbs up from the Financial Services Board (FSB).

According to Safe CEO Francois Venter, the company managed to get approval from the FSB and now only needs the go-ahead from the JSE.

The company, which is black-controlled, will be targeting the township economies and Venter said the model would enable the lower end of the market and small and medium-sized enterprises (SMEs) to grow.

“We have a complete niche market and will be closely working with government to provide funding to SMEs and growing companies from inception, as well as providing training to entrepreneurs and company incubators and helping grow the South African economy.”

Venter further said the fact that the FSB was issuing a slightly higher number of exchange licences despite the size of the market was a good thing.

“It is great that the FSB has opened the market to many exchanges and this is how the international markets work.

"If you look at the Bric countries alone, India has two national exchanges and something like 23 regional exchanges, and Russia, China and Brazil have multiple ­exchanges.

"So, South Africa is following the international trend where the concept of one national exchange per country is outdated,” he said.

New business 

Venter added that Safe has unique products and will be working closely with government and cater for businesses that the other exchanges do not cater for.

“So, we have a niche product and we have more that R5 trillion of assets under management letters of support from the buy and sell side from the market, as well as government,” he said.

Venter said Safe was actually not competing with the other existing exchanges.

“The JSE, ZARX and 4AX are competing against each other.

"If you look at their market caps, they are only accommodating the upper end of the market and their requirements are a minimum of R100 million.

"A2X is a multilateral trading facility competing directly against the JSE. For the SME market, Safe needs a minimum of one year’s externally audited financial statements. For the mid-cap market Safe needs three years.

"As little as R1 million can be raised on the SME market and R3 million on the mid-cap markets.

"When we launch the Venture Capital Issuer market, as little as R1 million can be raised here as well.

"This will be launched three months after the SME and mid-cap board is launched,” he said.

Venter said he did not expect the JSE to object to its entry, especially after the exchange publicly stated that it supported competition.