Trading kicks off on SA’s newest stock exchange | Fin24

Trading kicks off on SA’s newest stock exchange

Feb 20 2017 14:12
Gareth van Zyl

Johannesburg - South Africa’s new stock exchange, ZAR X, kick-started trading on Monday with the listing of one the world’s largest white maize providers.  

Agriculture business Senwes and its holding company Senwesbel, which has 60 silo complexes that allow storage of 25% of South Africa’s grain output, is the first to list on Johannesburg headquartered exchange ZAR X.

Senwes focuses on input supply, financial, equipment, and precision farming services. Its other focus areas include grain handling and secure storage in seven provinces ranging from Gauteng to the Western Cape.

The listing of Senwes comes days after the Financial Services Board (FSB) dismissed an application by the Johannesburg Stock Exchange (JSE) against the licence granted to exchange newcomer ZAR X.

The JSE had contested the licence granted to ZAR X as far back as 2015, and had launched four appeals. But on February 10, Judge LTC Harms, deputy chair of the FSB appeal board, said there was no evidence that the JSE would suffer harm or prejudice amid ZAR X’s launch.

READ: Failed JSE appeal paves way for ZAR X launch

And on Monday, it took just under 10 seconds after 09:00 for the first trades in Senwes to settle on ZAR X.

ZAR X is the first alternative stock exchange to the JSE in South Africa since the Union Exchange was closed by government in 1958.

"After all the effort that we've put in and all the speed bumps that we've had to encounter it's just good to actually get on the board so to speak and forge ahead,” Geoff Cook, director at ZAR X, told Fin24.

"Literally the first trade that went through this morning took just under ten seconds to settle. In other words, the purchaser had the shares in his account in under ten seconds and the seller had the cash under ten seconds.

"We've had a couple of trades go through, but in typical South African fashion everybody is now queuing up and busy trying. We've been inundated by brokers this morning,” Cook said.

ZAR X is moving to differentiate itself from the likes of the JSE by, for example, only requiring appointed advisers and not necessarily sponsoring brokers.

Investors can also buy shares on ZAR X in real-time through brokers and it promises to make itself more accessible to South Africans as participants only require R1 000 to start trading.

"We have a pre-funded and pre-cleared and pre-validated settlement model, which is effective in real-time,” Cook told Fin24.

“So, if somebody wishes to purchase a ZAR X listed security, they must pre-fund the ZAR X nominees' account,” he added.

OTC trade migration

Senwes’ listing on ZAR X comes after it decided to migrate its ‘Over The Counter’ (OTC) share trading to a licenced environment as required by the Financial Markets Act of 2012.

In 2014, the FSB issued a directive and guideline to compel the existing OTC equity trading market to alter its methodology, and operate through a licensed exchange in terms of the Financial Markets Act, or cease trading outright.

The directive has resulted in big local companies such as Vodacom and MTN, which operated restricted BEE shareholder schemes on the OTC market, to launch these schemes formally on the JSE in recent months.

But while ZAR X is offering an alternative for companies that have been engaged in the OTC market, Cook said that the exchange is casting its net wider.

"For those companies [engaged in OTC trades], ZAR X offers them a very good way to become legal I suppose,” said Cook.

"They are an easy target, but it's not necessarily our focus,” he added.

Competition with JSE

Reacting to its failed bid to halt the license of ZAR X; Donna Nemer, director of capital markets for the JSE, told Fin24 earlier this month that the JSE is open to competition but wants high regulatory standards protected.

READ: JSE reacts to competitor exchange judgment

“We want our markets to be inclusive to small and medium size companies and reach investors which have not had access to it in the past. But instead of lowering the standard, they should be given a market that sets a high global standard,” Nemer told Fin24 at the time.

But Cook told Fin24 that he thinks the JSE’s fears over lower standards are “fundamentally unfounded”.

He also told Fin24 that ZAR X plans to provide South Africa with an alternative when it comes to buying and selling shares.

"There are various markets within the South African market,” Cook said.

"As ZAR X, we decided that there was opportunity within the market.

"It's like Capitec...we will broaden our products going forward based purely on market demand,” Cook added.

Read Fin24's top stories trending on Twitter:

zar x  |  jse  |  trading  |  shares


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