South Africa’s first alternative exchange- ZAR X

South Africa's first alternative exchange, ZAR X.
South Africa's first alternative exchange, ZAR X.
South Africa’s first alternative exchange, ZAR X.

On Monday the 50-year long monopoly enjoyed by the JSE (Johannesburg Stock Exchange) ended as South Africa’s first alternative exchange- ZAR X made its debut with the listing of agri-business Senwes and its holding company Senwes Beleggings (Senwesbel) according to a report by MoneyWeb.

A report by Fin24 stated that since 1958 when the Union Exchange was closed by the government,  the JSE has been the sole exchange in South Africa. “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,” said Geoff Cook, director at ZAR X.

ZAR X CEO Etienne Nel said that the first purchase of 100 Senwes shares at R10,50/share was settled and cleared  in 10 seconds through the ZAR X platform, this process would normally take the JSE four days. This deal showcases the real-time settlement cycle called T+0 used by ZAR x, which is in line with global best practice, the JSE uses a T+3 settlement cycle which settles trades in four days.
ZAR X’s platform doesn’t facilitate short-selling, the practice of selling a stock that the seller doesn’t own, unlike the JSE and other global exchanges. This is in order to reduce systemic risk and create liquidity for companies, says Nel. “Investors can’t sell shares that they don’t own and get them post a sale event. In our environment, you need to do all the admin beforehand and that’s how we get the share settlement.”

The FSB Appeal Board dismissed the joint appeals of alternative stock exchange 4 Africa Exchange and the JSE in early February. The appeal was against the granting of an exchange licence to ZAR X. The dismissal opened the door for ZAR X to go live with its exchange.

There are deals in the pipeline according to Nel, ZAR X has five potential companies, with a minimum market capitalisation of R200 million. When questioned on how many more listings does ZAR X need to be sustainable, Nel said: “It depends on the underlying listed company. The focus for ZAR X is to list quality companies that will trade effectively. We could do a R10 billion to R15 billion listing and it has huge amounts of liquidity for us.

The opening of this alternative exchange could well usher in a new era for trading in South Africa.

Staff Writer