ZAR X… true fi­nan­cial trans­for­ma­tion

Adri Senekal de Wet

Cape Times - - OPINION&ANALYSIS - Go­liath. Adri Senekal de Wet is ex­ec­u­tive edi­tor of Busi­ness Re­port.

YOU CAN’T con­cen­trate on do­ing any­thing if you are think­ing what’s gonna hap­pen if it doesn’t go right,” said Mal­colm Glad­well in his book David and

This is the heart and soul of the chief ex­ec­u­tive of ZAR X. South Africa’s new­est op­er­a­tional stock ex­change ZAR X is here to stay, and to make a dif­fer­ence – a low­cost, sim­ple and con­ve­nient trad­ing plat­form that em­pow­ers or­di­nary South Africans with share­hold­er­ship op­por­tu­ni­ties.

“I am about to board a plane to Cape Town, and hope to com­plete my opin­ion piece in time”, I said to Busi­ness Re­port’s news edi­tor. But I am so ex­cited af­ter my meet­ing with ZAR X chief ex­ec­u­tive Eti­enne Nel yes­ter­day that even if I need to copy and paste from their web­site – I just have to share some of the ex­cite­ment with our read­ers. Af­ter more than six decades, South Africans have a new stock ex­change, and it was like start­ing a new bank and news­pa­per house for Nel. Com­pe­ti­tion is fierce, and they don’t want to share their place in the sun.

ZAR X se­cured ap­proval from the Fi­nan­cial Ser­vices Board (FSB) back in Jan­uary 2015 to start op­er­at­ing, but months and years went by. Var­i­ous meet­ings and court cases with the JSE fol­lowed. But where there’s a will there’s a way, and Nel won the bat­tle and on Fe­bru­ary 20 ZAR X cel­e­brated the first list­ing: Sen­wes and Sen­wes In­vest­ments.

“I asked my­self ‘Why Not’,” Nel said. “Why not have a stock ex­change with zero cus­tody fees and real-time set­tle­ment? The JSE set­tles trans­ac­tions af­ter three days (T+3 – pre­vi­ously T+5), ZAR X set­tles in less than 10 sec­onds!”

ZAR X plans to fa­cil­i­tate list­ings of re­stricted share schemes cur­rently trad­ing over-the-counter (OTC).

“ZAR X’s li­cence en­ables the com­pany to op­er­ate a fully-fledged, in­de­pen­dent stock ex­change and pro­vides an ex­cit­ing al­ter­na­tive to com­pa­nies that want to list their se­cu­ri­ties on a li­censed ex­change.

“In­vestors are able to trade se­cu­ri­ties across a state of the art tech­nol­ogy plat­form that per­mits trans­ac­tions to be ex­e­cuted on same day set­tle­ment of trades,” Nel said. Fact is that the ZAR X model is world lead­ing and sig­nif­i­cantly re­duces set­tle­ment risk, be­cause all trans­ac­tions are pre-funded.

“We also make in­vest­ing sim­pler and af­ford­able for the pub­lic – es­pe­cially the lower in­come groups,” Nel added. The in­no­va­tive tech­nol­ogy en­ables in­vestors to un­der­take trad­ing via their mo­bile de­vices.

Nel was quoted ear­lier as say­ing: “A key driver for me was to fos­ter the fi­nan­cial in­clu­sion of lower in­come South Africans who have largely been ex­cluded and to fos­ter a sav­ings cul­ture”.

Nel is the founder of ZAR X and is joined by pi­o­neers of the new ap­proach to in­vest­ing and list­ings. Pi­o­neers who like him­self pre­vi­ously set up and op­er­ated an es­tab­lished OTC trad­ing plat­form. Pi­o­neers like Ge­off Cook and Graeme Well­sted, ex-In­vestec alumni, who are ex­pe­ri­enced com­pli­ance and le­gal ad­vis­ers.

Nel noted: “ZAR X has no his­tor­i­cal prac­tices and le­gacy sys­tems which drive up costs and slow down trans­ac­tion times. Our plat­form is specif­i­cally de­signed to give busi­nesses a flex­i­ble, trans­par­ent and af­ford­able way to list their shares.

“In par­tic­u­lar, the ex­change is es­pe­cially well po­si­tioned to fa­cil­i­tate list­ings of re­stricted share schemes, cur­rently trad­ing OTC, which the FSB ruled were in con­tra­ven­tion of the Fi­nan­cial Mar­kets Act.

“Com­pa­nies that con­sider a list­ing on ZAR X do not have to sub­mit a prospec­tus to share­hold­ers, which can eas­ily add another R650 000 to the list­ing fee – in print­ing cost – for an av­er­age com­pany with 5 000 share­hold­ers. We stand for a more flex­i­ble and prac­ti­cal list­ings process, en­sur­ing greater sim­plic­ity and less com­plex­ity for com­pa­nies mak­ing use of ZAR X.”

Nel spoke about a main board for com­pany list­ings, with com­pli­ance doc­u­men­ta­tion sig­nif­i­cantly re­duced com­pared to the tra­di­tional model, fol­low­ing a shift from a rules-based to a prin­ci­ples-based dis­pen­sa­tion.

A “re­stricted mar­ket” is a for­malised ver­sion of pre­vi­ous OTC plat­forms for the trad­ing of BBBEE shares and other se­cu­ri­ties that can only be bought and sold within a lim­ited mar­ket­place where is­suers re­quire some con­trol over the liq­uid­ity in their shares, and an in­vest­ment prod­ucts mar­ket.

I am look­ing for­ward to a suc­cess­ful jour­ney where we get rid of the rigid struc­tures of the past and where we pave the way for new en­trants to the for­mal econ­omy, es­pe­cially black in­vestors and en­trepreneurs ea­ger to con­trib­ute to the wealth of the pre­vi­ously de­prived.


Eti­enne Nel is chief ex­ec­u­tive of ZAR X, SA’s new­est stock ex­change.

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