SA’s third bourse has six listings in pipeline

4AX, a recently licensed stock exchange, says it hopes to begin trading in April and it has six listings in the pipeline.

“What we have here will be a game changer for our country and a catalyst for transformation. We are hoping to offer an alternative platform that targets retail and institutional investors,” said 4AX CEO Fay Mukaddam.

Together with ZAR X, 4AX was granted a licence on August 31 2016 by the Financial Services Board’s (FSB’s) registrar for securities services.

The new stock exchanges are the first to enter a market dominated by the JSE for at least half a century.

4AX would list a range of asset classes, such as equities, debt and special purpose vehicles, said Mukaddam. Most of the listings in its pipeline were equities but some fell into other asset classes.

It had also teamed up with the Gauteng provincial government to look at listing small and medium-sized businesses, such as township entrepreneurs, Mukaddam said.

This would give these businesses access to additional

capital and would introduce more retail investors to stock market investing, she said.

4AX, which would provide low listing and compliance costs, hoped to simplify trading to open it up to the broader public, Mukaddam said. It would make market data, such as stock prices, freely available.

The exchange would focus on companies with a market capitalisation of R100m-R8bn, as well as issuers with security trading restrictions, such as over-the-counter and broadbased black economic empowerment schemes.

The Maponya Group, led by Chichi Maponya, is among 4AX’s shareholders, via AfroMap Investments.

“We have a commitment to be a black-owned exchange and are in discussions with potential investors,” said Mukaddam.

A review application of the FSB appeal board’s decision to uphold an earlier decision by the registrar to grant ZAR X a licence was with 4AX’s legal team, she said.

ZAR X began trading on February 20, settling its first trade in 10 seconds, a first in the South African market.

In February, the FSB appeal board dismissed with costs two separate but consolidated appeals brought by 4AX and the JSE against the granting of an exchange licence to ZAR X.

The appeal board felt ZAR X and the registrar had complied with the Financial Markets Act, which seeks, among other objectives, to ensure that financial markets are fair and promote investor protection.

“There are certain checks and balances that are absent in the ZAR X model, which gives us cause for concern because of the potential to introduce systemic risk into the market,” said Mukaddam. 4AX felt there had been insufficient strengthening of ZAR X’s governance structures, she said.

The appeal board did not have the power to decide some of the procedural challenges raised in 4AX’s appeal. These and other aspects needed to be tested in a review court in order to give effect to the Financial Markets Act and its core aims, Mukaddam said.