ZAR X… true financial transformation
Adri Senekal de Wet
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.