Prospective new South African stock exchange 4 Africa Exchange (4AX) wanted to start operating with five listings when it launched later this year, Fay Mukaddam, 4AX CEO, said this week.
Other than share listings, Mukaddam said the company might consider debt instruments in future.
Cooperative company NWK, which is also a 4AX shareholder, was likely to be one of the first companies to list on the exchange, said Mukaddam, who is a 4AX minority shareholder.
She declined to say which other companies could list on the exchange once it was up and running.
The exchange was looking for companies with a market value of more than R25 million to list, but its target market was corporates with a market capitalisation of between R100 million and R8 billion, Mukaddam said.
Solly Keetse, Financial Services Board (FSB) head of the directorate of market abuse, said the FSB registrar had published notices of applications for exchange licences by three applicants, namely, ZAR X, 4AX and 2AX.
Last month, the FSB granted ZAR X’s application to be licensed as an exchange, subject to certain suspensive conditions, and ZAR X is looking to launch in September.
Chichi Maponya, a 4AX director, said 4AX was expecting to get FSB approval soon and was hoping to be up and running by June.
An executive at a Johannesburg-based JSE brokerage said 4AX, as well as the other companies that were planning to open new stock exchanges, would have to establish niches for themselves because the “JSE is too well established”.
“The new stock exchanges will have to find their niches and grow from there. It is going to be a long haul,” he said.
The key issue was for the new exchanges, once they launch, to attract corporates to list.
“The new players need to develop critical mass. Their costs need to be matched with trading uptime. The JSE is not going to let their market share be lost easily. I just wonder if South Africa is big enough for a number of exchanges,” said the JSE broker.
Mukaddam said the new exchange would try to reduce red tape, but would have proactive surveillance and monitoring.
The exchange would allow normal or restricted equity or debt, except mineral and property companies, and other securities like derivatives, she said.
The exchange would allow for primary and secondary dual listings, Mukaddam said.
Like ZAR X, 4AX will also facilitate restricted share trading, which would likely apply to BEE schemes, former cooperatives, mutual societies and certain employee schemes.
“The economy has stayed within the range for the past two decades. Many more people need access to capital and finance. We need the ability to mobilise more capital. If we don’t solve this problem, we won’t have the ability to grow,” 4AX’s Maponya said.
Black Business Council CEO Mohale Ralebitso said the council would welcome the day when 4AX went live.
Ralebitso said that 4AX would deal with the needs of smaller entrepreneurs and would help ensure that capital was used and contributed to the growth of the economy.
Mukaddam said 4AX started life in 2013 when its shareholders saw a gap in the market.
It first made its application to the FSB in June last year.
The company has six staff at present, but this was set to increase to 25 once the company got its licence and was up and running, and 4AX’s maximum staff complement was expected to be 40, Mukaddam said.