New stock exchange to be launched in South Africa in September

New stock exchange to be launched in South Africa in September

JSE and ZAR X plan to work side by side to maximize investment opportunities

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Background

Founded during the first gold rush in South Africa in 1887, the Johannesburg Stock Exchange (JSE) with market capitalization of over US$1,007 billion, is the largest stock exchange in the Africa continent.

In 1963 the JSE joined the World Federation of Exchanges however in 2005 it listed on its own exchange. When ranked by market capitalization, the JSE is the world’s 19th largest stock exchange, with almost 400 listed companies, including big names like SABMiller, British American Tobacco, BHP Billiton and GlencoreXstrata, who make up a significant share of the market.

Following the decision in 2011 to amend the listing rules in South Africa, foreign companies are now treated the same as domestic listings. This has helped make JSE a very attractive listings destination.

ZAR X

In March 2016 the Financial Services board granted ZAR X a stock exchange license making them South Africa’s second stock exchange. They are due to begin trading on September 1st, 2016 and just like JSE, will be a fully independent stock exchange but unlike JSE, ZAR X will focus on mid-sized capitalized companies and the restricted market including those companies that cannot currently list with the JSE.

ZAR X has a different settlement model than JSE and has been described as a new, affordable and fast stock exchange. Any transactions made on the JSE exchange take 5 working days to be settled and cleared whereas the model used by ZAR X settles and clears any transactions made instantly.

Etienne Nel, the CEO of ZAR X said: “Our market which we are offering is a real market. There is no additional activity over and above standard trades. We have no derivatives or short selling.”, “The minute that you want to have complex listing requirements, lots of liquidity, and broad appeal, go to the JSE,”.

The state of the art systems being used by ZAR X not only enable their instant settlement model but also allow shares to be traded on mobile phones as well as other hand-held devices, allowing sections of the population previously excluded, namely those from lower income households, to fully participate in the country’s economy.

Initial interest

Whilst it is not possible to detail the companies that have already committed to listing on ZAR X, due to confidentially agreements, it is reported to include a number of technology companies.

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