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4 Competitors That Want To Disrupt The Johannesburg Stock Exchange Monopoly

4 Competitors That Want To Disrupt The Johannesburg Stock Exchange Monopoly

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India has 21 stock exchanges, China and Russia each have four and the days are numbered for the Johannesburg Stock Exchange monopolizing South Africa’s equity market, MoneyWeb reports.

A growing number of wanna-be exchanges hope to destabilize the JSE.

The JSE announced plans to open a second office in Cape Town — its first outside its Johannesburg headquarters, according to a January BusinessDayLive report.

A second office will facilitate innovation, said JSE capital markets Director Donna Oosthuyse.

More likely, JSE made the move to defend its territory in light of new players who want to establish competing stock markets, said a Cape Town-based fund manager.

Here are some of the wanna-be stock exchanges looking for approval to start trading in South Africa.

Etienne Nel. Photo: moneyweb.co.za
Etienne Nel. Photo: moneyweb.co.za

ZAR X

ZAR X describes itself as a cheap, simple and convenient trading platform that empowers ordinary South Africans with shareholding opportunities, “even if they have never formally invested money or opened a bank account before,” said CEO Etienne Nel, according to BusinessTech.

“The platform also gives business enterprises a flexible, transparent and affordable way to list their restricted or limited share offerings, so that ordinary South Africans can take advantage of them,” Nel said.

ZAR X hopes to be approved by the end of March for an application to the Financial Services Board to begin trading in South Africa.

Kevin Brady, CEO, A2X. Photo: africanbusinesscentral
Kevin Brady, CEO, A2X. Photo: africanbusinesscentral

A2X

Partners Kevin Brady, Ashley Mendelowitz, and Sean Melnick want to compete with Africa’s oldest and largest financial market by undercutting the monopoly’s fees at a competing exchange — A2X, Bloomberg reported in a Biznews story.

Brady once headed equity trading for South African-born bank Investec Ltd. Mendelowitz, is formerly with tech company Peresys Ltd. Melnick co-founded investment firm Peregrine Holdings Ltd.

A2X may open for trade in the second half of 2016 if its license application is approved by the regulator, the Pretoria-based Financial Services Board.

wants to compete with Africa’s biggest and oldest financial market, JSE Ltd. To do that he plans to undercut the monopoly’s fees.

“Our target is to make the end-to-end cost of an equity trade between 30 to 50 percent cheaper,” said Brady, 48, in a Sept. 3 phone interview. “Our value proposition is about giving people a choice and a high-performance platform with top-end technology and a material reduction in price.”

African Financial Exchange (SAFE)

Francois Venter. Photo: linkedin.com
Francois Venter. Photo: linkedin.com

SAFE intends to compete directly with the JSE, with plans to have 10 boards including a small-to-medium enterprises board, venture capital board and commodities board, Moneyweb reports. It will also cater to companies trading over the counter — currently an unregulated market.

The SAFE main board will offer cheaper and faster processing, said Francois Venter, a former executive of the Bond Exchange of South Africa who’s heading up the endeavor. Venter has written rules for stock exchanges in several African countries and helped set up the Seychelles Financial Exchange (Trop-X) in 2013.

SAFE will make it easier for companies to list, unlike at the JSE where the listing requirements are 497 pages long, Venter told Moneyweb. Venture capitalists without a track record will be able to list. A five-year forecast of your product or business model will do, while SMEs would only need to provide one year’s financial statements. The commodities board will also make it easier for small mining companies.

Just 6 percent of African mines are listed in Africa while 90 percent are listed offshore, Venter said in a Moneyweb interview. “If you’re a junior miner and you want to start a mine, you don’t have any revenue so you can’t list on the local exchange … That needs to change. What we’ve done is match buyers with sellers, and that’s all an exchange is.”

SAFE submitted its application in 2012, and hopes the exchange licence will be issued in 2016

“We’ve almost finalized the listing requirements and rules. We’re about two to three weeks away from complying with everything that they require. After that, we’ll start the public consultation phase,” Venter said on Feb. 8, 2016.

Chichi Maponya, newly appointed board member of 4AX. Photo: destinyconnect
Chichi Maponya, newly appointed board member of 4AX. Photo: destinyconnect

4 Africa Exchange (4AX)

The 4 Africa Exchange, or 4AX, hopes to provide a platform for companies trading over-the-counter shares and issues that are part of South Africa’s black economic empowerment program.

4AX plans to be South Africa’s second licensed exchange, and had hopes to be trading by October 2015, Bloomberg, reported a year ago.

It hasn’t launched yet but in December announced the appointment of two leading South African businesswomen to its board. The new 4AX CEO is Fay Mukaddam, outgoing president of the Johannesburg Chamber of Commerce and Industry. Brand South Africa chairwoman Chichi Maponya has been appointed to the board, according to ENCA.

At least 20 companies that are part of South Africa’s black economic empowerment program are trading OTC, Bloomberg reported. They have a combined market capitalization of $1.7 billion, and at least eight of them expressed an interest in 4AX.

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