ZAR X – South Africa’s new, fast and affordable stock exchange – is on track for its official launch in September, ushering in the era of realtime or T+0 settlement.
This was confirmed today by ZAR X chief executive officer Etienne Nel.
He noted: “A lot of work has gone in since we received conditional approval from the Financial Services Board some months ago. All suspensive conditions have had to be fulfilled to the satisfaction of The Registrar of Securities Services. We submit our final report to the FSB in the coming weeks for final approval prior to going live.
“Intensive collaboration was required with our partners at STRATE, the central securities depository, Computershare, the appointed central securities depository participant and our auditors, Nkonki.
“We’ve ticked all the boxes and we’re looking forward to opening ZAR X in September, as originally scheduled.”
Preparatory work with STRATE and Computershare was necessary to develop and bed down the technology driving the T+0 settlement system that puts ZAR X in the global forefront of rapid, safe and simple settlement.
Traditionally, South Africa’s long-established stock exchange has offered T+5 settlement – a matched trade and settlement with clearing into an investor’s account over a five-day period.
From the outset ZAR X offers same-day or T+0 settlement, with enhanced security as transactions are pre-funded.
Technology developed specifically for the new stock exchange is designed to cut costs and red tape while enabling share trading by mobile phone or hand-held device.
Simplified processing and fast settlement are achieved without a price premium. In fact, the ZAR X approach enables fees to be cut as:
§ ZAR X does not have to amortise costs relating to legacy issues
§ Modern technology removes costs associated with people-intensive systems
§ In the listings space a transition from a rules-based to a principles-based dispensation fosters cost efficiency
§ The need for lengthy compliance documentation is much reduced
§ Cost-efficient focus is achieved by concentrating on equities only, with no short-selling and no trading in futures and derivatives
Cost efficiencies permit several investor-friendly add-ons, including a free safe custody service, which drives financial inclusion to all South Africans previously excluded from formal investing.
Issuers have a choice of three platforms:
A main board for company listings;
An investment products market for trading structured products and Exchange Traded Funds (ETFs);
A ‘restricted market’ for trading BBBEE shares and other securities that can only be bought and sold across a narrow investor-base.
State-of-the-art systems specifically created by ZAR X facilitate trade between the holders of restricted BBBEE shares who are eager to realise value after participation in empowerment structures.
Nel pointed out: “Listing of restricted shares in the ZAR X space makes it possible for transformed companies to retain or enhance their empowerment profile in perpetuity.
“This is just one way in which ZAR X contributes to economic transformation.”
Simplified, affordable and accessible share-trading systems – sometimes via cell-phone – has the potential to promote greater equity ownership, particularly among lower-income groups that were previously excluded from full participation in the economy.
“This is why we are so excited by the prospect of a spring opening,” said Nel. “South Africa is building a new, progressive future and ZAR X promises to be a key building block.”