New stock exchange 4AX says it is exploring the potential for foreign inward listings, dual listings and how best to be accessible to foreign investors.
4AX, which obtained its licence in August 2016, was in discussions with the Reserve Bank to understand what inward listing and foreign-exchange control requirements it would need to meet, CEO Fay Mukaddam said on Wednesday.
The JSE has attracted a slew of recent inward listings, particularly in the property sector.
Foreign investors comfortably account for more than half the value traded on the bourse, effectively providing the liquidity it needs to function.
4AX and ZAR X will arguably need to attract foreign investors, including foreign institutions, to achieve the liquidity needed for a sustainable exchange.
"Liquidity and volume … drives all exchanges around the world. To drive volumes, we need to ease restrictions to bring in foreign money to trade on the exchange," said Tim Marshall, the CEO of Terbium Financial Services (formerly Trifecta Capital), which is behind 4AX’s technology platform.
Michelle Krastanov, the head of sponsor services at Arbor Capital, said the extent to which capital raising was successful on new exchanges and underwritten by brokers would also play
a key role in where issuers decided to list.
An Arbor Capital client, which qualified to list on the JSE’s main board, was instead keen on a ZAR X listing due to the cost saving, Krastanov said.
A second client was weighing up the AltX and ZAR X.
ZAR X, which began trading in February, is licensed to trade equities only, but CEO Etienne Nel said the exchange would consider other instruments if it identified a need.
4AX’s exchange licence enabled it to list a range of asset classes including equities, debt, special-purpose vehicles and real estate investment trusts, said Mukaddam.
Its current listings pipeline included agriculture, renewable energy, property, tourism and hospitality, and financial services assets, she said.
"We do not believe 4AX has any competitors," Mukaddam said, noting it would target "untapped markets", including small and medium-sized businesses and restricted share schemes, such as broad-based black economic empowerment schemes.
Asked why ZAR X was not viewed as a competitor, Mukaddam said its structure, model, target audience and licence were different to 4AX.
4AX had partnered with the Gauteng government on investor education, said chairwoman Chichi Maponya. It would target entrepreneurs and informal savings schemes, such as stokvels, she said.
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