This is according to niche independent investment banking and advisory firm, Bravura, which stated that if a licence is granted to 4 Africa Exchange (4AX), it will be the second licensed exchange in South Africa, next to the [DATA JSE:JSE].
“The consortium, led by Bravura, is in the process of applying for a licence to become an exchange for trading in shares of companies that are currently trading over-the-counter (OTC), shares in BBBEE schemes as well as limited participation share entities,” it said.
“The other stakeholders in the consortium include Trifecta Capital, Intercontinental Trust, Capital Markets Brokers, NWK and Global Environmental Markets (GEM), a developer of electronic exchange trading platforms.”
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Stephan van der Walt, spokesperson for 4AX indicated that the aim of the exchange is to provide an infrastructure and service that will meet the needs of issuers as well as the needs of investors.
This while adhering to the regulatory oversight provided by the Financial Services Board (FSB).
According to the company, the application follows a directive issued by the FSB in July 2014 which stated that companies must either licence their OTC platforms as a regulated exchange, cease the illegal unlicensed exchange activities, or obtain the appropriate exemption to continue with such activities.
“This caught many companies off guard and most of those companies applied for exemption from the requirements. In most instances, exemptions were granted for a limited period to provide companies to consider alternatives,” van der Walt said.
He further stated that by obtaining a licence, 4AX will provide issuers and shareholders with ease of investment and trading, increased liquidity, more market exposure, a lower cost alternative to the JSE as well as enable asset managers who may only invest in listed shares to also enter this market.
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Van der Walt also believes that the 4AX technology and business model will address the issues facing ‘Restricted Shares’, which is the restrictions on share trading embedded into the founding documents of some companies.
“This will give the companies and share issuers comfort over the fact that their shares are being traded by appropriate investors, award such companies the ability to unlock value for their shareholders and give them a liquid market on which they can trade their shares in a cost effective manner,” he stated.
“The consortium sees a lot of value in developing an exchange which would not only provide security to investors but enable, develop and deepen capital markets in South Africa in a fair, efficient and transparent manner. We believe that the market is ready for an exchange alternative to the JSE.”