File picture: Willie Cloete.

Johannesburg - ZAR X said on Wednesday it has been granted a stock exchange licence by the Financial Service Board (FSB), the first company to do so in more than 100 years.

The licence enables the company to operate a fully-fledged, independent stock exchange and provides what it calls an exciting “alternative to companies that want to list their securities on a licensed exchange”.

South Africa’s first, and until now, only bourse, the JSE, was formed in 1887 during the first South African gold rush.

After the first legislation covering financial markets in 1947, the JSE joined the World Federation of Exchanges in 1963 and upgraded to an electronic trading system in the early 1990s. The bourse demutualised and listed on its own exchange in 2005.

ZAR X has now joined this elite club and investors are able to trade securities across a state of the art technology platform that permits transactions to be executed on a T+0 or same day settlement of trades, said CEO Etienne Nel. “The ZAR X model is world leading and significantly reduces settlement risk as all transactions are pre-funded.”

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The JSE’s new computer systems also allow real-time trading, and trades to be executed via algorithms.

The founders of ZAR X are Etienne Nel, who previously set up and operated an established over-the-counter (OTC) trading platform, and Geoff Cook and Graeme Wellsted, ex-Investec alumni who are experienced compliance and legal advisors.

Three ZAR X boards are available to issuers:

- A main board for company listings, with compliance documentation significantly reduced when compared to the traditional model following a shift from a rules-based to a principles-based dispensation.

- A ‘restricted market’ – a formalised version of previous OTC platforms for the trading of BBBEE shares and other securities that can only be bought and sold within a limited marketplace where issuers require some control over the liquidity in their shares.

- An investment products market – a platform for the trading of structured products and preference shares.

Trading on the ZAR X Stock Exchange is expected to begin on September 1.