The Financial Sector Conduct Authority (FSCA) has cancelled the exchange licence of stock exchange, ZAR X,
This follows the suspension of the exchange’s licence in August 2021 over liquidity and capital adequacy concerns.
According to the FSCA, the cancellation of ZAR X’s licence follows its prolonged non-compliance with the liquidity and capital adequacy requirements of an exchange in South Africa.
In line with the sector’s regulations, ZAR X is now required to immediately inform all affected persons and all affected stakeholders of the immediate cancellation of its licence and cease all business of an exchange.
“No further trading of securities listed on the exchange is permitted and no new listings may be admitted,” the FSCA said.
The group also has to take necessary steps to facilitate the delisting of all listed securities on the exchange and provide weekly progress reports to the satisfaction of the FSCA.
ZAR X has 14 days to comply.
FSCA Commissioner Unathi Kamlana said the cancellation decision was not taken lightly.
“However, the decision follows a prolonged remedial process which was initiated to assist ZAR X to become compliant to the regulatory framework. The remedial process failed to yield positive results,” he said.
ZAR X launched in 2016 and was the first company to be awarded a stock exchange licence in South Africa in 60 years. It was the first new competitor to the Johannesburg Stock Exchange (JSE).
The exchange targeted smaller businesses and aimed to use technology to bring stock trading to a wider audience. It drew investment from various sources, including the Public Investment Corporation, which acquired a 25% stake in the group in 2018.
South Africa now has four licensed securities exchanges which remain operational within the South African financial markets.
The JSE is South Africa’s first and oldest exchange and has been in operation since 1887.
After ZAR X entered the market in 2016, another secondary exchange, 4AX launched in March 2017 and later rebranded to the Cape Town Stock Exchange in October 2021.
Another stock exchange, A2X was licenced in April 2017. The latest exchange to be licenced is the Equity Express Securities Exchange (EESE), which was granted its licence in September 2017.