27 Jun.
BEE share trading on alternative exchange to JSE.
The JSE might finally be facing some competition. Software development company Singular Systems has developed an online trading platform to allow black investors to trade their BEE shares. It has already secured African Bank’s Hlumisa and Eyomhlaba BEE share schemes.
According to Singular Systems Etienne Nel, African Bank approached the company to develop a trading platform as it felt the JSE’s systems were too restrictive and expensive. “ They didn’t go to the JSE because they (African Bank) had unique rules for their scheme which the JSE couldn’t cater for,” he says. These include a phased vesting option which only allows investors to sell the shares after certain periods.
The JSE only has Sasol Inzalo shares available for trading on its BEE segment.
African Bank says these schemes remove the need to pay a stockbroker. Investors can register online and immediately begin trading with other black South Africans.
The bank’s CFO, Nithia Nalliah, says that not going to the JSE was not a cost issue. “The JSE allows non-natural persons, such as CCs, to buy shares,” he says. “We want to empower the right people.”
Nel says Singular Systems is also working on a mobile website that would allow potential investors to register and trade from their cellphones. “Still, the platform has been quite successful with over 115000 Eyomhlaba and 42500 Hlumisa shares traded,” he says. “The average transaction size is R2000-R3000.” He says African Bank has listed over R1,5bn worth of Eyomhlaba and Hlumisa shares.
Equity Express sells shares on a trade plus two days basis (money and shares are transferred in 48 hours). The JSE sells on trade plus five days, says Nel.
Singular Systems is negotiating deals to develop similar tailored platforms for several listed companies .
JSE deputy CEO Nicky Newton-King says flexibility has never been a problem . “Our system is one which works for any share or financial instrument, from depository receipts to BEE shares,” she says. “Requirements are generic but create a regulated environment. You have to go through a listing process, which is there to protect investors and ensure they get the best possible price.”
Nel admits investors using Equity Express may not get the full value from the sale of their shares. “Eyomhlaba is trading at R12 while the net asset value is R20,” he says. “People buy for one reason but sellers have to pay school fees and put food on the table. I’d rather give them choice.”
Source: Financial Mail
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