The Financial Sector Conduct Authority (FSCA) in South Africa has suspended ZAR X ’s exchange license.
“The suspension resulted from ZAR X’s non-compliance with section 8(1)(a) of the Financial Markets Act (FMA), read with Regulation 8 and 43(2) of the FMA Regulations, which relate to the liquidity and capital adequacy requirements of an exchange,” the FSCA said in a statement.
“We don’t take this regulatory action lightly, given its impact,” FSCA commissioner Unathi Kamlana said in a statement. “Our view, however, is that this is a necessary step to safeguard market integrity and the interest of issuers and the broader investing public. This is the cornerstone of our mandate as the FSCA.”
The first new stock exchange in South Africa in 58 years, ZAR X, was established five years ago. The exchange was founded after new regulations allowed new rivals to enter the market, including the JSE.
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The exchange promised to resolve share trades substantially faster than the JSE. Senwes and Runway Property Group are two of the few companies that have listed on the market.
On behalf of the Government Employees Pension Fund, the Public Investment Corporation (PIC) purchased a 25% share in the exchange in 2018.
The market, however, is now facing closure, with the FSCA threatening to revoke its license in three months unless it addresses the watchdog’s concerns regarding capital sufficiency. In the meanwhile, ZAR X must provide weekly progress updates to the FSCA.
Uprise.Africa And ZAR X’s Partnership
In 2019, Africa’s first equity crowdfunding, Uprise.Africa, and ZAR X came to an agreement that would see the mini stock exchange list any up-and-coming entities, which have already successfully raised capital via crowdfunding, and freely trade their shares on the open market.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer