THE Financial Services Board (FSB) came in for serious criticism last year for moving to implement the Financial Markets Act more strictly and deeming some issuers, such as black economic empowerment (BEE) and agricultural schemes to be operating illegal exchanges.
In fact, the FSB’s move has created many more opportunities than expected, but black capital has not aggressively taken advantage of them.
For those who have not followed the story, many issuers, such as BEE schemes Sasol Inzalo; Ukhamba Holdings; Welkom Yizani; YeboYethu and MTN Zakhele were deemed to be operating illegal exchanges. These issuers were read the riot act and warned that they should either adapt to legal mechanisms or shut down.
There was a lot of noise about the FSB clamping down on a market that was educating many people about the markets. The board extended exemptions to such issuers so that people could continue trading shares while solutions were being found.
However, black businesspeople seem to have been oblivious to a real benefit. You see, the FSB’s plan to strictly implement the act has in fact opened up the market to the possibility of many more exchanges being operated than just the JSE.
Its reading of the riot act has pushed some people to think hard and the more daring entrepreneurs among them have quit their jobs and started their own exchanges.
You see, if you are a real entrepreneur, you will understand that when there is a crisis, there are also opportunities to do business.
I have been digging hard to see how many black consortiums have used this opportunity to apply for licences to compete with the JSE, but I have not yet found a single black-owned consortium that has applied for a licence to either take on the smaller JSE AltX market or the country’s largest bourse.
The firms that have applied for licences to run exchanges are mainly white consortiums. Where are the black people? Don’t black people buy shares? Don’t some have the ambition to operate exchanges in which people buy and sell shares to the tune of billions of rand?
Those known to have applied are ZAR X, 4 Africa Exchange and A2X. The ZAR X and 4 Africa Exchange licence applications are largely aimed at accommodating over-the-counter traded firms, such as BEE schemes and agriculture co-operatives, which the FSB has found to have been operating illegal exchanges.
But these two are likely to compete with the JSE’s AltX market, which caters for smaller companies.
ZAR X, led by stockbroking expert and operator of the over-the-counter market, Etienne Nel, is ahead of the queue as the FSB has issued a notice of application inviting comment from all interested parties.
A consortium of companies is setting up 4 Africa Exchange including advisory firm Bravura and agricultural business NWK.
The would-be exchange submitted an application to operate a stock exchange to the FSB last month.
It has also said it is looking for a BEE partner to take up a 30% stake in its consortium.
A2X is led by Kevin Brady, a former MD of securities at Investec; Gary Clarke, a former JSE company secretary for 12 years; and Neal Lawrence, a former head of information technology at UBS and an IT principal at Absa Capital.
Are black businesspeople going to wait for these exchanges to be set up and then demand a BEE stake afterwards? That would be sad!
It would mean that BEE is not helping those who have been crippled economically by a racist past, but is instead crippling people now.
Thinker Cheikh Anta Diop has disputed the notion that concepts of "money, credit, stock market, thrift, or accumulation of wealth by individuals" were found only in Europe, and not in precolonial Africa.
He provided evidence of a stock exchange in Timbuktu, Mali, in the precolonial era. The idea of a stock exchange is not a European import.
Black people with capital must sit back and see how they can reclaim their past and own their own stock exchanges, rather than wait for empowerment stakes.
The opportunity is now. The Financial Markets Act must be used appropriately.
• Ndzamela is finance writer
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