Goodbye ZAR X

The Financial Sector Conduct Authority (FSCA) has announced that it has cancelled the exchange licence of ZAR X with immediate effect.

ZAR X was granted a stock exchange licence by the Financial Services Board in March 2016 and started trading in February 2017.

ZAR X said it offered a “low-cost, simple, and convenient trading platform”, allowing South Africans to trade shares even if they have never invested money or opened a bank account.

Things did not go as planned and, on 20 August 2021, the FSCA suspended the exchange licence of ZAR X.

The suspension resulted from ZAR X’s non-compliance regarding the liquidity and capital adequacy requirements of an exchange.

On 13 February 2023, the FSCA, with the concurrence of the Prudential Authority and the South African Reserve Bank, cancelled ZAR X’s exchange licence with immediate effect.

The cancellation of ZAR X’s licence follows its prolonged non-compliance with the Financial Markets Act, relating to the liquidity and capital adequacy requirements of an exchange.

ZAR X is now required to:

• Immediately inform all affected persons, i.e. (i) issuers; (ii) authorised users; and (iii) all affected stakeholders, of the immediate cancellation of its licence and provide proof of having complied with this condition within five business days from the date of receipt of the cancellation letter.

• Cease all business of the exchange. No further trading of securities listed on the exchange is permitted, and no new listings may be admitted.

• In consultation with all stakeholders, take necessary steps to facilitate the delisting of all listed securities on the exchange, where applicable. The processes to delist the securities must be finalised within 14 days.

• Provide weekly progress reports with respect to the above matters to the satisfaction of the FSCA.

FSCA Commissioner Unathi Kamlana said the cancellation decision was not taken lightly.

“However, the decision follows a prolonged remedial process initiated to assist ZAR X in complying with the regulatory framework. The remedial process failed to yield positive results,” Kamlana said.