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Agri-business listings launch new SA stock exchange

Senwes first trade settled in ten seconds – Etienne Nel, CEO – ZAR X.

SIKI MGABADELI:  South Africa’s first additional stock exchange in almost 60 years, ZAR X, has launched its operations with the listing of integrated agri-business Senwes and its holding company, Senwesbel. Senwes is a provider of white maize with its around 60 silo complexes, enabling the storage of 25% of our country’s grain output.

We are going to chat to them in a moment, but first let’s speak to Etienne Nel, who is CEO and co-founder of ZAR X. Etienne, thanks so much for your time today.  It’s been, what, an over two-year journey and now you are here. Tell us about that journey.

ETIENNE NEL:  Yes, Siki, your two-year number is spot on – almost to the day, in fact. It’s been an interesting journey. Truth be told, we are delighted to be finally operational and in a position to offer a very real alternative as an exchange to the investing South African public.

SIKI MGABADELI:  This may sound like an obvious question, but I’m going to ask it anyway. Why do you think we need an alternative?

ETIENNE NEL:  Well, why not? That question may sound flippant, but interestingly enough it is the ethos of ZAR X. That’s how we started – why not have a second exchange? I can now pontificate about all the reasons why competition is good, because it drives better client relations, pricing, better service to investors, etc. But at the end of the day we also ask that question of ourselves on a regular basis.

So, for example, if you look at our settlement model, it is T real time. We just said the world is T+3 – in other words, trade plus three working days – and moving towards T+1 or T+2 or whatever the case is, and we say “why not T+0?” Why aim for being mediocre and [not] go for gold? So effectively that’s what ZAR X is all about.

SIKI MGABADELI:  And in fact I think this morning you settled your trade in what, ten seconds?

ETIENNE NEL:  Yes. Correct. So between the time the transaction matched the settlement and clearing process, which obviously needs to go through a CSDP [Central Securities Depository Participant], and a CSD. The CSD in this case is Strate –the same CSD that the JSE uses. So our systems truly are world class. And between the match settlement and clearing happening, that whole process took ten seconds. A similar process on the JSE takes four days.

SIKI MGABADELI:  Have you got more issuers on the cards?

ETIENNE NEL:  We are looking at a very strong pipeline. Regrettably I can’t confirm who those are just yet. But we will keep the market fully informed of any new developments and we are hoping to have an announcement in the next week or two.

SIKI MGABADELI:  Okay. A big thing, of course, is the need for us to attract more ordinary South Africans, more retail investors into the market. Have you got a strategy related to that at ZAR X?

ETIENNE NEL:  Siki, we definitely do. It was at the core of ZAR X’s application to the Financial [Services] Board for our licence. And what drives that is the fact that we are offering free custody of a share-trading account to any person in South Africa who wants to open a ZAR X account. So that means you don’t have to pay to have an account. You only pay when you transact. So in essence you can start with R1 000, which is currently not possible.

Furthermore what we do is we offer a live price feed on the ZAR X website under the company stats, so just go to ZAR X.co.za and during market hours ordinary people – you don’t need an app, you don’t need anything fancy, you can just log on – can see the activity on the market. And that we offer free as well.

In addition to that obviously ZAR X publishing service, which we call Zaps, that is also free, so you don’t need to subscribe to any fancy data feed from a vendor. And all that sort of thing drives interest in the capital markets and obviously it makes it cost-effective to people to actually access an account.

SIKI MGABADELI:  Alright, we’ll leave it there. Congratulations and thanks for your time. Etienne Nel is CEO and co-founder of ZAR X.

Let’s chat to Francois Strydom, who is CEO of Senwes. Francois, thanks for your time today, and congratulations on your listing. How was day one?

FRANCOIS STRYDOM:  Thank you certainly much, Siki. Yes, obviously a big moment for us in our 107/8-year history. Just to confirm what Etienne has said, for all those reasons, Senwes took the plunge. But this also brings institutional investors into play, that they have the caveat that they can only trade and invest in regulated platforms. So this opens that avenue up.

I think the important thing here is that the ZAR X platform is typically a disruptive business model. You would think the guys in the industry would see this coming and change their business model, but I think nowadays you find that typical disruptive business models come and sort of capture the market in a revolutionary way.

SIKI MGABADELI:  Tell us the rationale for the listing itself, for Senwes. Why did you choose to go the listing route?

ETIENNE NEL:  Siki, the important thing is it’s an introductory sort of listing to introduce Senwes to the market. Investors I don’t think are used to this kind of business model specifically where we are in the food-production value chain.

The second thing was to protect our client base, our investor base. Remember that in the third place the FSB put this regulatory compliance on the market for the OTC sector. We had to comply with that. So this is also a compliance issue, and therefore once you comply you also attract institutional investors.

SIKI MGABADELI:  Alright, we’ll leave it there. Thanks for your time. Francois Strydom is CEO of Senwes.

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