Three other exchanges, 4AX, A2X and ZARX, were licensed in 2017, but EESE is the only one that exclusively trades restricted shares. Picture: ISTOCK
Three other exchanges, 4AX, A2X and ZARX, were licensed in 2017, but EESE is the only one that exclusively trades restricted shares. Picture: ISTOCK

SA’s fifth exchange, Equity Express Securities Exchange (EESE), which exclusively trades restricted shares, has clinched four new listings. 

On Thursday EESE, which is the first majority black-owned equity exchange in the country, listed the second broad-based BEE scheme on its platform, Motus’s Ukhamba 2. Motus is the new company that listed on the JSE on Thursday following the split of Imperial into two parts.

On Friday, the platform will list two of MultiChoice’s Phuthuma Nathi BEE share schemes as well as Media24’s Welkom Yizani.

“It is a challenging time for stock exchanges. Delistings have been higher than listings. When you look at the exchange market and where it’s going, we can’t compete with the JSE on traditional types of listings, like normal equities. But we are seeing in the market a need for surveillance on restricted shares. There are also a lot of notes and bonds that require listings. We’ve had a lot of people approach us to try and solve those problems,” said EESE CEO Anthony Wilmot.

EESE was awarded an exchange licence in September 2017 and launched in December 2017 with one listing, Imperial’s BBBEE share scheme. It only performs primary listings.

Three other exchanges, 4AX, A2X and ZARX, were licensed in 2017, but EESE is the only one that exclusively trades restricted shares. ZARX and 4Ax also manage restrictions but they trade unrestricted shares as well.

Restrictions placed on EESE-listed shares can range from specifications on who may own, such as BBBEE schemes, demographic and sector preferences, as well as limitations on the percentage of shares individual entities can hold. Though EESE’s licence only allows the platform to list shares with a restriction, the company has applied for a review of its licence to be able to list companies without restrictions. It is also looking at the possibility of listing foreign companies and other securities.

“But we’ll retain our ability as an exchange to enforce restrictions. We maintain the register behind the market. So we know exactly who owns what shares and who is buying certain shares at all times. It’s particularly important when a company has restrictions on how many shares one can own. In the BEE schemes, it’s all about verification. You have to keep them black,” said Wilmot.

The JSE also has an empowerment segment where Vodacom’s YeboYethu and MTN Zakhele BEE schemes are listed. But the JSE’s shareholder register is administered by Strate whereas EESE’s advantage is that it keeps its own register and is able to pick up in real time the identity of the person performing any transaction.

EESE’s black shareholders are the Investec BEE trust, which owns 15%, the exchange’s chair, Zuko Kubukeli, who owns 15%, Legae Securities, with 15%, and Insele Ventures, which holds 10%.

In the past year, the exchange has been facilitating about three trades a day, completing 805 deals with more than 128,000 shares traded. But liquidity of traded shares was only 2.1%. Liquidity of 5% is regarded as normal and anything below 5% is low. Most shares on the JSE have liquidity of about 10%.

“You can say that liquidity is quite low but a lot of established Ukhamba shareholders aren’t really keen to sell shares,” said Wilmot.

With the new listings, Wilmot said they expected EESE’s trade revenue for next year to be in the region of R300m.

buthelezil@businesslive.co.za