The JSE Securities Exchange (JSE) is to open the first alternative exchange in Africa on which small and medium companies can be listed, the exchange said on Monday.
The new exchange, which opens in October, has been named AltX.
The Department of Trade and Industry (DTI) supports this initiative.
”All companies start small, and we are committed to supporting the burgeoning SME [small to medium enterprises] sector of the South African economy,” said Russell Loubser, chief executive of the JSE.
The new market is differentiated from the JSE’s main board in many ways, with separate listing requirements. Companies that list on AltX could migrate to the main board once they have grown enough.
Alistair Ruiters, director general of the DTI, said: ”We believe that the establishment of AltX will promote black economic empowerment and assist in creating sustainable employment. Small and medium enterprises play a significant role in our economy and we are wholeheartedly supportive of initiatives which will enhance this sector.”
The new market, which has reduced listing fees, will receive the full range of JSE services. These include the trading of shares on the same system as the main board, market surveillance to eliminate irregularities and settlement of AltX securities through STRATE.
Listing requirements for AltX will be appropriate for small and medium companies. These requirements place great emphasis on the initial and ongoing disclosure of company information. There is also a focus on the enhancement of the skills of directors of AltX companies with a compulsory four day directors’ induction programme to be offered by the Wits Business School.
Companies require no profit history to list, but a share capital of R2-million is required.
The new market is expected to open for trading in October 2003. Companies are currently being sought to join AltX to issue new shares, raise funds, widen their investor base and have their shares traded on a regulated market.
Noah Greenhill, manager of the new market, said AltX would be keen to target junior mining companies and black economic empowerment organisations.
”We researched parallel exchanges internationally and have incorporated best practice into AltX. The most successful parallel market has been AIM in the UK which has admitted more than 850 companies since it opened 1995. Collectively, these companies have raised more than $10-billion whilst on AIM.
”We believe that the success of AltX will be based on a philosophy which emphasises relationship management, marketing and continuous education.” – Sapa