JSE vs over-the-counter trade

2011-12-24 00:00

OVER-THE-COUNTER trade might be the ideal method of trading shares held within an empowerment scheme, as suggested by MultiChoice and African Bank.

Several corporates with BEE share initiatives, such as Naspers’s MultiChoice and African Bank, have opted for this method of trade, after taking administrative costs, scheme specifications and limited, first-time investor knowledge into account.

Software development company Singular Systems has developed an online trading (OTC) platform to allow black investors to trade their BEE shares. It has already secured African Bank’s Hlumisa and Eyomhlaba BEE share schemes and MultiChoice’s Phuthuma Nathi scheme.

Singular Systems director Etienne Nel said this method of trade is effective for BEE share schemes, as they usually have a large shareholder base among the lower LSMs (living standards measure).

“An element of what our platform does is that it allows shareholders to trade without a broker account,” said Nel.

Nel said that Singular’s platform makes share trading easier as investors can make use of the Internet or their call centre. “This allows for transparency between shareholders,” he added.

The rules, restrictions and requirements pertaining to trade in BEE schemes are often easier to manage when using an OTC platform. “The logistics around these schemes make it difficult for the JSE to administer and it’s also not economically viable for brokers to trade between R5 000 and R6 000.”

Due to the uniqueness of most of these schemes – eg, African Bank’s phased vesting, in which shareholders can only sell a third of their shares each year to black individuals — each scheme by law has to have its own trading platform. Singular is looking at introducing a platform for several other empowerment schemes.

The JSE also has a BEE segment on its main board which caters only for BEE held shares. Sasol Inzalo shares are the only listed scheme on its platform. The scheme has had little uptake as it is considered more onerous to use compared to simpler options, as reported by TechCentral. — Moneyweb.

 

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