Media giant, Naspers, has abandoned the idea of establishing its own licensed share exchange to be used to facilitate the trading of broad-based black economic empowerment (B-BBEE) shares issued by its South African subsidiaries, Multichoice and Media24.
The exchange would have housed Multichoice’s B-BBEE shares titled Phuthuma Nathi and Media24’s B-BBEE shares titled Welkom Yizani. These B-BBEE shares are currently listed on the Equity Express’ over the counter (OTC) share trading platform.
A statement released recently by Naspers says “We have been engaging with the Registrar and as part of this process, MultiChoice and Media24 investigated various options, including the establishment of a company, Yizani Phuthuma Nathi (YPN), which applied for an exchange licence under the FM Act.”
The statement adds that “After careful consideration and taking into account a range of relevant factors including costs, operational efficiencies, regulatory obligations and the need to minimise disruption to shareholders, we decided to apply for Phuthuma Nathi’s shares to be listed on the Equity Express Securities Exchange (EESE).”
The resolution for Naspers to establish its own share exchange platform came after regulators issued an order for all companies that facilitate trading in their own shares in over the counter platforms to conform to the provisions of the Financial Markets Act of 2012.
The order came after the Financial Services Board (FSB) – now known as the Financial Sector Conduct Authority (FSCA)- spotted a regulatory gap in the OTC share trading activity. OTCs were not regulated which exposed investors to substandard service and abuse like insider trading, market manipulation and false reporting.
As such the regulator issued a directive that all public companies that provide infrastructures conforming to the definition of an exchange where the issuer facilitates trade in its own securities must apply for an exchange license. The directive was designed to regularise the affairs of all unlicensed exchanges. And it classified as an exchange any activity that maintains and provides an infrastructure:
- for bringing together buyers and sellers of securities,
- for matching bids and offers for securities of multiple buyers and sellers,
- and whereby a matched bid and offer for securities constitutes a transaction
This directive saw MTN Zakhele shares and others move to the JSE empowerment segment. Welkom Yizani and Phuthuma Nathi remained on the Equity Express platform presumably on a promise that the platform would gets its house in order.