Over-the-counter trade just 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 (JSE:NPN)’ 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 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 says 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 using a broker account,” said Nel.
Nel says that Singular’s platform makes share trading a lot easier as investors can make use of the internet or by phoning their call centre. “This allows for transparency between shareholders,” he adds.
The unique 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 (JSE:JSE) to administer and it’s also not economically viable for brokers to trade between R5 000 and R6 000.”
This type of scheme is gaining a great deal of popularity in both listed and unlisted companies. I think that is far more effective than the hoops you have to jump through to do this through the JSE. The number of trades on the Sasol share vs the first day of the launch of the Multichoice earlier this month speaks volumes.
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