Financial watchdog, the Financial Sector Conduct Authority (FSCA) has officially decided to cancel stock exchange ZAR X’s licence with immediate effect, after the alternative bourse failed to allay liquidity and capital adequacy concerns.

The decision to cancel the exchange’s licence was taken together with the Prudential Authority and given the go-ahead by the South African Reserve Bank (Sarb).

The FSCA has ordered the exchange to notify all affected persons within the next five days, to stop any further trading of listed securities as well as finalise the delisting of all its listed securities within the next 14 days.

“The cancellation decision was not taken lightly. However, the decision follows a prolonged remedial process which was initiated to assist ZAR X to become compliant with the regulatory framework. The remedial process failed to yield positive results,” FSCA commissioner Unathi Kamlana said in a statement.

ZAR X began operating in 2017. At the time, the bourse was positioned as the alternative to Africa’s largest stock exchange, the Johannesburg Stock Exchange (JSE).

The exchange was lauded for pioneering the use of T+0 (Realtime) settlement in South Africa and for implementing an exchange model that sought to drive financial inclusion and facilitate access to capital.

However in 2020 the exchange ran into financial trouble due to the Covid-19 pandemic as well as challenges related to a significant equity transaction with a foreign-based investor which dragged out longer than expected.

In August 2021, the FSCA moved to suspend the exchange’s licence, finding that ZAR X did not comply with the Financial Markets Act (FMA) and regulations relating to an exchange’s liquidity and capital adequacy requirements.

ZAR X’s closure, according to the FSCA, leaves four licensed securities exchanges within the South African financial markets.