The term ‘red tape’ probably has its origins in the 16th century when Charles V of Spain’s government started using red or pink coloured tape to bind important documents requiring immediate attention. With time, this practice found favour among Britain’s bureaucrats too… and by the 18th century, the phrase ‘cutting the red tape’ had come into use to signify removing or simplifying rules and procedures, making processes more efficient and accessible.

The JSE is a firm believer in the need to simplify regulatory objectives; therefore, it has initiated a project to rewrite its listings requirements, aiming to make it easier and more attractive for companies and securities to list and remain listed on the exchange.

‘The existing requirements were often complex and voluminous, making them difficult for issuers, sponsors and investors to fully understand and apply,’ says Andre Visser, the JSE’s Director of Issuer Regulation.

‘The JSE identified unnecessary burdens and administrative complexities within the existing framework [that were] leading to increased compliance costs. The simplification project also allowed the JSE to implement various transformational reforms, which align directly with the JSE’s broader strategic goals by improving market accessibility.’

Visser says that by simplifying the listings requirements and introducing market segmentation (Prime and General segments for the Main Board), the JSE aims to tailor regulation more effectively to companies of different sizes and reduce the barriers to entry for smaller and medium-sized enterprises. ‘This makes the market more accessible to a wider range of companies. In a global context where exchanges compete for listings, a simpler, more efficient and less burdensome regulatory framework makes the JSE a more attractive destination for capital raising. This helps the JSE maintain and improve its competitive edge. The initiative also contributes to South Africa’s overall financial sector competitiveness by creating a more modern and efficient regulatory environment,’ he says.

The JSE has engaged extensively with the market and stakeholders throughout the simplification process. The project began with a consultation paper released in May 2022, inviting comments on a range of proposals, including the simplification project. It received overwhelming support. Recognising the magnitude of the project, the JSE adopted a staggered and open public consultation process over a period of about 12 months. Various sections of the listings requirements were released in phases for public comment.

In support of full transparency, a dedicated simplification project portal was created on the JSE website, serving as a central database for the project and providing access to consultation documents. ‘The JSE has actively sought and received feedback from market participants, including issuers, sponsors and investors. This feedback has influenced subsequent amendments and refinements to the proposed requirements,’ says Visser.

‘While considering international trends, the JSE has focused on what is appropriate for the South African financial markets. The project involves a complete rewrite of the listings requirements, aiming to reposition them with plain language and concise regulatory objectives. This includes creating a new structural format for them with a new dedicated corporate governance section, consolidated corporate actions section and a new section in which we showcase all the listings options on the JSE.

‘The project also entails several transformational changes, which include a much more flexible capital raising and financial reporting regime, and provides for the reduction in costs with the removal of fairness opinions and valuation reports, just to mention a few examples,’ says Visser. ‘The project also involves a significant expansion of the fast-track secondary listings route onto the JSE. Although not a primary objective, the project resulted in a significant reduction in the overall volume of the listings requirements by more than 60%.’

Clearer, more concise regulatory objectives will provide greater certainty for new and existing issuers regarding their obligations, says Visser. ‘A more modern and efficient regulatory environment makes the JSE a more appealing platform for companies seeking to raise capital, thereby increasing the pool of potential new issuers.’

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