Report on Principles and Standards for the Harmonization of the Listing Rules of SADC Stock Exchanges

This report is a follow-up to a number of activities that have been initiated to support the harmonization of the listing rules of the stock exchanges in the SADC region. The initial work focused on the analysis of gaps in listing rules using the JSE listing rules as a benchmark. During the most recent consultation, members were offered two options:

• Option 1: Harmonize around a common set of standards and principles.
• Option 2: Dual Book Approach: Adopt two rule books with Rule Book 1 containing harmonized rules that apply to all exchanges and Rule Book 2 focusing on rules pertaining to individual markets.

The members of CoSSE have chosen Option 1 for the initial phase of harmonization. This report is designed to propose standards that can be adopted by all CoSSE members. To simplify the analysis, it has been found necessary to distinguish "principles" from "standards". Principles refer to broad internationally accepted principles as espoused by the International Organization of Securities Commission (IOSCO) and the World Federation of Exchanges (WFE). Standards are rules for the application of the global principles and can vary significantly across stock exchanges. It is noted that there is general consensus already on principles; however, there are differences in standards are depending on how far a stock exchange wishes to go in applying the general principles.

It is important to point out that a significant amount of consensus is required in adopting harmonized standards. Therefore, the recommended principles and standards in this report are tentative. Ultimately, CoSSE member will need to reach a consensus on the feasibility of adopting particular standards for voluntary or binding compliance by all members.

The recommended standards for harmonization are presented for the following themes:

1. Sponsors

2. Continuing obligations

3. Conditions for listing

4. Methods and procedures for bringing securities to listing

5. Pre-Listing Statements

6. Listing Particulars

7. Financial Information

8. Transactions

9. Related party transactions

10. Secondary and Dual Listings and Listings

A self-assessment instrument has been designed to enable individual stock exchanges to benchmark their listing rules against the proposed standards.It is expected that in addition to the harmonization objective, this benchmarking exercise will also assist CoSSE members to identify opportunities to raise their standards.