Zimbabwe Stock Exchange ZSE trading set to resume next week

Business Reporter

TRADING on the Zimbabwe Stock Excha-nge is expected to resume next week, the Securities Commission has said.

Trade on the local bourse was negatively impacted by a requirement stipulating that all funding for the purchase of shares be formally guaranteed by the bank at the highest level as a pre-requisite to accepting and processing orders.

The directive, which took effect on November 20 last year was in response to the Reserve Bank of Zimbabwe’s concerns that there were a lot of underhand dealings on the local bourse involving some individuals, bank officials and stockbrokers, who were using unsupported cheques to buy shares and sell them at a premium for their benefit.

In an interview with Herald Business, the Securities Commission chairperson Mrs Willia Bonyongwe said investors’ money was locked up so there was need for the ZSE to resume trading.

"We are working on modalities on how stockbrokers can operate to safeguard public funds.

"The operations of the ZSE are not just an event but it’s a process. We cannot say the opening of the trading period has been delayed.

"The commission has set some rules and regulations, which need to be followed, but some stockbroking firms were not complying, so we were resolving some issues before trading resumes,’’ she said.

She added: "It is important to note that we take the lessons learnt from the recent crash of financial markets and develop better models, regulations and financial products that will improve the capital market and make it a model for the region and the world at large.

"There is need to further develop and strengthen capital market’s regulations in the country and to fine-tune the trading products and practices in the market.’’

This, she said, was meant to introduce risk-based supervision of brokers operating at the ZSE.

The commission has also reduced a proposal of a new capital requirement of US$500 000 in acceptable assets for stockbrokers to US$40 000, to resume trade on the local bourse.

The capital requirement would be deposited with the commission and would be used to settle any arrears that would accrue if stockbrokers were involved in fraudulent transactions.

The commission has put in place a system, which would not be manipulated to avoid misconduct by stockbrokers.

The commission has set a condition that would see stockbrokers come to the market with adequate funds.

Each stockbroking firm should have a compliance officer who will work with the commission in following procedures at the market.

The move seeks to advise on monitoring and reducing market volatility and enhancing member firms’ capital adequacy.

In addition to that, Mrs Bonyongwe said this move would assist in drafting legislation related to mergers and acquisitions as well as upgrading provisions for investor protection fund besides broadening the investor base, creating new investment opportunities, developing new trading practices and reviewing the Information Technology infrastructure of the capital market institutions.

She said last year’s financial turmoil demonstrated the importance of strong regulations, efficient market mechanisms, and well-managed depository centres.

"These are exactly the areas which we will be working on.’’

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