NEW: Securities and Exchange Commission proposes streamlined capital adequacy framework

27 Mar, 2024 - 17:03 0 Views
NEW: Securities and Exchange Commission proposes streamlined capital adequacy framework

The Sunday Mail

Kimberly Mhembere 

THE Securities and Exchange Commission of Zimbabwe (SECZ) has said there is need to streamline the capital adequacy framework for small-to-medium local capital market players.

There are concerns that the current capital adequacy framework is burdening small-to-medium players in the sector.

The current capital adequacy directive requires asset management firms and stock-broking companies to set aside capital equivalent to 13 weeks of their reported quarterly operational expenditure or an amount of US$150 000, whichever is higher, for asset management firms and US$75 000 for stock broking firms.

Addressing a ‘Proposed Capital Adequacy Directive for Securities Market Intermediaries Symposium’ in Harare on Wednesday, SECZ prudential supervision and surveillance officer Mr George Nhepera said:

“There maybe a need to review the amount required for operational risk and reduce the funds set aside.’’

Mr Nhepera said current capital adequacy directive has negatively affected small and medium-sized Securities Market Intermediaries (SMIs).

“This operational risk calculation rule was noted internally to have impacted negatively on most small-to-medium SMIs, especially those strategically set up as a low-cost entities and technologically driven to maximise on efficiency, productivity and high returns for the benefit of shareholders and investors.

“They could be need to review such amounts for 13 weeks, so as to reduce funds set aside for operational risk apart from cost cutting measures to be deployed at various entities,” he said.

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