The Sunday Mail
Enacy Mapakame – Business Reporter
THE Zimbabwe Stock Exchange and Chengetedzai Depository Company have started drafting instruments to penalise delinquent stockbrokers who abuse the electronic trading system.
The stock market is transitioning from manual to paperless trading.
There are concerns that some stockbrokers are colluding with investors to settle transactions before completing the mandatory dematerialisation of shares.
CDC chief executive officer Mr Campbell Musiwa told The Sunday Mail Business that regulators would not hesitate to wield the axe on brokers found cheating the Central Securities Depository (CSD).
“The CSD is in the process of engaging market participants on the introduction of penalties which also cover such offences. The penalties are expected to instil discipline in the market.
“The CSD also expects the introduction of the ATS (automated trading system) and automation of trading to eliminate such incidences,” said Mr Musiwa.
He indicated that although indiscipline was rampant in the first two months the system’s use, cases of malpractice were falling.
“The decline can be attributed to efforts by the CSD to educate market participants on the implications of such transgression; and transgressors being reported to the ZSE and Securities Exchange Commission of Zimbabwe who can bar them from trading until they rectify outstanding positions,” explained Mr Musiwa.
Securities and Exchange Commission boss Mr Tafadzwa Chinamo said the transition had been satisfactory.
“The ZSE has done a lot in ensuring smooth flow of business at the bourse since launch of the CSD. There were problems in initial stages, which is common whenever a new system is being introduced, with market participants adjusting. But the problems are now a thing of the past and progress has been good,” said Mr Chinamo.
Last year, Chengetedzai, who are managing the CSD, started migrating shares from a paper-based system to the electronic platform.
Although the project missed its December 2014 deadline, it is now expected to be completed before the end of 2015 and 52 of all active counters on are now live.
“The CSD has made significant progress in automating the clearing and settlement side. Average ratio of dematerialised shares to total issued shares across all counters is now 24 percent after eight months,” added Mr Musiwa.
“Empirically, CSDs have achieved a ratio of 10 percent in the first year. Fifteen counters have achieved a ratio of at least 30 percent and the highest is at 84 percent.”
