THE Zimbabwe Stock Exchange (ZSE) has expressed optimism that the recently incepted Central Securities Depository (CSD) will go a long way in improving market access for retail investors while enhancing operational efficiencies.
Last month, the ZSE was granted a licence to operate a CSD by the Securities and Exchange Commission of Zimbabwe in accordance with the Securities and Exchange Act, (Chapter 24:25) and the Securities (Registration, Licensing and Corporate Governance Rules, Statutory Instrument 100 of 2010.
A CSD is an institution that keeps custody of financial securities (debt, equities, exchange-traded funds) in electronic form and also offers other related services such as securities clearing and settlement, securities transfer and pledges that are related to securities transactions.
Speaking to The NewsHawks Business this week, ZSE chief executive officer Justin Bgoni said the development will go a long way to improve the ease of doing business for investors.
“The launch of the ZSE Depository will make it easier for retail investors to access the market, improve operational efficiencies in the market, reduce market costs to all participants and facilitate the introduction of new products,” he said.
“The overall objective is to improve operational and cost efficiencies in the market. The norm with most exchanges is that both trading and settlement are handled by the exchange – which was not the case in our market. The CSD was independent, had its own operating structure and own systems and this meant additional costs that had to be borne by market participants and investors.”
He said the previous arrangement also proved difficult when it came to managing changes that required system upgrades or changes as two system vendors had to be consulted.
Bgoni said investors who participate on the ZSE or Victoria Falls Stock Exchange (VFEX) are required to have a CSD account and the securities purchased by an investor on an exchange are then credited into their CSD account which is regularly updated, depending on related transactional activities.
“By operating both the Depository and the trading function, the ZSE will be able to reduce the listing fees and offer more flexibility to the issuers. For the Investors, ZSE will reduce the settlement fees,” he added.
— STAFF WRITER.