Govt gazettes alternative bourse rules

GOVERNMENT has gazetted new rules for the country’s alternative trading platform (ATP) as the capital markets regulator seeks to diversify the stock market’s trades platforms. ‘

Source: Govt gazettes alternative bourse rules – The Zimbabwe Independent September 9, 2016

By Bernard Mpofu

According to Statutory Instrument 100 of 2016, the new rules effectively give the Securities and Exchange Commission of Zimbabwe the greenlight to start issuing licences.

ATP, according to the law, means any person that constitutes, operates, maintains, or provides an electronic market or otherwise provides a place or facility for bringing together primary market issuers of securities and investors who wish to purchase securities. It also provides a platform for secondary market sellers and buyers of securities.

“It is hereby notified that the Minister of Finance and Economic Development, in terms of Section 118(6) of the Securities and Exchange Act (Chapter 24:25), has approved the following rules made by the Securities and Exchange Commission of Zimbabwe …” reads the Statutory Instrument in part.

“An application for approval to establish a platform shall be submitted to the commission in the form and manner as prescribed by the commission from time to time … The initial registration fee for a platform shall be US$5 000. The annual renewal fee of registration shall be US$4 000.”

This comes as the Zimbabwe Stock Exchange (ZSE) continues to underperform, mirroring a floundering economy.

Last month the local bourse recorded a monthly turnover of US$7 million, the lowest in seven years.

In July the ZSE completed its demutualisation exercise after it held its first meeting as a private company.

However, it reported a US$1,1 million loss for the full-year to December 2015 compared to a profit of US$300 000 in prior comparative period owing to weak trades.

Stockbrokers and government will in the interim own 68% and 32% respectively. The equity stakes will later be halved to 34% and 16% respectively to attract new investors. The remaining 50% equity stake will be shared among private financial institutions and individuals.

Low foreign investor participation, liquidity constraints and confusion over the country’s indigenisation law compelling foreign companies to cede 51% stakes to locals has widely been blamed for keeping foreign capital at bay.

Meanwhile, the local bourse said this year it will seek partnerships with major data vendors such as Bloomberg and Thompson Reuters to ensure that its market data is easily accessible to investors worldwide.

“The ZSE is mindful of the high market charges that make it less competitive than other regional exchanges. ZSE will continue to lobby the government in order to have the charges reduced or associated taxes removed altogether in order to stimulate trading,” read the minutes of a ZSE AGM.

“In pursuance of the demutualisation process, a new company, the Zimbabwe Stock Exchange Limited was registered under the Companies Act (Chapter 24:03) on December 31 2014. The functions and operations of the new company will remain the same as that of a stock exchange regulated under the Securities and Exchange Act (Chapter 24:25). The Companies Act (Chapter 24:03) will provide the governance framework, capital structure and financial reporting requirements and obligations.”