THE Securities Commission of Zimbabwe (SECz) is spearheading the wholesale reform of Zimbabwe’s capital markets and encouraging players to support the process, according to CEO Tafadzwa Chinamo.
Addressing delegates at the Zimbabwe Association of Pension Funds (ZAPF) Annual conference in Victoria Falls recently, Chinamo implored Zimbabwe’s pension funds to take the lead in capital market reforms. He said reforms would be inevitable.
Chinamo challenged pension funds and trustees to play an active role as shareholders in the investee companies, rather than taking a back seat and watching their companies being mismanaged.
He urged shareholders to question some of the decisions and resolutions that were being passed by management and boards, saying these decisions had not always been in the best interests of shareholders, especially pensions funds, who were viewed in most companies as passive.
“We have trustees sitting in AGM’s and EGM’s approving resolutions that are not in their own interest,” said Chinamo. “For example we have companies coming forward with share buybacks and share option schemes that dilute or lose value for pension funds, but these corporate actions are approved without a fuss.”
Chinamo said reforms in the capital markets were now overdue such that following the adoption of the multicurrency system in 2009, investors had been left disappointed with the US dollar share prices. This, he said, had also led to the noticeable reduction in participation on the market by investors – including pension funds.
“Whilst liquidity challenges are apparent in the economy, there is clear failure of the price discovery mechanisms in Zimbabwe – no-one can be sure what’s going on,” Chinamo said.
He said the ZSE needed modernised trading systems on the ZSE.
“Online, continuous, and automated trading is now necessary as the traditional call over system is just not good enough,” Chinamo said, adding the current open cry system was inefficient and open to abuse.
The SECz boss also said the CSD (Central Securities Depository) would deal with the inefficiencies of the current paper-based system that had killed market integrity. Realtime trading would also allow realtime clearing and settlement of trades.
The initiatives would provide high level of investor protection, promote market integrity and investor confidence, whilst preventing market manipulation and ensuring transparency in capital markets.
Chinamo said it was unfortunate that stakeholders viewed SECz as being “heavy handed”, adding the commission’s mandate included supporting and facilitating any efforts that are targeted at broadening and deepening capital markets.
He believed that the current ZSE listing rules needed to be upgraded to emphasise better disclosure in reporting, corporate governance & corporate actions. The rules would enable authorities to act promptly on transgressors.
A new set of SECz rules to provide for the regulation of financial services and markets and to ensure the organised, safe, public, fair and efficient operation of markets and to protect the rights and interests of investors would be gazetted before year end.
SECz would embark on an investor education and public awareness campaign to explain the effects of dollarisation on the investments markets.
SECz would also soon formalise qualification criteria for players – introducing a securities institute leading to qualifications and status similar to IOBZ and ICAZ.
SECz would also introduce programmes in schools to broaden its drive to get people to appreciate money & investments.