Old Mutual set to start a stockbroking firm

ZIMBABWE’S largest financial services group, Old Mutual, is starting a stockbroking firm which is going to be headed by former Zimbabwe Stock Exchange chairman Seti Shumba.

Old Mutual controls about 70% of activities on the local bourse and the establishment of a stock broking firm might face resistance by some brokers as it “virtually, directly and indirectly runs the stock market”.
Old Mutual is an international organisation known to have a reputation for integrity, financial strength and value-for-money. It is however questionable whether this market can sustain the number of brokers on the market.
Stockbrokers are said to be facing viability problems as the volume of shares traded on the stock market continues to go down, resulting in the reduction of their commission.
Commission for brokers was reduced from  2% to 1%.
The reduction in the brokerage charge was expected to be compensated by the expected increase in volumes traded on the bourse.
February recorded a turnover of US$29,6 million which translated into a brokerage of US$296 000 shared among 18 broker firms, with each getting $16 500.
The volume of trade on the bourse has continued thinning as foreign investors who used to dominate the market are sitting on the fence following the introduction of the Indigenisation and Economic Empowerment Act. –– Staff Writer.

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