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Major changes to Securities Act

THERE have been major amendments to the Securities Act, chief among them being the granting of more executive powers to the Securities Commission of Zimbabwe (SECz) chief executive officer in order to ensure the smooth running of financial markets in the country, according to the amended Securities Act to be gazetted today or next week.

The changes will also include the long-awaited de-mutualisation of the Zimbabwe Stock Exchange (ZSE).
Without giving detail, Finance minister Tendai Biti said the ZSE was run like a mafia operation and should cease to be self-regulating by being a referee, umpire and goalkeeper at the same time.
“As it is now, nobody knows who owns the ZSE or who is in charge,” Biti said at a ceremony to mark the listing of TN Bank on Wednesday.
Biti said his ministry was speeding up the process of modernising the ZSE by making amendments to the Securities Act (Chapter 24:25) to align it with regional and international best-practice.
Some of the clauses include provisions that SECz commissioners will be non-executive while executive powers would be vested in its CEO.
The amendments will also see stock exchanges run as companies rather than mutual societies, and an investor protection fund shall be established to compensate investors who are prejudiced as a result of malpractice or insolvency.
Under the new amended act, asset managers and managers of collective investment schemes under the Reserve Bank of Zimbabwe would fall under SECz.
Biti said SECz, as the regulator, had the responsibility of enforcing legislation in the market and therefore had to be adequately empowered to exercise its responsibility, while at the same time being accountable to stakeholders.
SECz has in the past said that there is a perception that regulation is weak, falling short of global International Organisation Securities Commissions (IOSCO) principles.
As for the central securities depository (CSD), Biti said it was important to mordenise the ZSE in order to lure foreign investment. Automation of trading systems improved liquidity because trades were promptly executed, he added.
“The call for ZSE automation cannot be over-emphasised. As government, we need the ZSE automated as early as yesterday,” the Finance minister said.
The CSD shareholders’ agreement was finally signed last week after it had been prolonged over disputes concerning the valuation of sweat capital that had been put in by Chengetedzai Depository Company.
Some of the benefits that will come with the introduction of the CSD include a reduction in the settlement cycle, thus improving liquidity.
The CSD also brings transparency, ensures easy monitoring of foreign participation thresholds, and is a critical tool for combating money laundering and terrorism financing.
“What we are trying to do is to create an atmosphere of good corporate governance,” Biti said.
He said the market infrastructure was important because it determined the efficiency of the market. A developed infrastructure promotes market integrity and transparency while minimising market manipulation, fraud and financial crime.
“Adoption of modern technology is a critical aspect of capital market infrastructure,” he said.

— Staff Writer.

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