Zimbabwe Stock Exchange (ZSE) CEO Alban Chirume’s stay at the bourse could be coming to a premature end amid indications stockbrokers want him fired owing to high expenditures and charges that he made several unanimous decisions without the nod of shareholders.
A stockbroker told businessdigest this week that members were “emotional” at a meeting held on June 29 over the contentious acquisition of the new ZSE offices in Borrowdale, which many felt was overvalued and were miffed by high expenditures at the bourse.
But the stockbroker said they could not automatically eject Chirume from his position because they did not have adequate board representation.
Once they appoint board members, the stockbroker said, they would begin the process of ridding the ZSE of Chirume. “The last meeting of stockbrokers was emotional. It was felt that he does not consult us on key issues and he makes several unanimous decisions. But we are going to do it tactfully,” the stockbroker said.
“We agreed to get rid of him.” Chirume was unavailable for comment.
Stockbrokers are also not happy with their involvement in Chengetedzai Depository Company Limited — which operates a central securities depository for Zimbabwe’s securities industry — as they feel the Automated Trading Systems (ATS) should have come as a single package. Chengetedzai was given the mandate to design an electronic trading system.
A depository is a provider of a facility for holding and transacting securities in electronic book entry form.
According to Chengetedzai’s website, physical securities can be converted into an electronic book entry form by way of immobilisation or dematerialisation so that they exist only as electronic records. “Chengetedzai doesn’t make business sense for us and won’t be a viable business. We wanted the service Chengetedzai offers to have been incorporated into the ATS,” the stockbroker said.
The ZSE last week launched an ATS. The ATS is expected to result in a number of changes such as continuous trading.
On the ATS, securities will continuously trade during the open sessions of the market, a development that will see multiple prices being established for one counter in a day. Traders will also have more flexibility on handling client trades.
Another change is the requirement for all counters to be on boarded to the CSD platform, the ATS configuration, requires it to verify client shareholding balances with the Depo/X of CDC.
What this means is that all issuers whose securities are not yet dematerialised will be unable to be traded through the ATS and price discovery through algorithms. The pricing of securities traded on the market will shift from the collective effort of the stockbrokers participating in the trade to a computer-based algorithm. This implies that an order can be concluded at several different prices depending on the order book.
The ATS will have circuit breakers on price. Basically, the ATS will have lower and upper price limits for each counter which will be based on the closing price. This limit set in percentage terms may be set uniformly for the whole exchange or each counter can have its own limits.
The ATS will also be able to generate real time data throughout its “open” phase. Such data will be accessible to market participants and other stakeholders for a fee.
The central securities depository is the back end of the ATS with a mandate for settlement of both scrip and cash. A close coupling model has been crafted between the ATS and CSD systems.
Stockbrokers feel this was unnecessary and could have been done as a single package. On Wednesday, stockbrokers were supposed to meet for an EGM to appoint two board members. At the end of the year, the term of the current chairperson Eve Gadzikwa is expected to expire, according to another stockbroker.
When her term of office expires, stockbrokers will also move to consolidate their position in the ZSE board by appointing a chairman, who represents their interests.
The ZSE was recently demutualised with stockbrokers and brokerage houses getting shares in the new company.
Demutualisation is the process by which a mutual organisation or co-operative changes legal structure to form a joint stock company (a company owned through shares).