Confidentiality in the capital markets

Confidentiality is the bedrock principle of securities exchange ethics. Client confidentiality is the principle that an institution or individual should not reveal information about their clients to a third party without the consent of the client or a clear legal reason.

As part of FINSEC’s ongoing efforts to ensure that investor rights are fully respected, FINSEC has developed policies and procedures aimed at protecting personal information. FINSEC’s commitment to privacy is an integral part of its Code of Professional Conduct, to which FINSEC strictly adheres to.

FINSEC believes in promoting market integrity to reduce leaks and insider trading. Confidence in the integrity of the capital markets could be undermined if investors believe rumors are actively spread in the market to distort proper price discovery. FINSEC has therefore developed and adopted sound practices

Which support and adhere to the principles of continuous disclosure by issuers to ensure the effective management of confidential information and facilitate the responsible handling of rumors.

Customer Due Diligence (CDD) and Know Your Customer (KYC) are key elements that enable FINSEC and its entire value chain to know its customers and their financial dealings better, which in turn helps FINSEC identify suspicious transactions and manage risks prudently. FINSEC’s Customer Due Diligence includes identifying, verifying and monitoring all aspects of the applicant’s identity, residential address, any temporary address, and includes information on the source of funds and source of wealth. It also includes continuous surveillance and reporting mechanisms.

Except in the most unusual and extraordinary circumstances FINSEC does not reveal client’s confidential information. The three circumstances under which FINSEC can disclose client’s personal information include when compelled to do so by the law in the case of a court proceeding. FINSEC is therefore not a vehicle for money laundering schemes and plays a role in combating financial terrorism. FINSEC can also divulge confidential information when given the authority by a client. FINSEC appreciates the protective function obtainable in the entire value chain of its market stretching from the supervised obligations of the issuers to the universal standard practices of the qualified professionals providing advice and services, as such, FINSEC can disclose information if it increases transparency and if it is for the good of the market to promote the integrity of its market.

Where a breach of law does occur, investors should be protected through the strong enforcement of the law. In the event of an ultimate dispute, investors should have access to a neutral mechanism (such as courts or other mechanisms of dispute resolution) or means of redress and compensation for improper behavior.

FINSEC organises and disseminates price and company information, making the marketplaces more transparent, efficient and investor-friendly. Moreover, besides prescribing the quantity and quality of information a company provides, FINSEC also provides issuers with services to engage and inform their investors.

FINSEC ensures that its market structures do not unduly favor some market users over others. In particular, FINSEC’S rules are designed to detect, deter and penalize market manipulation and other unfair trading practices. Thus, FINSEC promotes market practices that guarantee fair treatment of orders and a price formation process that is reliable and further aims to ensure that investors are given fair access to market facilities, prices and market information.

 

The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group.

For more information contact:

2nd Floor ZB Centre, Cnr Kwame Nkrumah and 1st Street

Harare, Zimbabwe

Tel: +263 4 758193

Email: info@finsec .co.zw

www.finsec.co.zw

Twitter: @FINSECZim

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