High ethical standards are critical to maintaining the public’s trust in the capital markets. FINSEC seeks to serve the public interest through the development and promotion of internationally recognised professional and ethical standards that have universal application across the entire spectrum of the capital markets.
The Financial Securities Exchange offers a transparent and connected financial marketplace that empowers brokers to quote instruments on an open board as well as provide investors with the information necessary to intelligently analyse, value and trade various securities already available or informally circulating in Zimbabwe. To create additional clarity in the investment process, FINSEC has organised the trading platform into tiered specialist marketplaces comprising the Equities Board, the Fixed Income Board, the Mutual Funds and Alternatives Board.
To qualify for the marketplace, issuers must meet acceptable financial standards, diligently convey their qualifications, prove the integrity of their operations, demonstrate compliance with Zimbabwe’s securities laws, be current in their disclosures and have sponsorship of a participant broker. These standards provide a strong baseline of transparency and enhance the information and trading experience for investors who put their resources onto the markets trusting to get a return on their investment.
The role of FINSEC is to determine that the issuer qualifies whilst the marketplace has the prerogative to determine if the issuer deserves capital. It is a philosophy that leaves the marketplace to market forces. It is also a philosophy which seeks to demonstrate that raising capital is sometimes not an event but a process through which enforced reporting standards increase the flow of information, raise the profile of companies, improve price discovery, and increase trading hence liquidity in the marketplaces.
Efficient capital markets lower the cost of capital, enable firms to invest, and channel resources to their most valuable uses. FINSEC aims for cost and price efficiency in its marketplaces particularly through the standardisation of terms, economies of scale and complete automation. In this respect, cost efficiency is sought from the customers’ perspective and related to implicit and explicit costs associated with transacting on FINSEC and its entire structures. Price efficiency is sought in terms of the quality of price discovery as measured by achieving the lowest spread between the price that a buyer needs to pay and the price a seller receives when selling.
FINSEC understands that it is Zimbabwe’s window to international markets and that it has the obligation to conduct itself to the deepest professional standards and represent Zimbabwe in the highest esteem. An efficient and exceptionally performing exchange attracts foreign direct investment through facilitating smooth entry and exit of international capital. Thus, the FINSEC disclosure demands, for issuers on FINSEC, provides the first step to injecting enhanced corporate governance into local businesses and assists them to compete in the global capital markets.
The global nature of the investment community and capital markets has resulted in more and more companies considering dual listings on other international exchanges. Obtaining a listing on multiple exchanges in different jurisdictions enables a company to improve its standing in the global business community and gives it greater access to equity and debt capital markets, while at the same time providing shareholders with more formal markets on which they can freely trade their securities. However, this also brings additional and sometimes higher levels of ethics, trust and professionalism.
- 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.