ATP set for April

THE Securities and Exchange Commission of Zimbabwe (SecZim) will start processing applications for the Alternative Trading Platform or System (ATP) in the first quarter of the year, a senior official has said.
The capital markets’ regulator announced last October that it would issue licences for the setting up of a new flexible trading platform to allow private companies to raise capital by selling their securities to the public.
However, since the announcement in October 2015, SecZim chief executive Mr Tafadzwa Chinamo told The Sunday Mail Business that the regulator was waiting for approval of the rules governing the APP from the Ministry of Finance and Economic Development.
“So far, the regulator has received expressions of interest from one or two applications, although they cannot be processed until April when everything is expected to be in place,” said Mr Chinamo.
“By April we should be licensing, we are hoping everything will be in place by March.
“Right now we are not taking or processing any applications yet, the rules that will be used for the ATP are awaiting approval.”
But analysts have warned of company and or investor apathy, influenced by the bearish trading obtaining on the Zimbabwe Stock Exchange (ZSE).
Last year alone, investors on the ZSE lost US$1,4 billion in value as thin trading and low volumes dominated the local bourse.
ATP therefore provides an alternative for private companies and other individuals hesitant to lose out on the stock market.
With the ATP, private companies can raise capital by selling their shares or bonds to the public.
Simply put, the ATP is an organisation or system that provides or maintains market place or facilities for bringing buyers and sellers of securities together but does not set rules for subscribers.
Unlike the ZSE, companies need not be listed on the ATP to qualify to trade, according to a framework released by SecZim on October 9, 2015.
However, the companies will be required to have an asset cover of 250 percent of total liabilities, US$100 000 insurance cover, positive cash balances and others.
In developed markets, ATPs are used by large institutional investors to trade very large parcels of listed securities so as to avoid large deals swaying prices.
Mr Chinamo was optimistic that the platform will benefit interested companies in every economic sector.
“As soon as everything is in order, we expect to receive applications from the market,” he said.
In terms of regulation, the SecZim will play only a minimum role, limited to supervisory functions over trade and settlements. The world over, Alternative Trading Platforms tend to self-regulate.
“The most an ATP can sanction is by barring a participant from transacting on its platform.
“The Commission will have overall regulatory authority with regards to the operations of the ATP and general conduct of the ATP participants,” said Mr Chinamo in an earlier interview.
The ATP was expected to boost means by which listed or unlisted companies could secure capital more cheaply and efficiently, experts say.
Local companies are struggling with liquidity and waning demand which has forced capacity utilisation in the manufacturing sector to fall to 34 percent from 57 percent in 2010.