adminone-stop regulatory service to the entire financial market.
The minister says establishing such a single regulatory authority would enhance oversight functions and ensure people make full disclosures of their interest and avoid “incestuous relations” of company shareholders.
He made the call on Tuesday in the House of Assembly while steering the Deposit Protection Corporation Bill.
The minister said the current laws were so fragmented that it was difficult for a regulatory authority in one market to pick misdemeanours committed by shareholders.
“We have to consider seriously the issue of the Financial Services Authority, a regulator that regulates the entire financial services so that we do not have this eclectic piecemeal regulation where insurance, banks, asset management, equity houses, venture capital and companies listed on the stock exchange each with their own regulator. We need one regulator with one uniform standard – that is the best practice,” he said.
He gave the example of Renaissance Financial Holdings which he said was owned by two or three persons yet they had interest in Renaissance Merchant Bank, Afre, an insurance company, and Rainbow Tourism Group, all under different regulatory authorities.
He said his ministry had to struggle in their bid to suspend RTG and Afre from the ZSE because of the absence of a consolidated legal instrument.
“We have to amend the Securities Act,” he said. “We had to struggle when we suspended trading in RTG and in Afre, to find a legal provision that gave us that power because the current law says the Securities
Commission recommends to the stock exchange to say suspend, but the Commission is recommending to the person who has failed.”
The minister said there was need to computerise the ZSE and have a central deposit condition that would allow full disclosure and avoid insider trading by shareholders and stockbrokers.
With the current situation, an unknown loan shark with shares in a listed company would simply instruct a stockbroker to buy his shares and get away with it because his identity is not known.
“When you have a central deposit, you remove the corporate veil: we know who we are dealing with and we know who has done insider trading,” he said.
The minister called for the “demutualisation” of the ZSE, saying there must be someone owning it, unlike the present situation where it is used as a “boys’ club run by a committee”.
The minister said the National Social Security Authority and the central bank, for example, could hold different equity in the ZSE as what obtains in other jurisdictions such as South Africa.
“The problem at ZSE is that you have a situation in which we have no board, no management, ownership and infrastructure. There is basically one gentleman, Cde (Emmanuel) Munyukwi, who is running it. We should have a corporate framework,” he said.
Online Reporter