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SHAREHOLDERS of Chengetedzai Depository Company will meet early next month to deliberate on recapitalising the new securities clearing and settlement company expected to start operations in October this year. This follows the awarding by Chengetedzai of the contract to set up Zimbabwe’s first ever central securities depository to Swedish firm CMA Small Systems AB. The CSD platform will service various exchanges.
CMA’s DEPO/X solution will connect Chengetedzai Depository Company to 22 participants, including 13 stockbrokers, four custodians, three transfer secretaries and a settlement bank as well as the Zimbabwe Stock Exchange.
Chief executive Mr Campbell Vincent Musiwa said they would convene an Annual General Meeting early next month with a view to call on a US$1 million to US$1,5 million rights issue to raise fresh capital for the company.
Mr Musiwa said Chengetedzai shareholders had injected over US$1,6 million in the initial capitalisation of the company to get things moving, but now seek further resources to get operations going.
He said they had not called for full capitalisation of the company to allow Government to acquire some stake having originally not been among shareholders that were set to acquire shareholding in the firm.
After the Government came in and acquired a controlling 51 percent stake through quasi-fiscal entities the private players’ shareholding was subsequently reduced to a combined 49 percent in Chengetedzai.
Mr Musiwa said recapitlisation proceeds would be expended on the new CSD system and remaining hardware. The CSD will service the Zimbabwe Stock Exchange among a host of other exchanges still to be set up.
Most of the CSD hardware is already in the country and has a been installed. It was acquired at a cost of US$200 000, most of which has already been paid to the suppliers of the equipment.
“We are still to identify a system and buy more hardware. We had looked at a rights issue of US$2,5 million to completion. US$1 million has already been called. The next US$1 million or US$1,5 million is what we are going to discuss at the AGM. We have not decided whether it’s US$1million or US$1,5 million.”
Mr Musiwa said that an agreement had already been reached with the CSD software suppliers for payments to be made periodically after a certain milestone, such as the start of CSD operations, has been reached.
CMA Small Systems was chosen as the winner after bidding to establish the CSD, beating four other foreign competitors, namely STT of South Africa, Financial Technologies of India, CMC Markets of Sweden.
CMA Small Systems, which is based in the Swedish capital of Stockholm, is represented with offices in Russia and France. Market activities focus on Europe, Asia, Africa, South America and the Middle East. Its solution’s primary functions will be dematerialisation of processed securities for quick and effective settlement based on Delivery Versus Payment principles. The CSD system accommodates special business-processes that significantly simplify process of transfer to- and settlement of dematerialised instruments
Zimbabwe was lagging behind other regional and continental exchanges in terms of modern clearing and settlement systems and in that regard is still at the same stages with small markets such as Swaziland.
But the country has made quantum leaps to move from the traditional trading practices such as open cry or over-the-counter trading to electronic trading of shares supported by paperless clearing and settlement.
The ZSE is in the process of automating its trading system in what will result in seamless interface between trading and clearing and settlement of shares bought or sold on the exchange.
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