Delays on SecZim Act derail Zim IOSCO plans

Nelson Gahadza
Business Reporter

ZIMBABWE’s capital markets regulator, the Securities and Exchange Commission of Zimbabwe (SECZim) says delays in effecting legislative amendments to the SECZim Act has hampered the country’s efforts to attain full membership of the International Organisation of Securities Commissions (IOSCO).

IOSCO is an international organisation that brings together the world’s securities regulators and is a global standard-setting body in capital markets. Zimbabwe was accorded associate membership status effective from December 2021.

SECZim’s priority is to become signatory to the Multilateral Memorandum of Understanding (MMoU) of IOSCO, as result, the commission has been pushing on amendments to its laws so that it fully complies with the requirements of IOSCO 38 Principles.

SecZim acting chief executive Gerald Dzangare said that for Zimbabwe to be a full member, it should have direct access to regulating listed securities, not indirectly regulate them through stock exchanges.

“As SecZim, our mandate is to protect investors on the capital markets.

“So for us to protect investors from harm, we need to have regulatory power that has control of all the capital market processes.

“At the moment we register stock brokers, asset managers, and investment advisers, but we do not have access to the actual securities which are being traded,” he said in an interview.

He added that IOSCO believes that for SecZim to adequately protect investors, it must have regulatory power over the securities that are issued on the capital markets.

“This is why as the Commission we are an associate member not a full member. So for Zimbabwe to become a full member and be able to protect investors there is a need for the capital market regulator to actually have regulatory powers over issued securities,” Mr Dzangare said.

He added that if SecZim does not have regulatory access to the securities it is not fully discharging its mandate.

“That is why we are pushing for the amendments to have exchanges look at growing and bringing in innovative products, but the regulatory aspect being done by the Exchange Commission,” he said.

Mr Dzangare noted that when SecZim approves listed securities, it means the issuer can go on any exchange because there will be a standard that will be set.

“At the moment, there are different rules for different exchanges, but when there is one regulator who then has approval of all listed securities it will be standard and the company will be able to list on any exchange and that improves our ease of doing business and helps in pushing Zimbabwe open for business agenda.

“So the regulatory power of issuers by SecZim is critical for us to have full membership in our international engagements efforts as a nation,” said Dzangare.

According to Dzangare, IOSCO membership means global visibility for Zimbabwe capital markets which is a significant step towards international recognition from other international bodies and regulators across the globe as a jurisdiction committed to improving investor protection and cooperation through seamless interaction with other regulators.

In addition to that, IOSCO membership presents opportunities to SECZim associated with goals articulated in the National Development Strategy (NDS1) 2021-2025 to ensure high, accelerated, inclusive and sustainable economic growth as well as socio-economic transformation and development, reinforced by sound financial markets, including strong capital markets, with local participation and the ability to attract foreign investment.

The IOSCO membership supports Zimbabwe’s national priorities which include image building, international engagement, and re-engagement driven by economic diplomacy to improve the country’s image, strengthen relations with the international community and boost trade and investment.

Mr Dzangare said the Commission is also seized with other legislation planned to advance the capital markets. These include publication of exchange and CSD rules. The commission is also working on a draft Statutory Instrument aligning collection of the Investor Protection Fund (IPF) levy in terms of section 86G of the Act.

Mr Dzangare said that the draft has already been sent to the market and the Commission will be grateful to receive suggestions.

SECZim is also a member of the Committee of Insurance, Securities, and Non-Banking Authorities (CISNA), which was established in 1998 to bring together the SADC region’s non-banking financial regulators.