Investor protection fund grows

Business Reporter
THE Securities Commission of Zimbabwe’s investor protection fund has grown to $5,7 million since its formation in 2009 on the back of restoration of confidence in the capital markets.The fund was set up to protect market investors by building a bulwark against cases of fraud and other malpractices as well as offences by licensed brokers and securities traders.

If such cases occur, investors will make claims through an Investor Protection Fund Board established early this year.
However, the compensation fund does not cover day-to-day business risks.

“The fund was valued at $5,7 million as at 31 March 2013, thus reflecting a steady growth of the investor protection fund. However, the fund could be threatened by possible claims subject to ongoing licensed company closures,” said outgoing Finance Minister Tendai Biti.

He called on the regulator to ensure that the investing public is protected from the adverse impact of such company failures.
The rise in the investors’ protection fund was due to the reforms being implemented to ensure accountability in share dealings.

The fund is expected to improve Zimbabwe’s score on protecting investors in the World Bank’s doing business reports.  Under the investors’ protection fund system, licensed securities traders and dealers registered to collect a levy in every buy or sell deal and remit the money to SECZ within a month.

It is also hoped that the fund would grow further when the Centralised Depository Company starts contributing sometime this year.
SECZ would this year continue working to push for more reforms in order to grow the Zimbabwe Stock Exchange (ZSE) market capitalisation.

At the moment the ZSE market capitalisation was valued at $4,8 million. Strategies to be implemented include encouraging brokerage firms to have compliance officers responsible for separating depositors’ money from territorial money.

It is also hoped that automation of the ZSE would create vibrancy to the stock exchange. Automation of the bourse, according to SECZ chief executive officer Mr Tafadzwa Chinamo, would increase daily trading on the ZSE from $1 million to between $5 million and $6 million.