Securities Commission crafts investor fund rules

of measures to manage and regulate the Investor Protection Fund that has accumulated to US$5 million.
Chairman for the IPF board of trustees, retired Judge Justice George Smith told Herald Business that the board was in the process of crafting the rules to manage the fund and protect investors on the Zimbabwe Stock Exchange.
“The rules and regulations on compensation and guidelines should be ready before the end of the month,” said Mr Smith.
Basically, the purpose of the IPF is to cushion investors whenever problems arise on the bourse or any other exchange that might result in the loss of investment.
Successful implementation of these rules and regulations is expected to make the local bourse a lucrative destination for foreign investors.
However, the fund is also expected to cater for the other exchanges to be established in the country.
The commission is also working on a number of measures to guide and protect investors regarding disclosure, insider trading, operations of central securities, mergers and takeovers.
SEC says the ability of the fund to cover any eventuality on the market shall be significantly boosted by leveraging the fund through insurance.
Last year Government approved rules and regulations to operationalise the Securities Commission of Zimbabwe, regulate trading and dealing in securities.
The rules enable SEC to license, supervise and regulate the capital markets to ensure that high standards of professionalism and integrity are maintained.
SEC is empowered to prescribe qualifications for licensed players, register, supervise and regulate securities exchange.
According to the statutory instrument, SECZ will be responsible for prescribing fees and levies to be paid by licensed persons and mandate licensed persons to maintain trust accounts, give guidelines on corporate governance framework to be adhered to by registered securities exchanges and licensed persons.
A total of six levies which represents 1,68 percent of total deals apply to the market and players have since complained that the commission has introduced too many levies, eroding earnings on the market.
Every holder of securities (dealer) licence shall pay a levy of 0,18 percent of the total consideration, net of any duty or tax, payable for any purchase.
Under the Investor Protection Funds, 0,05 percent will be taxed.
Securities Exchange Levy and Securities (investment Management) Company Levy will both be charged at 0,5 percent of monthly gross income – to be remitted to the commission.
Under the Securities (Investment Advisors) Company Levy, 0,35 percent of gross income of the investment advisor will be taxed.
Every issuer of a security that is initially offered for sale on a registered securities exchange shall pay a corporate action levy of 0,1 percent of the gross amount raised through the sale, and it will be remitted to the commission.
The commission, which was established through an Act of Parliament, seeks to provide high levels of investor protection and reduce risk.
The commission also promotes market integrity and investor confidence as well as preventing market manipulation, fraud and financial crime.
A full-fledged SEC will also ensure transparency in capital and securities markets and promote investor education.
The approval of rules and regulations put to rest some entities within the capital and securities market, which questioned the legitimacy of SEC rules and regulations.