adminEnacy Mapakame
Business Reporter
SHARES worth US$1,37 billion, or 35 percent of the Zimbabwe Stock Exchange’s total value, are now trading electronically on the Central Securities Depository (CSD) platform, Chengetedzai Depository Company chair Mr Zwelibanzi Ndlovu has said.
The ZSE launched the automated trading system on Friday to replace the manual callover system.
Statistics from Chengetedzai Depository Company show that 2 617 accounts have been opened on the CSD by pension funds, corporate, individual, insurance, unit trust funds, unclassified local and unclassified foreign investors.
Of the opened accounts, individual accounts are the highest at 1 178.
However, they only make up two percent of the market value of all accounts on the CSD.
The total value of individual accounts is US$16,9 million, while the 389 pension fund accounts are worth US$233,7 million. Unclassified foreign accounts make up 40 percent (584 accounts worth US$548 million).
“It is important to note (that) the number of individual accounts may be more, but their value as a percentage of total market value of shares in CSD is low. The same goes for unclassified foreign accounts, they are 584 accounts but worth US$548 million, which is 40 percent.
“So far, a total US$1,37 billion has been entrusted in the CSD system,” said Mr Ndlovu in an interview.
A CSD is a specialised financial organisation holding securities such as shares in electronic format and allows brokers and financial companies to hold their securities at one location where they are available for clearing and settlement.
This is done electronically, which makes it faster and easier than was traditionally the case where physical share certificates would be exchanged when trading.
Chengetedzai Depository Company was mandated to list shares on the CSD platform.
Mr Ndlovu said 61 of the 62 counters on the ZSE were now on the CSD. Border Timbers is the outstanding counter.
There is no regulation mandating all investors to dematerialise shares unless they need to trade. Dematerialisation is a process of converting physical shares into electronic format.
“Right now we cannot force everyone to dematerialise their shares, but they cannot trade until they convert those shares into electronic format,” said Mr Ndlovu.
He emphasised the need for all stakeholders to embrace the new system which he said has proven to bring efficiency on other markets.
In order for the financial services sector to attract capital, he said, investors need to be assured of the safety of their investment and efficiency as well as transparency in the operation of the markets.
The CSD is largely expected to eliminate some of the challenges in the certificated securities system that tended to slow down growth of the capital market such as loss of certificates, forgery, mutilation and theft; and also reduce settlement risk and processing time.
The settlement cycle is expected to be reduced from seven days to three days.
Online Reporter