Online ReporterNelson Gahadza
Business Reporter
CHENGETEDZAI Depository Company says testing of its securities lending and borrowing platform has been completed and the system is now awaiting its first live transaction.
This marks a key milestone as Zimbabwe’s capital market edges closer to introducing securities lending and borrowing to broaden investment products on the Zimbabwe Stock Exchange (ZSE) and deepen liquidity in the capital market.
Securities Lending and Borrowing is a practice where an investor temporarily transfers shares or bonds to a borrower in exchange for a fee and collateral.
Lenders earn extra income on idle portfolios, while borrowers use the assets to facilitate short-selling, hedge risks, or cover settlement obligations.
CDC operations manager Mr Takunda Muneni said in an interview that the testing phase had been completed, with the platform now ready to process transactions once participating parties conclude the necessary contractual arrangements.
“We have completed the end-to-end testing and are now awaiting the first transaction. We have received some enquiries and interest, but the transactions are guided by a contract between the borrower, who is the stockbroker, and the lender, who is the investor,” said Mr Muneni.
Earlier last year, the Securities and Exchange Commission of Zimbabwe (SecZim) admitted the CDC Securities Lending and Borrowing platform into its regulatory sandbox to allow live testing before a full market rollout.
The testing was effective March 12, 2025, for an initial six-month period, during which the commission would monitor and guide implementation to safeguard investors.
A regulatory sandbox provides a controlled environment where innovative capital market products and financial technologies can be tested under regulatory oversight before they are introduced to the wider market.
Securities lending and borrowing enable investors to temporarily lend their shares to stockbrokers in exchange for a fee, creating an additional source of income beyond dividend payments. At the end of the agreed period, the borrower returns either the securities together with an agreed interest or other compensation as stipulated in the lending agreement.
The ZSE says the securities lending and borrowing framework forms part of broader initiatives aimed at expanding market products, improving liquidity and enhancing the attractiveness of Zimbabwe’s capital markets to both retail and institutional investors.
Investment analyst Mr Enock Rukarwa earlier said that the successful completion of testing represented an important step in modernising the local securities market, although widespread adoption would depend on investor education and participation.
“Securities lending is a standard feature in developed capital markets because it improves market efficiency and liquidity while giving long-term investors an additional income stream from assets that would otherwise remain idle,” he said.
“However, the success of the product will depend on market confidence, awareness and the willingness of institutional investors to participate. A strong regulatory framework and effective risk management will also be critical in ensuring the product gains traction.”
Market participants also believe the introduction of SLB could provide stockbrokers with a new revenue stream while stimulating trading activity on the ZSE as the exchange continues to diversify its product offerings.
