ZSE: Market warms to automated exchange

MARKET participants have warmed up to the automated Zimbabwe Stock Exchange, which completed its transition from a manual to a more efficient electronic trading system last week.

Experts say the automated trading system (ATS) is the front end of the trading cycle while the Central Securities Depository (CSD) is the back-end mandated for settlement of both scrip and cash.

The ATS reduces the settlement period from seven days to three days.

Through the system, investors get paid sooner in the event of a sell or receive their stocks quicker in case of a buy.

Dealers no longer have to be physically present on the trading floor to conduct business, as was the case during the manual call over system.

Securities and Exchange Commission of Zimbabwe chief executive Mr Tafadzwa Chinamo said the new system, which had a false start on July 3, was performing to satisfaction.

“It has been good so far,” said Mr Chinamo in an interview last week, after the ZSE seamlessly traded live on July 6 after overcoming “technical glitches”.

Brokerage firm IH Securities forecast a slowdown in activity as the market adjusted to the new system.

In the days leading to the July 3 switch, Econet shares tumbled 15 percent to USc34.

On the first day of successful electronic trading on July 6, the mainstream industrial index eased 0,75 points to settle at 145,45 points while the mining index rose to close at 42,09 points.

Total market turnover stood at US$13 000 with 11 stocks trading. On July 7, shares worth US$203 000 changed hands.

According to stockbrokers EFE Securities “ . . . most investors opted to observe the first trades and processes in the new environment . . . ATS Trades continued to improve on the ZSE in the mid-week session as traders and investors got the grips of the new trading environment”.

But by close of trade on Wednesday, total turnover had increased 247 percent to US$705 000 as investors gained confidence in the system.

Analysts said such slow trades were normal in an environment where a new system was being introduced.

Investment analyst Mr Albert Norumedzo said the system was in sync with competitive financial markets.

“Trading is running smoothly and cannot complain about anything (sic). It has improved on transparency and brings the stock market closer to other financial markets,” he said.