The Financial Gazette

Bernard Mpofu,Chief Business Reporter

THE Securities Commission of Zimbabwe (SECZ) has declined to grant the Zimbabwe Stock Exchange (ZSE), one of the oldest bourses on the continent, an operating licence after the ZSE reportedly failed to provide critical information demanded by the regulator, The Financial Gazette's Companies & Markets can reveal.

In a notice to stockbrokers ahead of a retreat that took place this week, SECZ said the ZSE had to comply with its licencing requirements just like all capital market players.
It indicated that the ZSE had to provide SECZ with information specified in Section 30 of the Securities Act, noting that this requirement was even more imperative to the domestic bourse "given that it operates as a Self Regulatory Organisation".
The capital markets regulator noted: "It is worrying therefore that the commission has not yet issued the ZSE an operating license due to the failure by the ZSE to provide the required information. Of particular concern to the commission is the non-submission of the 2010 financial statements which would enable the commission to verify the exchange's capital adequacy. Also of concern is the lack of a business plan to satisfy the commission that the ZSE is working towards specific goals in developing the market."
The commission said it was fed up with failure by the exchange to automate and do away with the current paper-based trading system despite initial indications that the process would be completed by year-end. SECZ also said only three out of just over a dozen brokerage firms operating in the country had been registered by the commission.
Currently, the commission is charging a yearly fee of US$3?000 for stock-broking firms and US$1?500 for individual stockbrokers.
But the ZSE chief executive officer, Emmanuel Munyukwi, however dismissed claims by the regulator, saying the exchange had complied with all requirements in terms of the law.
"There is nothing like that. As far as I know we have confirmed and verified that all the required information is with the regulator," he said.
This week, stockbrokers nominated a five-member committee tasked with dealing with several issues affecting the viability and integrity of the exchange. Sources said the committee will work with acting ZSE board chairperson, Eve Gadzikwa, and is expected to report back to SECZ in a week's time. The committee is made up of veteran stockbrokers, Tediuos Matsaira, Bart Mswaka, Jeff Mhlanga, Edward Mapokotera and Rufaro Zengeni.
The ZSE opened its doors in Bulawayo in 1896 soon after the arrival of the Pioneer Column. It was, however, only operational for about six years. Other stock exchanges were established in Gwelo (Gweru) and Umtali (Mutare).
The latter, also founded in 1896, thrived on the success of local mining, but with the realisation that deposits in the area were not extensive, activity declined and it closed in 1924. After World War II a new exchange was established in Bulawayo.
Dealing started in January 1946.
A second floor was opened in Salisbury (Harare) in December 1951 and trading between the two centres was by telephone. They continued operating until it was decided that legislation should be enacted to govern the rights and obligations of both members of the exchange and the general investing public.
The ZSE Act reached the statute book in January 1974. The members of the exchange continued to trade as before, but it became necessary for legal reasons to bring into being a new exchange coincidental with the passing of the legislation. The present exchange therefore dates back from the passing of the Act.
In 2004, the Securities Act was promulgated to repeal the ZSE Act and became operational in September 2008, giving way to the creation of SECZ.

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