Bernard Mpofu, Chief Business Reporter
THE Securities Commission of Zimbabwe (SECZ) has licenced a dozen stockbrokers after the Zimbabwe Stock Exchange (ZSE) members withdrew a court case challenging the regulator's powers to register ZSE members.
Following the gazetting of statutory instrument regulating the exchange, SECZ directed brokerage firms to register at least two brokers in a bid to improve integrity on the equities market. This move was opposed by the ZSE which for long had been self-regulatory.
Currently, the commission is charging a yearly fee of US$3 000 for stock-broking firms and US$1 500 for individual stockbrokers.
The delay in licensing new brokers was one of the concerns raised by members of the ZSE during last year's ZSE Annual General Meeting (AGM) held in June.
Industry sources said at least 12 new stockbrokers attended a strategic meeting conducted by the exchange a fortnight ago, joining over 25 currently practicing stockbrokers. Zimbabwe has 19 brokerage firms. These are compelled by law to employ at least two licenced stockbrokers.
However, there are licenced stockbrokers who do not operate under brokerage firms.
Before the registration of the 12 stockbrokers, non-compliant brokerage firms included Kingdom Stockbrokers, FBC, BancABC Stockbrokers, Prime Stockbrokers, EFE Securities, ZB Securities, Old Mutual Securities, Lynton-Edwards Stockbrokers and ISB Securities.
Under the current regulations, an aspiring stockbroker submits an application to a membership sub-committee which then forwards the eligible applications to the ZSE main committee comprising stockbrokers Jeff Mhlanga, Edward Mapokotera, Rufaro Zengeni, Tedious Kasaira and Bartholomew Mswaka. The committee then hands over the applications to the ZSE board which then approves them before handing them over to the capital markets regulator.
SECZ chief executive officer Tafadzwa Chinamo confirmed to The Financial Gazette's Companies and Markets that at least 12 brokers have so far been licenced to practice after waiting for at least three years.
"More brokers have been licenced and we are in the process of licensing the brokerage firms which submitted their applications this month," said Chinamo in an interview.
Asked why it had taken so long to licence new stockbrokers, Chinamo said there was no substantive ZSE board and membership committee. He also blamed a legal battle between the regulator and the exchange for delaying the registration process.
The case was subsequently withdrawn as relations between the ZSE and SECZ improved.
"What we understand is that there was no substantive ZSE board and a membership sub-committee to process the applications. More so one of the court cases filed by the ZSE against the commission challenged a section of the statutory instrument which required brokers and brokerage firms to be licenced by the commission. That (court case) has since been withdrawn," said Chinamo on Monday.
Minutes of the ZSE's last AGM held on June 24 2011 said Emmanuel Munyukwi attributed the delays to the then pending court case, although members had been unconvinced.
"There were no new members registered in the current year (2011) and the chairman encouraged that members who meet the requirements should be registered for continuity of the profession. Mr Mapokotera and Mr (Zvisinei) Nyakudya (of Southern Trust Securities) concurred and also encouraged the ZSE to speed up the registration process," read part of the minutes.
"Mr Munyukwi pointed out there was no new registration because of the pending court case. Members wanted to know what in the courts (was) stopping new registration and the chairman advised that the case was a Self Regulation Organisation status. Mr Mapokotera advised that court cases can take considerable time and that should not stop prospecting members who are rightly due to be members."
The chairperson during the time was Ndodana Mguquka.
Munyukwi, the minutes said, undertook to take the matter to the ZSE board to see if the registration could be done.
Munyukwi could not be reached for comment as he was reported to be in a meeting.
Among some of the new reforms that were introduced by the commission is the licensing of investment advisors, brokers, dealers and compliance officers.
Last week the capital markets regulator and the ZSE jointly issued a notice requiring all investment advisors in the country to be licenced, in what could signal the improvement of the erstwhile frosty relations between the two institutions.
"With effect from the date of publication of this notice in the local newspapers, the ZSE shall not accept corporate actions filed by investment advisors that are not registered in terms of the Securities Act (Chapter 24:25) and the Securities (Registration, Licensing and Corporate Governance Rules, SI 100/2010," read part of the notice published in newspapers last week.
"It is illegal to render investment advice, as defined in the Securities Act without a valid licence issued by the Securities Commission of Zimbabwe."
Meanwhile statistics indicate that the ZSE year-on-year turnover for the month of January improved this year although business was driven by block trades such as special bargains.
"Despite the negative market performance, activity for the month was high, after it grew 23 percent to US$55,8 million from December 2011 and a massive 71 percent increase from January 2011.
"Of significance is the fact the monthly turnover was the third best since dollarisation trailing the all-time monthly high of US$60,54 million in November 2009 and the June 2009 second best of US$57,1 million," said Interfin Securities in an equities market update.
"Offshore investors were the major activity drivers through block trades with the biggest deal so far this year being 120 million Meikles shares which traded when the Moxon group consolidated its shareholding into one offshore investment vehicle called Gondor Capital. Net foreign purchases for the month of January further rose by two thirds from January 2011 signaling increased foreign appetite on the local market mainly in few selected large-cap and mid-cap stocks."
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