Brokers fighting a 'lost battle' – SecZim

HARARE - Stockbrokers are fighting a “lost battle” in trying to block demutualisation of the Zimbabwe Stock Exchange (ZSE), the Securities Commission of Zimbabwe (SecZim) said.

Tafadzwa Chinamo, SecZim’s chief executive, said the brokers will not win the case because government technically owns the bourse through an Act of Parliament.

This comes as a wrangle has developed between government and the stockbrokers, who claim ownership of the equities market.

The ZSE is currently run as a mutual society by stockbrokers.

The stockbrokers have sought legal opinion over the issue, arguing they hold proprietary rights to the exchange, which translates to ownership.

These disagreements have stalled demutualisation of the bourse.

Demutualisation refers to a process by which a mutual organisation is transformed into a publicly traded firm.

A mutual company is one that is owned by members for their benefit.

“I don’t see brokers winning the case. The Finance minister (Tendai Biti) has made it clear that he will not rest until the bourse is demutualised,” Chinamo said.

The stock market levies a tax on investors. Furthermore, listed companies pay an annual subscription fee, which contributes more than 33 percent to the exchange’s annual income.

Biti has declared that government owns the exchange, arguing it was a creation of the State and therefore a State-owned enterprise.

He is on record saying there are individuals masquerading as de facto owners of the bourse, yet it was a statutory creation run by members drawn from stockbroking firms.

Presenting his 2013 National Budget, Biti said the automated trading system would be operational in the first quarter of next year.

Chinamo said money for automation is there and the only hurdle was the war being waged by the stockbrokers.

Demutualisation of the exchange is at the centre of the current reforms.

Once demutualised, the ZSE becomes fully exposed to market forces.

The Central Securities Depository (CSD) firm will comprise Chengetedzai ZSE, ZB Bank, the Infrastructure Development Bank and the National Social Security Authority as the shareholders.

Through the four State-controlled institutions, government will have a combined 51 percent shareholding in the CSD company while Chengetedzai would hold the remaining 49 percent shareholding.

The major concern for the stockbrokers is the protection of their interests.

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