Automated ZSE processes $142m trades

HARARE - The Zimbabwe Stock Exchange (ZSE) has processed trades valued at $142 million since its automation in September last year, Finance minister Patrick Chinamasa has said.

Last week, Chinamasa told guests at the official launch of Chengetedzai Depository Company Limited (Chengetedzai) — the firm running the country’s Central Securities Depository (CSD) — that 17 142 transactions had been recorded electronically by the bourse while 1 809 trades had been processed.

“The company has so far taken on board 50 of the 61 active counters on the ZSE. Further, a total of 2 069 investor accounts have been opened,” Chinamasa said.

The Treasury chief noted that the establishment of the CSD was going to lead to the electronic documentation of all issued securities in the name of the beneficiary owners.

“Before the establishment of the CSD, share certificates were in paper form. However, a certified securities system is fraught with a number of challenges that include loss of certificates, forgery, mutilation and theft of certificates.

“With the introduction of the CSD system, transparency will be enhanced in the capital market, thereby improving investor confidence and efficiency,” Chinamasa said.

The CSD is a facility for holding and administering securities, as well as enabling transactions to be processed by means of book entry.

The local one went live on September 8 last year, with three counters.

Central Securities Depository chairman Zwelibanzi Ndlovu said about $1,35 billion worth of shares on the automated system are held by foreign investors who presently account for nearly 56  percent of the total account holders.

“These 2548 accounts are composite in nature, with 754 accounts held by foreign investors while the remaining 1784 are held by local investors,” he recently told the businessdaily.

The latest development comes after the Zimbabwe Stock Exchange’s Automated Trading System (ATS) was recently integrated with the CSD.

The ATS is the front end of the trading cycle with the CSD being the backend of the automated environment with a mandate for settlement of both scrip and cash, as a close coupling model has been crafted between the ATS and CSD systems.

An ATS is a computer programme that creates orders and automatically submits them to a market centre or exchange; in this case, the submissions will be made to the already functional CSD.

ATSs can be designed to trade stocks based on a predefined set of rules which determine when to enter an order, when to exit a position and how much money to invest in each trading product.

Analysts say the disadvantages of the system are mainly operational as it can sometimes give in to mechanical failures.

Worldwide, countries with active capital markets have CSDs to provide custody and record-keeping services, which assists in attracting capital and making their economies more vibrant.

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