The Zimbabwe Stock Exchange Limited (ZSE) has been granted a licence to operate a Central Securities Depository (CSD) by the capital markets regulator, which will enhance efficiencies at the local bourse.
Chief executive officer Justin Bgoni indicated this will among other benefits, reduce market costs to all participants while boosting retail investors’ access to the stock market.
Retail investors have make up a smaller chunk of the investors on the local bourse as it has for years been regarded elitist. Such initiatives are therefore expected to boost their participation on the stock market, making it a preferred investment channel.
“The Zimbabwe Stock Exchange Limited (ZSE) is pleased to advise stakeholders that it has been granted a licence to operate a Central Securities Depository by the Securities and Exchange Commission of Zimbabwe in accordance with the Securities and Exchange Act, (Chapter 24:25) and the Securities (Registration, Licensing and Corporate Governance Rules, SI 100 of 2010.
“The ZSE decided to launch its own depository in order to improve operational efficiencies in the market, reduce market costs to all participants, make it easier for retail investors to access the market, and facilitate the introduction of new products. This is also in line with international best practice where an Exchange owns its depository.
“The ZSE wishes to thank the Securities and Exchange Commission of Zimbabwe for the support. The official launch date for the ZSE Depository will be announced in due course,” said Mr Bgoni in a notice to stakeholders.
A central securities depository (CSD), according to Wikipedia is a specialised financial organisation holding securities like shares, either in certificated or uncertificated (dematerialised) form, allowing ownership to be easily transferred through a book entry rather than by a transfer of physical certificates.
This allows brokers and financial companies to hold their securities at one location where they can be available for clearing and settlement and it is usually done electronically, making it much faster and easier than was traditionally the case where physical certificates had to be exchanged after a trade had been completed.