Business / Economy
Zimbabwe plans to amend Securities Act
01 May 2011 at 06:34hrs | Views
Zimbabwe's Securities Act is due to be amended to align its objectives with the latest global capital-market trends.
Plans to reform the laws come as the Johannesburg Securities Exchange has said moves to align the Zimbabwe Stock Exchange with regional boards were being hampered by weak governance structures, lack of automation and a non-demutualised ownership structure.
The realisation that some aspects of the law were impeding growth led Finance Minister Tendai Biti to order a moratorium on the payment of $10000 licensing fees for Zimbabwean stockbrokers.
"The minister has been very active in this initiative, which is meant to infuse newer ideas," said a Securities Commission of Zimbabwe insider.
"You must understand that the law was crafted way before many socioeconomic developments, such as the 2008 financial crisis and diversification of capital markets."
Under the plan, more industry-friendly measures and regulatory functions would be incorporated into the law - key to revitalising activity in the country's depressed capital markets.
The new measures could be fixed by way of a statutory instrument by Biti or a full review of the contentious act in parliament.
The crucial changes also come after securities traders complained bitterly in January that they faced widespread closures if authorities pressed ahead with the stifling cash demands.
Around the time, ZSE chief executive Emmanuel Munyukwi appealed for a downward revision of annual trading fees to averages of $500, arguing the industry was reeling from low business volumes.
"The ZSE's daily average turnover is $1.2-million, which translates into a daily brokerage of $1300 per firm. It is estimated that current monthly costs per firm is $20000 (and) most firms are failing to cover their overheads," the ZSE boss said, adding the fees ought to match regional structures and other professional bodies.
With Zimbabwean market liquidity at 1.2% and only seven out of 20 firms managing to fund daily needs from trading income in 2010, regional fees per firm are pegged at $371 in Botswana and $800 in Zambia, respectively.
While the industry feels throttled by Harare's steep cash demands, among other issues, the sector further argues that aligning Zimbabwe's fee structure with that of regional countries is justifiable because the ZSE's capitalisation is significantly lower than that of regional competitors.
Gaborone and Zambia, for example, are valued at $74-billion and $5.3-billion, while the local bourse is valued at $4-billion.
Plans to reform the laws come as the Johannesburg Securities Exchange has said moves to align the Zimbabwe Stock Exchange with regional boards were being hampered by weak governance structures, lack of automation and a non-demutualised ownership structure.
The realisation that some aspects of the law were impeding growth led Finance Minister Tendai Biti to order a moratorium on the payment of $10000 licensing fees for Zimbabwean stockbrokers.
"The minister has been very active in this initiative, which is meant to infuse newer ideas," said a Securities Commission of Zimbabwe insider.
"You must understand that the law was crafted way before many socioeconomic developments, such as the 2008 financial crisis and diversification of capital markets."
Under the plan, more industry-friendly measures and regulatory functions would be incorporated into the law - key to revitalising activity in the country's depressed capital markets.
The crucial changes also come after securities traders complained bitterly in January that they faced widespread closures if authorities pressed ahead with the stifling cash demands.
Around the time, ZSE chief executive Emmanuel Munyukwi appealed for a downward revision of annual trading fees to averages of $500, arguing the industry was reeling from low business volumes.
"The ZSE's daily average turnover is $1.2-million, which translates into a daily brokerage of $1300 per firm. It is estimated that current monthly costs per firm is $20000 (and) most firms are failing to cover their overheads," the ZSE boss said, adding the fees ought to match regional structures and other professional bodies.
With Zimbabwean market liquidity at 1.2% and only seven out of 20 firms managing to fund daily needs from trading income in 2010, regional fees per firm are pegged at $371 in Botswana and $800 in Zambia, respectively.
While the industry feels throttled by Harare's steep cash demands, among other issues, the sector further argues that aligning Zimbabwe's fee structure with that of regional countries is justifiable because the ZSE's capitalisation is significantly lower than that of regional competitors.
Gaborone and Zambia, for example, are valued at $74-billion and $5.3-billion, while the local bourse is valued at $4-billion.
Source - Timeslive
