ZSE will no longer be allowed to regulate itself

THE Zimbabwe Stock Exchange will no longer be allowed to regulate itself owing to past abuses and malpractices and insider trading by the players, Finance Minister Tendai Biti has said.

The minister said no person with shares in a listed company would be allowed to sit on the board set up to regulate the bourse.

He outlined the new measures during his Second Reading speech of the Securities Amendment Bill on Tuesday which sailed through the House of Assembly and now awaits transmission to Senate.

The minister's remarks followed representations from stakeholders to the Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion, chaired by Bulawayo South MP Mr Eddie Cross.

The committee tabled its report on the same day.

"The problem with the stock exchange is that it has been run like an old boys' club since 1893 when it was set up - you know it. So you cannot touch them. They operate like a cabal.

"They are hunting wolves and there are lots of incestuous things that happen which you know better than I - pushing a share price or collapsing a share price. So, self-regulation does not work any more."

He said one problem with the ZSE, as currently constituted, was that the enabling legal statute only set up the market, without defining who owned it.

"So the stockbrokers actually become the players and the umpires and it is a result of this self-regulation," he said.

"One of the reasons why we are now moving towards demutualisation is that we want people who are able to say: 'We own this thing'. We are appointing a board and this is best standard throughout the world, the issue of demutualisation."

Another measure the Bill seeks to address, he said, was the automation of trade and the Central Securities Depository so as to enhance transparency. People would in future be able to tell who have bought shares and their value, on a given day.

Minister Biti said the CSD would also help in "piercing the corporate veil" by telling who was behind the purchase of shares above a certain threshold.

"Just to give an example, there is a businessman called Van Hoogstraten  . . . He is a major shareholder in Hwange, he is also a major shareholder in RTG," he said. "Now, if you go to the register of Rainbow Tourism Group, you will not find Van Hoogstraten anywhere, but you will find Hamilton this and Hamilton that. It is almost like 18 Hamilton companies. So, the issue now of the CSD is that it obliges the piercing of the corporate veil," he said.

The Micro-Finance Bill also sailed through the House and is waiting to go to Senate.