Swedish firm wins ZSE CSD contract

SWEDISH company CMC Markets has been assigned to set up the Zimbabwe Stock Exchange's Central Securities Depository as the domestic bourse moves in line with global trends of paperless securities trading.

Sources said that Chengetedzai, the controlling shareholder in the CSD company, which won the tender to establish the CSD, settled for CMC Markets, specialists in developing financial and securities trading solutions.

Officials from CMC Markets have already been to Zimbabwe to take a look at the country's CSD hardware and software requirements and to be able to customise the CSD system to specific requirements of the local securities market.

"A Swedish company called CMC Markets has been selected to set up the CSD. The officials were here recently to have a look at the requirements and then develop a system that matches the requirements," a source said.

The ZSE's first ever paperless trading and settlement system is expected to be operational by September this year.

CMC Markets is an online retail financial services business which enables clients to trade foreign exchange, contracts for difference and financial spread betting on a range of shares, indices, foreign currencies, commodities and treasuries. The group also provides stockbroking services in Australia.

The financial services company has offices and representatives in the United Kingdom, Ireland, Australia, France, Germany Italy, Norway, Spain, Sweden, Canada, Japan, Singapore, China, Australia and New Zealand.

ZSE chief executive Mr Alban Chirume declined to comment on the issue referring questions to Chengetedzai Depository Company. Efforts to get a comment from Chengetedazi Depository Company were fruitless yesterday.

According to equities analysts Mr Nyasha Makura and Mr Campbell Musiiwa, a CSD is a system where the securities are held in electronic form. This is done at the request of the shareholder through the medium of a depository participant.

This is similar to a banking institution where depositors have accounts in different currencies (shares). The balances in these depository accounts are increased or reduced as the depositors buy or sell the shares respectively.

Transactions on the depositors' accounts are done through intermediaries called depository participants. Thus depositors do not deal directly with the CSD, but access CSD services through custodians, brokers and transfer secretaries.

Perhaps brokers are the most well known of the three classes of participants, but all combine to form the value chain in capital markets.

Electronic transaction of securities eliminates the problems and delays arising out of a paper-based system. Typically, paper-based systems are plagued by issues of security, misplacement and destruction from elements like fire, water and old age.