Stockbrokers’ future hangs in balance

OPERATIONS of most stockbroking firms hang by a thread as the Securities Commission of Zimbabwe demands that all stockbroking firms would be deemed licensed after registering at least two stockbrokers by December 31, 2010.
The dilemma is that the Zimbabwe Stock Exchange has 21 registered broking firms and only 31 registered stockbrokers.
According to the new guidelines of the commission, all brokers and dealing firms must be licensed by the commission, who are mandated to prescribe qualifications for licensed players, register, supervise and regulate securities exchange.
SEC chief executive officer Mr Alban Chirume said the commission was expecting dealing firms to comply although he refused to shed more light on the number of dealing firms that have complied.
"We are still expecting brokers to be furnishing the commission with their applications throughout the week," said Mr Chirume without giving elaborating.
However, he confirmed that registered brokers in the market were slightly less than the number of operating dealing firms ' which raises fears of some firms suspending operations during the first quarter of the year.
The commission has also introduced preliminary capital requirements due in the first quarter of the year.
Securities exchanges are expected to raise US$1 million by March next year with securities custodians coming up with US$500 000.
Transfer secretaries, investment advisors are expected to weigh in with US$150 000 each and US$100 000 for dealing firms.
Individual investment advisors and securities dealers will have to part with US$10 000 respectively.
"All market players should comply with the registration and regulations in terms of the Securities Commission Act by December 31, 2010," said Mr Chirume adding: "By December 31, 2010 it shall be illegal to continue trading without being registered or licensed."
These requirements will come as a burden to the capital market that is already weighed down by a number of taxes introduced by the commission.
According to Statutory Instrument 100/2010 a total of six levies would apply to the market that is currently valued around at about US$4 billion from 73 listed companies.
Every holder of securities (dealer) in 2011 shall pay a levy of 0,18 percent of the total consideration, net of any duty or tax, payable for any purchase.
In addition, they must pay an investor protection fund 0,05 percent, Securities Exchange levy 0,5 percent of monthly gross income and investment advisor 0,35 percent of gross income. Every issuer of a security that is initially offered for sale on registered securities exchange shall pay a levy of 0,1 percent of the gross amount raised through the sale.
Security dealers are also required under the new regulations to have sat for the bond market and derivatives market modules, offered by the South African Institute of Financial Markets.
More activity is expected on the country's capital markets following the introduction of a Securities Central Depository expected to come on board in the first half of the year. The commission will also regulate the SCD.
The commission was always at loggerheads with brokers and the Zimbabwe Stock Exchange regarding the overall regulator and this has been put to rest after Government issued a statutory instrument that mandates the commission to regulate trading and dealing in securities.