Willia Bonyongwe, the chairperson of the SECZ board of commissioners told Standardbusiness that the proposed rules were not targeted at ZSE per se but cover any exchange, which will be set up in the future.
“We are going to put in place various instruments that will guide and protect investors regarding disclosure, insider trading, operations of central securities, conduct of business by licensed entities, mergers and takeovers,” she said.
Bonyongwe said the regulatory board had so far collected over US$4 million for the Investor Protection Fund (IPF) to cushion investors when there are problems on the bourse.
It’s a small amount compared to what is obtaining in South Africa, Bonyongwe admits, but she added that “we also have to look at the comparative size of the market and the situation on the ground”.
The fund is collected from a 0,05 levy on all transactions done on ZSE. Initially the levy was 0,5.
The SECZ boss said the ability of the fund to cover any eventualities depends on the nature and the magnitude of the event.
The Justice George Smith-chaired IPF board is finalising the draft rules for the fund and SECZ hopes that the ability of the fund to cover any eventuality shall be significantly boosted by leveraging the fund through insurance.
The board is also looking at the adequacy and safeguards of the fund in absorbing potential market losses and this may involve actuarial valuations and an insurance policy for the fund.
Bonyongwe said it was shameful for Zimbabwe to be on a manual system adding that an automated trading platform will be in place in September.
“Investors deserve better. Automation brings in transparency.
“It is a deterrent to those who want to manipulate the market and makes regulation much easier,” she said.
She said regulation had become critical in the aftermath of the global financial crisis, which ravaged capital markets.
The fact that there is now a regulator in Zimbabwe, Bonyongwe said, has added to positive sentiments on the market for both local and foreign investors.
SECZ TO PROVIDE GUIDELINEs ON CORPORATE GOVERNANCE
SECZ has also moved to change the capital market landscape through Statutory Instrument 100 of 2010 whose major thrust is corporate governance.
The rules call for the appointment of an independent board at the ZSE and strengthening the capacity of the bourse to be in synch with the market it deals with.
Unlike other exchanges, salaries and board fees of directors are not published in annual reports.
Bonyongwe said the best practice now is for more of such disclosures.
“As a regulator, we have already taken the lead by incorporating disclosure and corporate governance guidelines in our statutory instruments 100 of 2010 which is a guide for all our licensed and registered market players,” she said.
“We therefore expect them to revamp their rules and requirements in line with the instrument and with best practices.”
She says Zimbabwe is not re-inventing the wheel but trying to ensure that the market is attractive.
“Investors out there have so much choice and one needs to spruce themselves out to be noticed.”