CTC condemns ZSE
LIVINGSTONE MARUFU
The Competition and Tariffs Commission of Zimbabwe (CTC) has condemned the attempt by the Zimbabwe Stock Exchange (ZSE) to push listed counters to join its central securities depository, a move described as part of efforts to enjoy an unfair advantage.
ZSE is said to have told companies listed on bourse to migrate to its CSD as part of their listing requirements.
The move by ZSE was, however, blocked by CTC saying the local bourse will enjoy unfair advantage over the other depository, Chengetedzai Depository Company, which began operations seven years ago.
“We don’t care about incentives or rebates but what we care about is fair competition. In this instance we just objected to arm twisting antics and extending all sorts of favours to the listed entities by the exchange to lure its counters to its depository. Where was that going to leave Chengetedzai Depository Company which does not have its own exchange,” a CTC executive, who preferred not to be named, told Business Times.
The executive added: “That is where we intervened to ensure fair competition in the depository business.”
A CSD is a facility that holds and administers securities as well as enabling transactions to be processed by means of book entry.
CTC said after its intervention, the ZSE and Chengetedzai can now battle it out on a fair battleground without the local bourse using its advantage.
The Commission says it was concerned about pricing as the depository with good prices will attract more counters.
The implementation of rebates which had begun on November 1 2021 to reduce costs on participants and improve operational efficiencies was stopped by the court.
ZSE chief executive officer Justin Bgoni told Business Times that the bourse only wanted to improve on efficiency to allow real time confirmation of trades.
“I cannot comment much given that there was a court case against us,” Bgoni said.
Amalgamated Regional Trading Holdings Limited, AXIA Corporation Limited, FBC Holdings Limited, Seed Co Limited, Simbisa Brands Limited and Truworths Limited have migrated to CSD.
More counters joined CSD on December 1 2021.
Bgoni said the rebate facility was supposed to be extended to all issuers whose securities are settled through the ZSE Depository.
He said ZSE’s thrust is to provide better service to the customers and market participants.
Bgoni said more counters will come through but currently, the bourse is still populating and will share with the market in due course.
He said the key functions of the CSD still remain the same, however, the only major difference is in terms of system used and how participants interact with the depository.
Bgoni said the introduction of new products will be made in due course.
The use of different systems and compatibility in the past was a hurdle when it came to launching new products, he said.
The bourse will have a collateral fund to cater for a failure settlement.
The collateral fund is prescribed by the bourse regulations and the regulations of the RBZ as the settlement bank.
The collateral fund is money that belongs to the custodian banks participating on the ZSE depository and not ZSE per se and will be depended on the trading activity handled by each custodian bank.
Bgoni said it was long that an Exchange also owns its depository overdue as per international best practice.
