New surveillance system for ZSE

(Last Updated On: November 30, 2022)

RYAN CHIGOCHE

 

The Zimbabwe Stock Exchange (ZSE) is finalising the procurement of  a  market surveillance system  to monitor illicit  trade practices  on the volatile local bourse,it has been established.

The  new system is expected to enhance  market integrity  and safeguard the interest of  investors.

The  latest development was revealed  by the Finance and Economic Development Minister, Mthuli Ncube, who said the system will monitor implementation of measures to curb illegal activities on the stock market.

“The ZSE is in the final stages of procurement of a market surveillance system to ensure implementation of measures to curb manipulation of the stock market and other illicit practices,’’ Ncube said.

It comes at a time when the local bourse has been subject to manipulation  through speculative trading that drove inflation upwards.

There have been  serious malpractices at the ZSE  believed to be part of  activities that fueled  parallel market activities.

The deficiencies in the ZSE system allowed clients to sell shares  and transfer proceeds to third parties  for speculative trading in forex.

Consequently, the government, through Statutory Instrument (SI) 103A, gazetted new regulations  to operationalise its directive  for tighter conditions  on trading  of securities on ZSE.

Blame has also been placed on the doorsteps of brokers, who have been accused  of  initiating part of  the  illegal and speculative  activities that fueled  depreciation of the Zimbabwe dollar through the transfer of funds   between brokers’ sub accounts. These  have  since been outlawed  by the government, clipping the wings of rogue brokers.

Government also doubled capital gains  tax on shares  for 270 days or less  to 40% from 20%, a move meant to  promote long-term investment on the ZSE. The 20% tax level was seen as not deterrent enough to discourage  speculative trading in shares.

The speculators used the price bubble on the ZSE  to make huge profits  as the bulls kept charging at the local bourse, resulting in  the market capitalisation  rocketing to ZWL$3.5 trillion in April this year, from ZWL$1.3 trillion in January this year. The bullish sentiment also resulted in a brutal attack on the Zimbabwe dollar in the parallel market.

However, since the gazetting of SI 103A,which curbed speculative trading on the stock market, the ZSE has been experiencing a bearish sentiment, with the market capitalisation declining to ZWL$1.7 trillion this week.

The measures which were put forward in May this year resulted in a liquidity squeeze which also depressed trading activity on the local market with investors continuously losing money.

 

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