Surveillance system installation sets for Q1 2023
LIVINGSTONE MARUFU
The Zimbabwe Stock Exchange (ZSE) is set to install the market surveillance system during the first quarter of 2023 to increase the integrity of the market through the surveillance of the operations of market participants by the bourse.
ZSE chief executive officer Justin Bgoni told Business Times that the system would assist in increased supervision and monitoring of the trading process to ensure market transparency and prevent market manipulation.
“The ZSE has identified the vendor that will be supplying the market surveillance system and we are currently conducting internal tests on the system based on our specifications.
“We anticipate installing the system in Q1 2023 after all the tests have been completed,” Bgoni said.
The system assists in increased supervision and monitoring of the trading process to ensure market transparency and prevent market manipulation.
It has also been deployed in different African countries that include South Africa, Nigeria, Kenya, Zambia, Mauritius, Uganda and Trinidad and Tobago.
In his 2023 budget presentation, Finance and Economic Development minister Mthuli Ncube said the system would monitor the implementation of measures to curb illegal activities on the stock market.
Ncube said the local bourse has been subject to manipulation through speculative trading that drove inflation upwards.
This made the government deal with ZSE resulting in subdued market performance.
The government believes there are malpractices at the ZSE believed to be part of activities that fuelled parallel market activities.
It is believed that the SE 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 the trading of securities on ZSE.
Brokers have been accused of initiating part of the illegal and speculative activities that fuelled the depreciation of the Zimbabwe dollar through the transfer of funds between brokers’ sub-accounts and this has been outlawed by a new statute.
The 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 market capitalisation skyrocketed to ZWL$3.5 trillion in April this year from ZWL$1.3 trillion in January this year and this resulted in the depreciation of the local currency.
The monetary authorities responded by enacting several laws including SI103A which curbed speculative trading on the stock market, resulting in market capitalisation declining to ZWL$1.63 trillion this week.
The investors have lost over ZWL$1.8 trillion since April and the trading continued to be subdued resulting in many companies mulling joining the Victoria Falls Stock Exchange.
