VFEX moves to lure retail investors

... Simplifies accounts opening process

BUSINESS REPORTER 

The Victoria Falls Stock Exchange (VFEX) has introduced broker-controlled accounts as it seeks to simplify the processes to lure retail investors to the bourse.

The accounts were introduced from July 1.

The broker-controlled account is opened by a VFEX-registered stockbroker on behalf of their clients who wish to trade in securities on the VFEX, allowing the stockbroker to interact with a licensed custodian on behalf of the investors, CEO Justin Bgoni said in a statement Monday.

This account is registered in the beneficial owner’s name, he said.

“The broker-controlled model was necessitated by the need to simplify the account opening process for retail investors. Broker-controlled accounts deliver lower costs and easier account opening procedures for investors wanting to open a VFEX trading account,” Bgoni said.

Under the system, a stockbroker opens a trust account with any participating custodian that is in partnership with VFEX for settlement purposes.

CBZ Custodial Services has entered an agreement with VFEX to offer the service.

The tripartite agreement between the stockbroker, VFEX and the custodian
(settlement bank) stipulates that all assets bought under the broker controlled account belong to the beneficial owner, Bgoni said.

“To this effect, stockbrokers are required to have a signed mandate with clients that they are allowed to open broker controlled accounts on behalf of participating investors,” he said.

The VFEX began operations in 2020 and trading is subdued on the back of institutional investors tightly holding on the US$ assets.

The bourse says investors prefer holding stock in dividend paying companies which has contributed in the lower trading levels.

Bgoni said retail participation on the exchange remains very low and various initiatives have been made to lure individual investors.

“We remain focused on increasing liquidity and deepening the market. As we approach 2022, VFEX Direct will remain a target product to increase access for retail investors to the market,” he said in the 2021 ZSE annual report.

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