Zimbabwe’s first central securities depository Chengetedzai Depository Company (CDC) says it has transformed the capital market to an “electronic-based system” from a manual or semi- automated one and is ready to help in these “trying times”.
The central securities depository went live in 2014 as a facility for holding and administering securities as well as enabling transactions to be processed by means of book entry.
CDC chief executive officer Campbell Musiwa said the platform also succeeded in “putting a stop to the rampant issues of shareholder litigation and fraud among counterparts which were due to structural deficiencies in paper-based systems”.
He said CDC has resulted in settlement timeframe to T+3 (transaction plus 3 days) from T+7(transaction plus 7 days).
It introduced delivery versus payment to avoid failure in settlement and also introduced a collateral fund to cover any market deficiencies. The fund is currently over US$260m, Musiwa said.
He said CDC laid the path for the launch of the automated trading platform on the Zimbabwe Stock Exchange (ZSE).
“CDC introduced settlement of funds using central bank money in line with international Organisation of Securities Commission [IOSCO] principles and international best practices,” Musiwa said.
“CDC strictly adheres to the 24 principles for key capital market infrastructure issued by IOSCO as these principles aim at having robust CSDs [central securities depository] that can withstand financial shocks. Clear segregation of the trading function from post trade transaction processing is one of most important aspects of such infrastructures so as to avoid issues associated with collusion and fraud.”
He said CDC has been “able to demonstrate 100% system uptime through its AAA rated system”, the same system in use in more than 65 countries.
Musiwa said the CSD system has been able to provide an effective quick response to the current Covid-19 pandemic by enabling the deployment for use by all participants from their homes since the beginning of 2020.
The Securities Exchange Commission of Zimbabwe recently licenced ZSE to run a CSD.