Published by the government of Zimbabwe
19 December 2008
Harare — THE Zimbabwe Stock Exchange Committee has warned that there would be no resumption of trade at the bourse for the remainder of this year, unless stockbrokers' concerns are addressed.
It said stockbrokers would be unable to furnish the Securities Commission with audited financials of networth by end of day today owing to costs involved and professional resource availability at this time of the year.
On Tuesday, the commission warned that it would close all stockbroking firms that fail to deliver the required statements by the deadline.
The statements were needed to allow resumption of trade on the stock market, which has stalled for the third week running.
In a statement, the ZSE committee said it was engaged in negotiations with the Securities Commission to resolve the trading impasse but expressed optimism that the normal trading environment might return next year.
"Consultations with the relevant authorities are taking place and we are hoping that a normal trading environment will be restored as soon as practicable although this is unlikely to be achieved in the current month," said ZSE.
The Commission is now regulating operations at the local stock exchange, taking over from the ZSE committee. Normal trading on the local bourse has been negatively affected by the requirements for purchasing shares, which came into effect on November 20 this year.
The requirements stipulate that all funding for such purchases must be formally guaranteed by a bank at the highest level as a prerequisite to accepting and processing all orders.
Having regard to the settlement risk attaching to this requirement, the consequences of breach as well as the promotion of market integrity and investor confidence, stockbrokers have been unable to play their usual intermediary role of advising clients and taking orders.
"This situation is unlikely to change until settlement issues raised by the requirements have been resolved," warned ZSE.
Commenting on the clearing and settlement issue, the ZSE said the normal settlement cycles and order matching principles have not been working as they would under normal circumstances due to a variety of challenges encountered within the banking system.
"The issues are however being progressively untangled with satisfaction.
"Information on a variety of defaults is being compiled and these are being actively investigated and all available evidence is being appraised according to Securities Commission Act (24:25) section 65 and the Members rules 10.01 and 11.01," said the committee.
Analysts argued the commission was also not in a position to summarily close any stockbroking company because of standing Members Rules. This rests with the ZSE Committee.
In accordance with the Securities Act, Section 118: Rules and Section 65 of the same Act it will be observed that such Rules do not exist currently under this Act and have therefore not been Gazetted as prescribed in Section 118(5 (a) and 6).
Recourse has therefore to be made to Section 121 (6) of the same Act.
This then means that "Any rules made by the Zimbabwe Stock Exchange in terms of Section 94 of the repealed Act and in force immediately before the fixed date shall be deemed to have been made by the ZSE in terms of Section 65 and may be amended or repealed accordingly."
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It is only right if the Comission steps in in times when ZSE comitte does not stretch its arm o f authority to such indisciplined financial activity like which took place on the bourse, they could see it nd could have taken action before the effects could ripple, the comission should see to it that the stokebrokers report of their positions as required or action be taken as it does no make sense also for the ZSE comitte to refute that, knowing that what its argument is for what its ACT states, but then that law cannot be brought in… [Read Full Text]