CHENGETEDZAI Depository Company (CDC) is working with companies that were unable to meet the regulatory requirements to join the securities’ holding and settlement platform by December last year.
By Ndamu Sandu
The Central Securities Depository (CSD)—a facility for holding and administering securities, as well as enabling transactions to be processed by means of book entry — went live on September 8 and all counters listed on the stock exchange were supposed to join the platform.
To date 43 out of 66 counters listed on the Zimbabwe Stock Exchange (ZSE) are on CSD.
The CSD reduces the settlement period to T+5 (transaction plus five days) from the T+7 (transaction +7 days) that was in existence.
CDC chief executive officer Campbell Musiwa told Standardbusiness the affected counters’ boards were yet to pass a resolution giving a nod to the move.
“In particular, the boards of the outstanding companies are yet to pass resolutions allowing for their shares to be on-boarded onto the CSD platform as dictated by section 72 of the Securities Act,” Musiwa said.
“We are working with the ZSE, the transfer secretaries as well as the boards of the companies so that they may comply. It is illegal for the CSD to on-board the outstanding counters until after their boards pass the resolution to dematerialise their shares.”
Despite the glitches, Musiwa said the company was on course to move to T+3 by June.
“The move to T+3 is attainable because we expect to on-board all counters by the end of the first quarter. It is important to note that all pre-settlement clearing is currently being concluded by T+2, implying that deals will actually be ready to settlement by end of day T+2. The period between T+2 and T+5 was a buffer to allow for human errors and solving of such errors, and is not to do with the on boarding of the outstanding counters,” he said.
Most countries with active capital markets have CSDs to provide custody and record-keeping services, which assist in attracting capital and making their economies more vibrant.
The system also eliminates the risk of fake certificates, since only those certificates authenticated by the Transfer Secretary would be deposited.
In 2010, Chengetedzai won the right to establish the first CSD company in Zimbabwe in a public tender from the Securities Commission of Zimbabwe.
The Infrastructure Development Bank of Zimbabwe, First Transfer Secretaries, ZB Bank, ZSE and minorities has 15% each in Chengetedzai.
Other shareholders are the National Social Security Authority and CBZ have 13% and 12% respectively.