ZSE issues 5-yeard bond to raise money for automation

By Happiness Zengeni, HARARE, August 9 (The Source) – The Zimbabwe Stock Exchange has launched a five-year bond to raise $2.3 million for the automation of the bourse, sources familiar with the transaction said on Friday.

The sources said the bond, which was structured by Ernst & Young had been issued at a coupon rate of 5% to fund the automation of the exchange after Econet’s offer for the same was rejected due to the conditions placed on it.

At present, there are four major projects the exchange is working on: the revision of the Listings Rules, the automated trading system (ATS), demutualisation and the setting up of a secondary exchange.

Recent reports suggest the ATS will be complete by the first quarter in 2014. Interviews for the consultancy were concluded last month but the automation would have to wait for the setting up of the Central Securities Depository for it to properly function. The CSD is expected to be ready by the end of next month.

The ATS is expected to reduce the cost of doing business through reduction of transaction costs and reduction in redundancy systems.  Experiences in other countries that have automated show that turnover increase and since the correlation of turnover to income of stockbrokers is nearly one, this will see the income of stockbrokers increasing in tandem.

The absence of an electronic trading platform makes it possible for brokers to manipulate certain prices and short sell. There are instances when stockbrokers have been accused of trading shares which they do not have and lead the market to secure the shares at lower prices.

This kind of activity has been reported on the exchange, and has been a concern for the Securities Commission of Zimbabwe and the Ministry of Finance who have demanded the introduction of an electronic trading platform at the earliest opportunity.