Following the gazetting of Securities Alternative Trading Platform rules in August, the Securities and Exchange Commission of Zimbabwe has issued the first licence to a local company.
An alternative trading platform is a system that provides or maintains a market place or facilities for bringing together buyers and sellers of securities but does not set rules for subscribers or discipline or seek to control the participants other than by excluding them from trading.
SEC chief executive Tafadzwa Chinamo said the regulator had licenced Financial Securities Exchange (FinSec), a subsidiary of the Escrow group and had also seen interest from several investors and companies.
“We have to date successfully licensed one applicant, FinSec but we have seen increased interest from several other investors and companies,” he said.
Escrow CE Collen Tapfumaneyi said there was an opportunity for ATPs to fill in the space which is not being covered by the main stock exchange. He said the process of acquiring the licence was lengthy but the group had taken advantage of the delay to sharpen its strategies and the products on offer.
The group is looking at attracting companies that currently have over the counter trading like Old Mutual Zimbabwe, Empowerment schemes (Employee Share Ownership Trusts and Community Share Trusts), agriculture co-operatives and “other products.” ATP products are not only related to equity trading but the platforms can trade debt and securities lending.
Tapfumaneyi also said the ATP would further the aims of financial inclusion and transforming the country’s anaemic savings and investment culture. “ATPs by nature work on an open equity market participation to all and therefore gives an opportunity for people in marginalised and peripheral areas to come and trade on a transparent platform. At the same it will also give brokers more business.”
The critical aspect would be the technology and FinSec would aim to match world class standards but adopt home grown solutions at a lower cost. Tapfumaneyi would not disclose the investment required for creating an automated platform but hinted that it would be around $5 million.
He emphasized that FinSec would not be a competitor to the Zimbabwe Stock Exchange, but rather an independent and alternative exchange platform for listing and trade execution which would complement the main board. “Consider ATPs as some sort of incubator for the main board and therefore the possibility of dual listings is very slim.”
Tapfumaneyi said the group would conduct road shows and ‘expose’ the product to potential players.