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CSD to migrate to T+3 settlement cycle in May

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CSD to migrate to T+3 settlement cycle in May

HARARE – Chengetedzai Depository Company will from next week change its settlement cycle to trade date plus three business days (T+3) from the current trade date plus five business days (T+5).

In a communique sent to market participants, the new settlement cycle will affect all trades executed from May 2.

This means that Zimbabwe Stock Exchange equities will be delivered in exchange for payment in four days(T+3 = Trade plus three days) versus the previous six-day (or T+5 = Trade plus five days) settlement cycle.

A substantial portion of the risks in the downstream activities within the financial markets value chain (i.e. clearing and settlement) are directly related to the length of time it takes for trades to settle. In capital markets time equals risk. A shorter settlement cycle has positive implications for the volume of transactions and market liquidity.

The communique also said that the adoption of a T+3 settlement cycle will also affect the timetable for Corporate Actions such as Cum Dividend date and Ex Dividend date.

Meanwhile, gains from select heavyweight counters saw the ZSE close with a 0.25% rise to 141.68. Turnover was just under $1 mln at $991 447.38 with foreign buys at $188 535.20 and the number of trades at 36.

Simbisa led the risers gaining 2.92% to 17.6c. Econet, which recently successfully concluded one of the most followed rights issue on the bourse, added 2.35% to 17.4c but is still down 42% in the year to date.

Innscor was up 0.22% to 45.25c and Old Mutual put on a marginal 0.01% to 363.25c on healthy volume.

Barclays, which is currently trading on cautionary pending the finalisation of talks with FMB Malawi over the acquisition of a majority stake, was the only stock to trade in the negative after losing 1.37% to 3.6c but still has a year to date gain of 12.5%.

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