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Business Reporter
THE Zimbabwe Stock Exchange has started work on plans to establish a regulated platform for listing and trading of debt securities. The bourse this week sent out invitations to stakeholders for their comments on the first draft of the requirements of the Zimbabwe Stock Exchange Debt Listing Rules.

“ZSE seeks to increase its product range through the establishment of a regulated platform to list and trade debt securities,” the ZSE said.

The proposed products are not adequately covered in current listing rules. As such, the proposal will be inserted in the revised ZSE listings rules.

A well-defined debt market will increase the space and feasibility of raising capital in Zimbabwe outside common stocks and a smattering of bonds.

In terms of the law, ZSE is mandated to provide for listing and trading of debt securities in a transparent, efficient and orderly marketplace.

To that end, the proposed debt listings requirements will reflect, among others, rules and procedures governing new applications and ongoing obligations of issuers and will be designed to instil investor confidence.

ZSE believes it is important to be able to facilitate offerings and listings by continually enhancing its listing rules to accommodate new products.

“A consultative approach is being used to derive maximum benefit from the practical experiences of all stakeholders,” the ZSE said in a statement.

As such, ZSE is seeking input on authority of ZSE, debt sponsors, financial information, listing conditions, listing particulars, specialised products, continuing obligations, documents to be submitted and fees.

A security is a tradable financial asset, which can be broadly categorised into debt, (banknotes, bonds and debentures), equity (common stocks), derivative securities, (forwards, futures, options and swaps).

A country’s regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such.

Securities may be represented by a certificate or, more typically, “non-certificated”, that is they may be in electronic or book entry only form.

Certificates may be bearer, meaning they entitle the holder to rights under the security merely by holding it, or registered, meaning they entitle the holder to rights only if he or she appears on a security register.

Debt securities may be called debentures, bonds, deposits, notes or commercial paper depending on their maturity and certain other characteristics.

The holder of a debt security is typically entitled to the payment of principal and interest, together with other contractual rights under the terms of the issue, such as the right to receive certain information.

Debt securities are generally issued for a fixed term and redeemable by the issuer at the end of that term and may be protected by collateral or unsecured, but contractually senior to other unsecured debt.