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Happiness Zengeni and Conrad Mwanawashe
THE Securities and Exchange Commission of Zimbabwe will soon issue licences for the setting up of Alternative Trading Platforms/Systems. An ATP is an organisation or system that provides or maintains a market place or facilitates for bringing together buyers and sellers of securities but does not set rules for subscribers.

SECZ chief executive officer Mr Tafadzwa Chinamo (pictured) last Friday said the commission had released the directive and will soon gazette a Statutory Instrument which will provide for the licensing of the ATPs.

Mr Chinamo said the commission has received enquiries from people interested in setting up of ATPs and the commission expects more applications following the publishing of the guidelines.

“We believe that we are about to make possible a way of trading shares that will not only complement the stock exchange but will also improve the liquidity on the market,” said Mr Chinamo.

“You have someone with securities which they want to sell. This is a platform that enables that person to offer those securities for sale. It is very similar to a traditional exchange. You have a company which is not listed which can offer shares to buyers on the ATP,” he said.

He said the ATPs will not replace the Zimbabwe Stock Exchange but offer an alternative platform for investors.

“This is not an exchange but a platform for people to trade in shares. The ZSE will still be there as a vehicle for companies to raise funds. There is no way the ATPs will replace the ZSE. It’s a way of casting the net wider and hopefully catch more people and make more transparent trade in securities that otherwise might have no market at all. I’m thinking here that the Community Share Ownership Trusts can be traded on the ATPs,” said Mr Chinamo.

Mr Chinamo said the licensing of ATPs is in line with SECZ’s objectives to develop and deepen the capital markets by fostering broader participation in the market by both locals and foreigners from all walks of life.

“In the eyes of the SECZ, ATSs are really an extension of broker-dealers (stockbrokers) and they comply with a different set of regulations than traditional exchanges. The guidance we are giving today essentially spells out these regulations in the form of Directive Number SS/07 /10 /2015. It will in due course come out as a Statutory Instrument,” said Mr Chinamo.

The directive sets out the registration requirements for anyone who is interested in setting up an ATS, operational requirements, products to be traded, capital and insurance, among other things.

There are no minimum capital requirements for registration for a licence but the regulatory body prefers profitable companies which are liquid. There are two categories of capital adequacy for ATPs.

“We found that absolute numbers do not make much sense, so we would rather have companies that are profitable.

“Under Tier 1, and shareholders’ funds must always be positive. In other words, where shareholders’ funds become negative shareholders will have to recapitalise the business. What we are watching is just their operations. Tie 2 is based on the risk that we perceive on that company, based on their actions in their market and what we are picking up from the surveillance that we are doing of that company. If you combine those two you will get a clear sense of what sort of risk we are attaching to that company,” said Mr Chinamo.

Mr Chinamo said there have been a lot of enquiries from people who want to set up ATPs.