have occurred since the Act was promulgated in 2003.
According to the Securities Amendment Bill of 2012, the amended Act is now called the Securities and Exchanges Act. The amendments were gazetted last Friday.
“It is important to acknowledge that, as is the case with any Act, the moment you start operating you find shortcomings,” said Mr Chinamo.
“When we were set up we had no board or secretariat — we just hit the ground running. We then looked at the situation and realised we needed to address the shortcomings. The commission could not work effectively and efficiently because of the challenges.”
The commission was hastily set up, as a result of which there was little time to ensure its effectiveness. But it was modelled on a similar commission in the United States.
Mr Chinamo said once the commission was in operation, “we realised that the commissioners were not operating full time,” as they were only required to hold about 11 meetings over 12 months.
The arrangement complicated the commission’s operations. It could not react speedily to problems, as executive powers were vested in the commissioners.
Executive powers have since been transferred to the chief executive officer while appeals against his decisions can be made to the Administrative Court, but could be interposed to the Minister of Finance.
“Now, Government, through the commission, has a more direct influence than before (on what happens on ZSE),” said Mr Chinamo.
The commission had limited latitude and had challenges influencing what happens on the ZSE. The commission will regulate other markets for bonds, commodities and derivatives, when they come alive.
An executive officer with a top stockbroking company said that amendments to the Act would improve the operations of the ZSE.
“It will help it to move forward. It also brings the two entities (ZSE) and SECZ into line with each other. The ZSE was using its own rules, as was the commission,” said the source.
The ZSE and its regulator, SECZ, have previously been locked in a wrangle following differences over investor protection levies.
“As much as we wanted to influence change on the ZSE the (original) Act did not allow us (to do that),” said Mr Chinamo.
Players in the securities trading industry said tightening the legislation would improve the bourse corporate governance system when it is transformed from an association to a corporate entity with a board of directors.
Amendments to the Act now require all securities exchanges in the country to have corporate entity structures.
Furthermore, the new arrangement improves the regulation of asset management firms previously regulated by the Reserve Bank whose major preoccupation is the supervision and overseeing of the banking sector.
Asset managers only fell under the control of the central bank after the frequent occurrence of financial misdemeanors by this class of businesses a few years ago.
Industry sources said it was noted in 2004 that some directors of these firms had strayed from their core business of managing and investing in securities to taking deposits.
Asset managers are major players in capital markets due to their involvement in managing unit trusts.
, hence the requirement that they be regulated under the Securities and Exchanges Act.
“The deposit-taking asset managers were causing too many problems and this was not the best way to do it. It was outside their (Reserve Bank) purview,” said Mr Chinamo.