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THE Securities and Exchange Commission of Zimbabwe is considering roping in investment managers’ proposal for minimum capital thresholds to be determined by the risk carried by an institution.
According to the framework of new rules for asset managers, SECZ said the move follows representations from the firms that the US$500 000 threshold was too high.

“Investment managers have proposed a substitution of the minimum capital of US$500 000 with a minimum capital requirement sufficient to meet three months’ operating costs.

“This structure is similar to what is being applied to Securities dealing firms in terms of the Sixth Schedule (Rule 530).

The capital threshold framework is based on tier 1 capital, namely liquid capital equivalent to the company’s operational costs over a minimum 13 weeks; or US$150 000 whichever is higher.

SECz said this can also be based on tier 2 capital, namely capital assets as defined in Statutory Instrument 100 of 2010 and tier 3 capital, determined by the risk to which the company exposes itself through the nature of its business it undertakes.

SECZ has since come up with new registration requirements for registered asset management companies, but any person who immediately before the legislation was amended, was duly registered in terms of the Asset Management Act (Chapter 24:26), is automatically deemed a holder of an appropriate licence for a period of 12 months.

To ensure that all persons are afforded a reasonable opportunity to obtain the appropriate licence, all asset managers should obtain a licence by September 30, 2014.

The Commission will issue licences which are renewed annually. Failure to meet renewal conditions may result in suspension or cancellation of the licence.

SECZ said the licensing period is January 1 to December 31. The deadline of September 30 2014 is for 2014 licences. Asset managers companies are required to renew their licences for 2015 by January 31, 2015.

SECZ shall establish a Risk Based Capital framework Steering Committee to spearhead the formulation of the proposed new capital framework for the Securities (Investment management) companies, which shall also incorporate the risks being carried by firms.

According to the framework, all unit trusts firms with outstanding audits are required to have audited financial statements for all the funds backdated from the last audited financial statements to the just ended financial year, 2013.

The annual reports must be submitted to SECZ before June 30, 2014.

Assets for both money market and equity funds must be registered in the name of the funds and must be handed over to the licensed custodians by April 30, 2014.

Under the new framework, operating accounts must be under the control of the trustees and custodians. Firms which still
SECZ mulls new capital thresholds have control over the accounts must hand them over to the trustees and custodians of the funds by the end of this month.

SECZ said it requires detailed explanations by February 28 why dormant funds, which were successfully registered, have not been launched since then.

The commission said it is working towards having a Code of Practice by the last quarter of 2014 to regulate conduct of asset managers and the regulations, necessary or convenient to be prescribed for carrying out or giving effect to the Asset Management Act.

The commission has also started carrying out prudential visits focusing on review of firms’ operations, custody arrangements of clients’ assets and registrations, readiness to Central Securities Depository, internal and external audits, risk management and capitalisation.

It is also working towards harmonizing the following pieces of legislation; Securities and Exchange Act [Chap 24:25], Asset Management Act [Chap 24:26] and Collective Investment Schemes Act [Chap 24:19]. – FinX