The Zimbabwe Stock Exchange (ZSE) is set to float its shares through an initial public offering (IPO) after Finance minister Tendai Biti this week instructed the exchange to demutualise and speed up its computerisation.
Details from a meeting Biti chaired on Monday, indicated that he among other urgent issues, instructed the setting up of a committee comprising Treasury officials, the Securities Commission of Zimbabwe and Zimbabwe Stock Exchange board to spearhead the demutualisation process.
Sources told NewsDay: “Biti told the meeting that the exchange does not belong to stockbrokers, but belongs to the government as it was formed by an Act of Parliament.”
Last year, ZSE stockbrokers proposed a new law on demutualisation of the exchange, as the capital-starved bourse pushed for listing.
Demutualisation, according to the sources, entails a change in the legal status of a stock exchange from a mutual association with one vote per member guided by consensus-based decision-making, to a company limited by shares with one vote per share.
This process would also result in the ZSE becoming a for-profit firm in a competitive financial market environment.
Stockbrokers, the source added, were instructed to organise themselves and participate as corporates in the new exchange on an allocated shareholding basis.
Biti, according to the sources, tasked audit firm Ernst and Young to ascertain the total capital required to run the country’s historic Central Securities Depository (CSD) that is expected to revolutionise the capital market currently fraught with risks.
A CSD is an entity that holds and administers securities and enables transactions to be processed by book entry.
The ZSE currently utilises a call-over system to execute trade. Critics believe the paper-based operations of the exchange were fraught with inherent risks.
Clearance and settlement was done between stockbrokers with payment against delivery of physical scrip on a T+7 calendar day basis.
ZSE chairperson Eve Gadzikwa on Tuesday confirmed to NewsDay that the exchange would next week submit a paper to Biti advising him on the modus operandi of the automation and demutualisation of the exchange.