DELAYS in setting up an automated trading system at the Zimbabwe Stock Exchange (ZSE) will threaten the survival of local stockbroking firms, the capital markets regulator has warned.
Report by Bernard Mpofu
Speaking on the sidelines of a business reporting workshop recently, Securities Commission of Zimbabwe chief executive officer Tafadzwa Chinamo said the subdued performance and use of the manual trading system had resulted in brokerage firms receiving low commission.
He said automation had quadrupled trades at other securities exchanges such as Kenya, arguing that the same could happen in Zimbabwe. Currently, the ZSE has an average daily turnover of $1,5 million.
“Local stockbrokers cannot process more than 50 trades a day, but with automation you can more than treble the figure. If it remains like this, more and more brokerage firms will struggle and some may fold. Automation may drive growth of the stockbroking business,” he said.
Chinamo said technological advances at the ZSE, which has a staff compliment of 18, could create more jobs. The automation of the ZSE, one of the oldest exchanges on the continent, has been on the cards for years together with several reforms to transform the local bourse.
His remarks come at a time when Kingdom Stockbrokers, a unit of AfrAsia Kingdom Limited, wound up its operations as the group intensify its restructuring exercise.
Despite recording remarkable gains at the start of the year, experts say with stockbrokers charging 1% commission on each side of every trade, the future of independent stockbroking firms could be bleak given the subdued performance of the ZSE over the last three years. Before dollarisation, the securities dealers were charging 2,5% commission on either side of the trade.
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Market players contend that nearly 80% of the trade on the ZSE are handled by at least five brokers, which means these could have taken the biggest chunk of the commission.
The five firms — Lynton Edwards, Imara Capital, MMC Capital, EFE Securities and Old Mutual — had since dollarisation of the economy been the more dominant players on the exchange.
