THE Zimbabwe Stock Exchange (ZSE) has scrapped the one-hour window for cancellation of deals on the bourse after the trading session amid an increase in the requests for such actions, the bourse has said.
In January 2013, ZSE had given stockbroking firms a one-hour window after the end of the trading session in which it would consider requests for cancellation of deals.
In correspondence to stockbroking firms, ZSE chief executive officer Alban Chirume said it would not be possible to cancel deals except in very exceptional circumstances.
“All trades are considered final and binding at the end of the trading session. The one hour allowed in terms of our memorandum dated 29 January 2013 falls away with immediate effect,” Chirume said in a July 17 letter.
Chirume told brokers if clients advise that they simply made an error, the brokers should decline the request to cancel and remind them of the obligations for settlement on due date. He said there was no need to refer the matter to ZSE.
Chirume said if there was a dispute related to price limit or volume, the stockbroking firm must resolve the matter with the client.
According to the new rules, if a dealer has made a mistake in taking a customer’s order or trading in the call over, the stockbroking firm must make good the error under the advice of the stock exchange.
Chirume said if a case exists which requires ZSE to exercise its discretion, the matter must be advised to the exchange in a written advice stating the circumstances that give rise to the request.
He said such a request must be accompanied by the client’s original order and the written request for cancellation giving full reasons. The ZSE boss said deal cancellation was not an acceptable practice and is generally discouraged adding that “it can be a sign of market manipulation and other malpractices”.
“It is observed that in general the number of requests for cancellation is increasing. The ZSE is not favourably disposed to cancelling a trade after the day’s trading results have been released for the simple reason that this practice makes the integrity of the market questionable,” Chirume said.
He said a scrutiny of the requests showed that they were necessitated after the client changed his/her mind after the trade has been executed.
There was lack of concentration by the dealer resulting in errors, especially non-adherence to price limit and incorrect quantity.
Clients, in particular asset managers, were accused of placing one order with one or two dealers. Chirume said there was “deliberate actions by participants, perhaps in collusion with clients”.