The electronic trading of shares on the Zimbabwe Stock Exchange (ZSE) finally took off yesterday after a false start on Friday due to “technical” glitches.
BY NDAMU SANDU
ZSE chief executive officer Alban Chirume said the system had gone live without challenges. This was also corroborated by Chengetedzai Depository Company chief executive officer Campbell Musiiwa who said “it was a successful trade”.
Chengetedzai is a central securities depository (CSD) — a facility for holding and administering securities, as well as enabling transactions to be processed by means of book entry.
It went live last year in the first step towards reforming the capital markets in line with the international trends. The Automated Trading System (ATS) which debuted yesterday is seen as the front-end of the trading cycle with the CSD being the backend of the automated environment with a mandate for settlement of both scrip and cash.
The ATS has replaced the manual trading platform that had been in place since 1896.
ZSE says the rollout of the ATS would result in continuous trading of securities during the open sessions of the market implying that multiple prices could be established for one counter in a day and that traders will have more flexibility on handling client trades.
All counters have to be on boarded on the CSD.
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ZSE says the ATS would result in price discovery through algorithms, that is, the pricing of securities traded on the market will shift from the collective effort of the stockbrokers participating in the trade to a computer-based algorithm.
“This implies that an order can be concluded at several different prices depending on the order book,” ZSE said.
It said the ATS would have lower and upper price limits for each counter which will be based on the closing price. This limit (set in percentage terms) may be set uniformly for the whole exchange or each counter can have its own limits.
The ATS will also result in real-time data provision.
The ATS will be able to generate real time data throughout its “open” phase. Such data will be accessible to the market participants and other stakeholders at a fee.
ZSE had over the years battled to launch the ATS to be in line with best practices.
In addition, the African Development Bank has in the past said it was reviving plans to harmonise stock exchanges in southern Africa to be able to trade across borders. One of the conditions to be in that group is that an exchange has to be automated.
ZSE sees automation resulting in the doubling of daily turnover. The debuting of the ATS comes after the exchange lost over $500 million in shareholders in the six months to June.
