‘Zimbabwe Stock Exchange (ZSE) to list on local bourse’

Treasury has introduced the self-listings rules for Exchanges under Statutory Instrument 147 of 2024, setting new regulations allowing Zimbabwe Stock Exchange (ZSE), the company, to list on the stock exchange that it manages.

Gazetted by the Minister of Finance, Economic Development, and Investment Promotion, Professor Mthuli Ncube this week, these rules will be enforced by the Securities and Exchange Commission of Zimbabwe (SECZ), the regulator.

“These rules may be cited as the Securities and Exchange (Self-Listings Rules for Exchanges) Rules, 2024,” the statutory instrument revealed, underscoring the focus on self-regulation and oversight within Zimbabwe’s financial markets.

This development comes amid ongoing efforts to strengthen the governance of securities exchanges in the country, aiming to enhance transparency and mitigate potential conflicts of interest.

A key provision of the rules pertains to the definition of an associate of an exchange. The rules describe an associate as a subsidiary or holding company of the Exchange, or any company which exercises, or over which the Exchange exercises, a degree of control which is less than the degree of control exercised over a subsidiary or by holding company.

This broad definition ensures that the rules apply to a wide range of affiliated entities, reducing the risk of circumventing the regulations.

In cases where an exchange seeks to list on its platform or that of an associate, the commission is granted specific authority.

According to the statutory instrument; “The commission shall for purposes of complying with section 63(2a) of the Act adopt the rules and exercise the functions of the exchange requiring to be listed on its official list or associate official list.”

This provision places the regulatory responsibility squarely on the commission, ensuring independent oversight.

S.I 147 of 2024 also mandates that “The commission shall include in its annual report to the minister a section on its operations relating to its role as a listing authority of the exchange including issues of conflict of interest and compliance with the rules.”

This requirement aims to enhance accountability and transparency, reinforcing the importance of regulatory oversight in maintaining the integrity of Zimbabwe’s financial markets.

Tafara Mtutu, an investment research analyst, commented on the introduction of the self-listing rules, noting their alignment with global best practices.

“That is what other exchanges are doing. It deepens capital markets,” he stated, highlighting the potential for growth in Zimbabwe’s financial landscape.

However, Mtutu also pointed out some potential limitations; “Given the underlying and strategic shareholders, it will probably not be as liquid as Delta and Econet.”

This suggests that while self-listing could enhance market depth, achieving the liquidity levels of established giants like Delta and Econet might be challenging.

Self-listing has become an increasingly common practice among stock exchanges in Africa, reflecting a growing trend toward enhancing market credibility and broadening investor participation.

Johannesburg Stock Exchange of South Africa as the largest stock exchange on the continent, set a precedent by self-listing. In 2006, the JSE listed its shares on its own exchange, becoming a publicly traded entity. This move was aimed at enhancing transparency, governance, and alignment with international standards.

In 2014, the Nairobi Securities Exchange followed suit by self-listing its shares and this was a strategic decision to diversify ownership and increase investor confidence. The self-listing allowed the NSE to raise capital for its expansion plans and upgrade its infrastructure.

The Botswana Stock Exchange self-listed in 2018, aiming to enhance its corporate governance framework and promote transparency. Through listing on its own platform, the BSE sought to demonstrate its commitment to the same standards of accountability and regulatory compliance expected of other listed companies.-ebisnsssweekl