Chengetedzai Depository Company finalizing securities lending and borrowing

Chengetedzai Depository Company (CDC) says it is finalising the implementation of Securities Lending and Borrowing to enhance market liquidity and increase turnover for the market.

The project, which is being worked on in collaboration with the ZSE is guided by a contract between the borrower (stock broker) and the lender (investor). Stockbrokers hope to use this new form of trading to turn around their financial fortunes and boost activity on the bourse.

CDC in 2018 held stakeholder consultation and engagements for the introduction of the scheme among other new products such as Turnaround Trading.

Prosper Mutorogodo, the CDC chief executive said the company aims to uphold the best practice in central securities depository services and enhance its products.

“As a testimony to this the CDC CSD retained the A– rating into 2023 after the recent review by the global CSD rating agency Thomas Murray.

“As the year is coming to an end CDC will also seek to continue fruitful engagement with key market stakeholders to strengthen bilateral relationships between the entities to improve service delivery,” he said in a Central Securities Depository (CSD) update for November 2022.

Mutorogodo said the annual market turnover is continuing to respond to the obtaining economic environment with figures showing an upward trend since the inception of the CDC CSD in 2014.

He said the sight difference between 2021 and 2022 figures shows the relative stability that has been prevailing in the market as of mid-2022.

During the month under review, a total of 101 equities deposits were processed and this brought the cumulative number of deposits since going live to 103,131.

“CDC CSD continues on a dematerialisation campaign to increase the dematerialisation ratio in 2022 for individual and institutional investors still holding shares in physical form,” he said.

According to the CSD update, the investor types that hold the most significant value on CDC CSD are the corporate and pension funds which account for 35,67 percent and 24,06 percent respectively.

Mutorogodo said securities registered on the CDC CSD accounted for 45,07 percent of the total market capitalisation being dematerialised shares, and their total value was $725,716 billion as of 30 November 2022.

In terms of account holding, individuals hold the largest number and proportion of accounts on the CSD and the other large portion of CSD accounts falls under the unclaimed shares.

“The CDC CSD is addressing this issue through an ongoing exercise based on a market drive where efforts have been increased to identify those making up the unclaimed shares category so that they claim their shares and dividends,” he said.

The ZSE equities market capitalization decreased by 11,82 percent for November 2022, closing at $1,610 trillion.

The total turnover for trades on ZSE settling through CDC CSD was $5,368 billion for the month under review.ebusinessweekly