ZSE raises alarm as daily trades dip 92%…as markets regulator grapples with private equity

THE Securities and Exchange Commission (SecZim) chief executive officer Anymore Taruvinga yesterday said the capital markets regulator is grappling with private equity deals which are taking place out of conventional markets.

Private equity are investment partnerships that buy and manage companies before selling them. Private equity firms operate these investment funds on behalf of institutional and accredited investors.

Presenting during the inaugural capital markets conference in Nyanga, Taruvinga said markets needed to widen their eyes in terms of alternative funding as the regulator has been seeing a lot of movement from the capital markets.

“To date, we have got four registered securities exchanges, 223 capital market players. So there are a lot of players that have come in because tech has enabled businesses to set up without the normal brick and mortar type.

“If you look at alternative funding platforms, this is where, as markets, we need to widen our eyes and look at what is happening, because there are a lot of players that are coming in, where a lot of private equity funding, for example, is taking place outside conventional markets. In fact, as regulators, we have been grappling with private equity.

“As we regulate our fund managers, we see a lot of movement from capital markets. In fact, if you look at the numbers for last year, the exposure to equities, for example, in 2022 was 46%. It is 3% down in 2023 to 43, but the alternative is actually almost doubling. So there is movement away from conventional assets.”

The SecZim chief said markets have not seen a lot of crowdfunding through the innovation office, adding that there were entities that had actually approached the regulator to try and set that up.

He said in the developed markets, it was actually becoming normal in terms of small businesses that want to access funding.

“They are more and more using these platforms where they are allowed to raise up to US$1 million, for example, without having to register their securities with any regulator. We have seen a lot of businesses using those platforms to actually raise funding,” he noted.

“The third one I would want to just highlight is theme four, the investment technology, where we are also seeing a replacement of the human being with your artificial intelligence. Now you have got items like robot advisory, you know, algorithm trading, where a person simply needs a code to set a trigger for them to place a buy or sell order.

“You do not need an analyst. You do not need a stockbroker. You can do it on your own. If you look at the numbers as well in the developed economy, they are indicating that brokerage revenue annually is declining by 4%.

“Perhaps sooner or later it will catch up with our market because people are exposed to these products through technology.”

Taruvinga encouraged players to be innovative, investing in capacity building as well as understanding investor needs saying, ultimately, it was the investors who were the ones that fed the capital markets.-nesday