Zimbabwe: Csds urged to facilitate migration process


The Securities and Exchange Commission of Zimbabwe (SecZim) has called on Central Securities Depositories (CSDs) to ensure a smooth migration process of securities deposited from one CSD to another now that the number of service providers has increased.

This follows the licensing of several CSDs, which now include the Chengetedzai Depository and the Zimbabwe Stock Exchange Depository Company.

SecZim chief executive Tafadzwa Chinamo said the directive was issued in accordance with the commission’s mandate to regulate capital markets.

The objectives include the provision of high levels of investor protection, the promotion of free, fair and orderly capital markets as well as the reduction of systemic risks, particularly in the trading, clearing and settlement ecosystem.

“Following the approval of several central securities depositories (CSDs), the commission is issuing this directive with the aim of ensuring a smooth migration of securities deposited from one CSD to another.

“Migration process within the meaning of article 159, paragraphs (1), (2) and (8) of the Law on companies and other commercial entities (chapter 24:31),“ COBE ”, the company, here- after being referred to as the participating securities issuer, is required to keep and update a register of its members at its head office or at its appointed agent (s).

“When the participating issuer of listed securities chooses to migrate from one CSD to another, certain steps must be followed,” he said.

A CSD is a structure that holds and administers securities and allows the processing of transactions by accounting entry.

Chengetedzai Depository Company’s CSD started operations on September 8, 2014, while ZSE’s CSD began operations on October 1, 2021.

Mr Chinamo said that in the event that a participating issuer chooses to migrate, regulatory approvals are that under Article 218 of the COBE, the board of directors of the company is responsible for making decisions on all matters. questions, with the exception of those reserved for shareholders by COBE or by the constituting documents of the company.

Subject to section 1 (a), a resolution of its board of directors will entrust the participating issuer with the responsibility of appointing or amending a CSD authorized under the Securities and Exchange Act (chapter 24:25) to maintain its electronic share register.

The participating issuer will notify the relevant CSD in writing of its decision to set up or move its electronic register and will provide the depositaries with the necessary resolution (s) authorizing such migration of its securities.

The participating issuer publishes a notice to shareholders on the migration to the new custodian. The notice must also specify the deadline to allow all transfers, payments including dematerializations and rematerializations to be settled on the “effective date” being the date of migration.

During an electronic transfer of securities, all investors whose securities are deposited with a ceding or terminating CSD will have their securities withdrawn from the ceding CSD.

“The ceding CSD will prepare an electronic file of all security holders and submit the file to the Issuer’s Securities Transfer Secretary for reconciliation and the issuer’s Transfer Secretary will reconcile the electronic file of withdrawn securities and the complete register of securities and will then submit it to the assuming or receiving CSD. “

According to the directive, the reconciliation of investor registers must ensure that on the effective date of termination, the transfer secretary and the terminating CSD ensure that the issuer’s share register is up to date.

As of September 30, 2021, the cumulative number of accounts opened on the Chengetedza CSD was 36,127. Local investors represented 95% of all accounts opened on the CSD.

According to Chengetedzai’s CSD update, the market cap of ZSE shares gained 30.32%, closing September 2021 at $ 1.032 trillion.

The securities registered on the CSD represented 53.48% of the total market capitalization of dematerialized shares and their total value amounted to $ 552,206 billion.

During the month under review, a total of 431 deposits were processed by CDC compared to 275 in July 2021, bringing the cumulative number of deposits since commissioning to 91,396.

According to the ZSE, CSD operations aim to improve operational efficiency, reduce costs for participants and facilitate retail investors’ access to the market.


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