Zimbabweans have a second option for trading securities, with an emphasis on financial inclusion and economic empowerment through capital markets. Financial Securities Exchange (Private) Limited (FINSEC) is licensed by the Securities and Exchange Commission of Zimbabwe as a securities exchange (alternative trading platform).
It was launched in December 2016 and is part of Escrow Group, which has interests in financial services and technology. According to Escrow website, it has offices in Kenya and Zambia. The group includes Corpserve Registrars, which is a share registrars company set up in 1997, with operations in Zimbabwe, Zambia, Malawi, Kenya and Tanzania.
According to the website: “FINSEC is a pioneer in the provision of alternative trading solutions aimed at automating activities of previously sidelined OTC (over-the-counter) markets. It offers a complete suite comprising Order Management, Matching Engine, Clearing, Settlement and Delivery. FINSEC is transforming markets with activities so far in Kenya, Uganda and Zimbabwe.”
FINSEC Zimbabwe reported record turnover of $1.2 million in November 2017, with total equity turnover of $3.1m from launch to early December 2017. Listings include bonds issued by Infrastructure Development Bank of Zimbabwe (IDBZ), and class B shares of Old Mutual Group. CEO Collen Tapfumaneyi forecast that bringing in mobile technology would boost volumes.
Microfinance company Untu Capital Ltd has raised $5m in medium-term notes on the platform, which it will use to finance micro, small and medium enterprises (MSMEs) in Zimbabwe. According to a story in Herald newspaper. It started with a $1m issue, followed with $2m and again with $2m in May-June 2018, which listed on FINSEC on 11 June 2018, paying a fixed coupon of 10% a year. The bonds are a financial inclusion tool, called “U-Gain” and partnered with Telecash and EcoCash to offer a minimum $50 issue, maturity date 10 June 2021, paying interest every 6 months. Untu was set up in 2009 and provides finance to MSMEs, including working capital, capital and investment and value added services.
According to a story on the Daily News website, the class B shares were created in 2011 when Old Mutual surrendered 25% of its issues shares to indigenous investors as part of the indigenization laws, including 11% to employees, 8% to pensioners and 3.5% to strategic investors and 2.5% to a special youth fund. On 25 June FINSEC announced that the shares were liberalized and could be bought and sold by investors who were not indigenous Zimbabweans, including foreign investors and all capital market participants.
FINSEC does electronic trading of different types of securities, and the FINSEC website reads: “..(it) integrates all market participants in real time via a robust and state-of-the-art web based technology. The market participants include but are not limited to securities dealers, custodians, asset managers, issuers, settlement banks, market makers, transfer secretaries and regulators.
“FINSEC offers an integrated market-place solution covering; order management; order routing; order matching; clearing and settlement; securities delivery; trade risk management; data analysis; surveillance; mobile trading; online trading and full reporting.” FINSEC manages the full cycle from investor creation to trade settlement with the involvement of custodians and settlement banks.
According to the FINSEC website, it hopes to focus primarily on retail investors. It says its alternative trading platform “emphasises that all investors make informed investment decisions based on thorough research, which includes evaluating a company’s disclosures and financial reports as well as the prices and market for the company’s securities”.
Trading is through stockbrokers and investor accounts have to be opened through stockbrokers and custodians. The only mentioned custodian is Three Anchor Investments, trading as Old Mutual Custodial Services and the only mentioned bank is CABS, a financial institution and subsidiary of Old Mutual.
FINSEC says it also has an investor relations portal where individuals can monitor their portfolios, update know your client (KYC) information and check inquiries. It provides online and mobile access.