HARARE – Automation of the Zimbabwe Stock Exchange (ZSE)’s trading system is expected to boost equities’ daily turnover to more than $5 million, the Securities and Exchange Commission of Zimbabwe (SecZim) says.
The local bourse’s daily turnover — which is the value of shares traded per day — currently averages $1,5 million.
“Experience elsewhere shows that upon conversion of automation, daily turnover increases by a factor of five,” said SecZim’s research and capital markets development manager Grace Berejena.
“Such levels of activity translate to more revenue for intermediaries, brokers in particular and thus lowering their inhibitions to a reduction of transaction commission,” she said.
Berejena added that less commission should increase share trading profitability which in turn attracts more traders and trading.
“The cycle goes on with ever increasing benefits.”
Early this month, the ZSE shortlisted four companies for the supply and installation of an automated trading system (ATS).
The bourse expects the system to be up and running by the first quarter next year.
Alban Chirume, ZSE’s chief executive, said the four were Chartered Systems Integration, National Stock Exchange of India, New York Stock Exchange Euronext and Infotech Middle East.
The automation of the bourse has been on the agenda since 2000 although plans have been stalled due to liquidity constraints.
In September, Central and Settlement Company of Mauritius (CDSM) was appointed consultant and is expected to review business processes of the ZSE, prepare a request for proposals, advise the local bourse on the process of vendor selection and prepare the system for implementation.
Chirume, said the ATS is poised to treble the ZSE’s annual turnover to around $1,5 billion from just below half a billion.
“CDSM has a visible footprint in the automation projects carried out elsewhere in Africa and we are delighted that our own initiative has attracted their interest,” he said.
The former SecZim boss noted that the consultant is expected to review business processes of the ZSE, prepare a request for proposals, advise the local bourse on the process of vendor selection and prepare the system for implementation.
“ATS is very significant to us in terms of the expected impact and also very delicate as it involves all stakeholders and how they conduct their business,” he said.
The system will replace the current manual system where brokers place orders on bids on a board during trading sessions on the floor for allotment to be done.
It is also expected to extend the trading hours on ZSE and allow dealers to trade from their offices.
“Brokers will no longer come for call over sessions.
“Unlike in Zambia where the system didn’t impact on volumes, our market is different because it is more aggressive and spread across. This model will see our volumes going three times up. We are very confident,” Chirume said.