In recognition of the key role played by capital markets in economic development, the Government of Zimbabwe, through the Ministry of Finance, has embarked on an initiative to bring efficiencies to the Zimbabwean Capital Markets through the use of Information and Communication Technologies (ICT) and the implementation of international best practice. The efficiencies gained will facilitate high volume; efficient trading with enhanced risk management will increase market attractiveness to investors.
One of the initiatives is setting up a Central Securities Depository (CSD) and Chengetedzai Depository Company (CDC) has been mandated with setting up the depository. The CSD will facilitate storage and trading of shares in electronic form and this addresses the issues and risks associated with paper securities. It is important that the investing public understands the operations of the CSD and enjoys its many benefits. The following FAQ section provides a response to concerns that investors may have regarding holding securities in electronic form.
What is the Central Securities Depository (CSD)?
A Central Securities Depository is a computer system that facilitates holding of securities in electron accounts (book entry system) in contrast to paper certificates. The CSD is very similar to a bank and an account in the CSD operates in a similar manner to a bank account.
Who should I contact to open a CSD account?
Is it possible to close an account with one Stockbroker and transfer the securities to another Stockbroker?
When I purchase or sell securities, how do I know my account has been credited or debited on the sale of the securities?
Can I convert my securities in the CSD to a paper certificate?
How do I convert the paper certificates I hold into electronic form within my CSD account
Can I open a joint account?
Can I open multiple accounts, that is, with more than one Participant?
Why should I open a securities account?
You need to open a CSD account for the following reasons:
Purchasing Securities – Your CSD account will be credited when you purchase securities. If you do not have a CSD account you will not be able to purchase securities on the ZSE.
Selling Securities – You CSD account will be debited when you sell securities.
How long does settlement of trades in securities take?
What are the benefits of the CSD?
Securities in the CSD can be sold at anytime and hence trading will be faster.
A CSD eliminates the risk of fake certificates since only those certificates authenticated by the Transfer Secretary will be deposited.
A CSD also reduces the paperwork involved in the trading of securities.
A CSD enhances service delivery and quality through improved operational efficient.