CHENGETEDZAI Depository Company Limited says it is looking to engage issuers to centralise the process of employee share ownership schemes to prevent insider trading.
Insider trading occurs when individuals use non-public information to make financial gains.
By centralising the process, the depository can ensure that all transactions are transparent, timely and compliant with regulations, preventing employees from unfairly exploiting confidential information.
“The monetary authorities continue with their tight monetary stance which has worked in curbing inflation. Going forward, CDC [Chengetedzai] looks to engage issuers to centralise processing of employee share ownership schemes and also locking of accounts in closed periods. This will help smoothen the process and also provide assurance that there is no insider trading,” Chengetedzai said in its trading update for June.
It said despite the slow activity, the market is experiencing increased trading starting in the last weeks of June.
“It remains to be seen whether the high volumes will persist. There could also be an improvement in activity after scrapping the vesting period which has also reduced the administrative burden,” the depository said.
If a depository centralises the process of employee share ownership schemes to avoid insider trading, it would take control of managing and executing all transactions related to employee shares.
This centralisation ensures that the buying, selling and holding of shares by employees are monitored and regulated through a single, secure platform, reducing the risk of insider trading.
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Meanwhile, market data showed that in the first quarter of 2024, a total of 625 new accounts were opened bringing the total accounts opened on Chengetedzai Central Securities Depository (CSD), this year, to 47 132.
Local investors continued to dominate the number of accounts opened, accounting for 95,13% of the total accounts opened as at March.
Chengetedzai said the cumulative number of trades processed on the CSD closed the period at 20 540.
“For the period from April 2024 to 30 June 2024, the total value of trades settled is ZiG192,532 million. The average dematerialisation penetration ratio (demat ratio) across all counters was at 63,68% as at 30 June 2024,” Chengetedzai said.
“Dematerialised securities registered on the CDC accounted for 60% of the total market capitalisation for dematerialised shares on the Zimbabwe Stock Exchange, and their total value was ZiG23,100 billion as of 30 June 2024. Corporates and pension funds hold the most significant value on the CDC CSD accounting for 30,04% and 24,45% respectively.”
During the period, the Zimbabwe Stock Exchange equities market capitalisation closed the second quarter of 2024 at ZiG38,71 billion.
The total value of trades that settled through Chengetedzai’s CSD system in the month of June 2024 was ZiG98,293 million.
