Technology: The heartbeat of capital markets
FOR many years securities exchanges were physical locations where stockbrokers met and negotiated on behalf of buyers and sellers. Exchange trading typically happened on the floor of an exchange. With the improvement in communications technology in the late 20th century, the need for a physical location became less important and traders started to transact from remote locations over the web or on wide area networks.
Today, thanks to technological advances, transactions are easier to complete, monitor, clear, and settle and this is helping to spur the development of the capital markets. Order handling has largely become automated for retail and institutional investors.
Securities dealers are using the internet to communicate with investors and to offer and distribute securities. Corporate issuers, large and small, are conducting offers online. Investors are also trading securities online.
The Zimbabwe securities market has not remained stagnant but has also adopted technological innovations providing tremendous advantages to all capital market participants. The Financial Securities Exchange (FINSEC) provides an electronic platform for the issuance, holding, trading and settlement of a wide array of securities.
This development allows securities dealers to ride the technological wave and match buyers and sellers in realtime and remotely.
The FINSEC Alternative Trading Platform (ATP) is an integrated securities market which comprises an automated trading infrastructure and a high-tech depository and settlement system.
The FINSEC ATP platform revolves around a world-class Automated Trading System (ATS) which is a front-end engine that matches buyers and sellers of various types of securities. The FINSEC ATS connects all stockbrokers in Zimbabwe and it can integrate with any central depository system developed on standard protocols.
At the back-end of the FINSEC ATP technology is a Clearing & Settlement System (CSS) that keeps a dematerialised register of all investors. The FINSEC CSS handles the real-time exchange of securities against payment. The CSS connects the Settlement Bank(s) to Custodians and Transfer Secretaries.
At the investor-end, the FINSEC trading and settlement infrastructure is integrated to mobile and online trading technology. In all, the FINSEC investor interface tools enable straight through processing of traffic at primary issuance and secondary trading.
The tools come in three segments. The web-based solutions include an Order Management System for institutional investors and an Online Investor Portal for retail investors. There is also an app-based solution for retail investors on smart phones.
The USSD-based solutions are targeted at non-smart phone users and integrates mobile money services.
FINSEC online trading offers an advanced interface which allows investors to participate on the exchange in real-time through mobile phones and personal computers. Through these tools, investors can trade securities, make or receive payments, obtain statements and follow the news.
In the decade ahead, the continued growth of technology will present even greater opportunities for expansion and innovation in capital markets especially as investors become more wired and more comfortable with communication technologies. The effects will be felt throughout the capital markets sector.
The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group. For more information contact: 2nd Floor ZB Centre, Cnr Kwame Nkrumah and 1st Street Harare, Zimbabwe Tel: +263 4 758193 Email: info@finsec .co.zw www.finsec.co.zw Twitter: @FINSECZim