Basic facets of securities market regulation

THE Securities and Exchange Commission’s main role is to facilitate the development of an orderly, fair and efficient securities market in Zimbabwe. The commission aims to facilitate capital formation through development and implementation of rules and regulations that safeguard market integrity.

It attempts to achieve a healthy and successful securities market through the following basic regulatory principles:

Licensing — The discipline of any market starts with ensuring fit and proper players hence the need for licensing.

All securities market intermediaries must therefore be licensed and the licensed activity should be conducted in accordance with the terms and conditions of the licence.

This ensures that market players are limited to performing only the functions for which they would have been licensed.

Licensing is aimed at achieving and enforcing good corporate governance and ethical practices onto the market. Breaching the licensing requirement is illegal.

Full, fair and accurate disclosure — Securities markets survive on information. One of the key determinants for assuring investor protection is simply the nature of a market’s information disclosure. Adequate information disclosure is the publication of reliable, timely, comprehensive material information.

It is meant to enable the investing public to make informed investment decisions. Hence, increased transparency tends to be associated with higher market growth and efficiency. The information needs to be readily accessible in an equitable manner by all investors.

Sound fi nancial conduct: Market intermediaries must possess a solid financial condition to enable them to conduct their businesses in a manner that absorbs shocks and minimises the possibility of losses to clients before insolvency. The commission’s capital adequacy framework provides for the winding down of a licensee business without disrupting the orderly functioning of the whole securities market system.

Supervision and enforcement: The commission supervises all licensed players to attain maximum deterrence of violations. The commission monitors market players’ compliance with set rules and regulations for the adoption of policies and procedures in line with the securities laws.