CDC influential in Zim’s capital markets
Depository Company Limited (CDC) prides itself in being the first Central Securities Depository (CSD) in Zimbabwe having won a rigorous tender process that was presided over by the Securities and Exchange Commission of Zimbabwe (SECZ).
SINCE its implementation in 2014, CDC managed to transform the entire capital market from what was largely a manual / semi-automated system to an electronic based system.
CDC also succeeded in putting a stop to rampant issues of shareholder litigation and fraud amongst counterparties which were there due to structural deficiencies in paper based systems. CDC remains available for efficient use by the capital market.
Some of the key highlights of CDC successes since inception include the following: ◆ Reduction of the settlement timeframe
from T plus 7 to T plus 3
◆ Introduction of Delivery Versus Payment
to avoid failure in settlement ◆ Introduction of a Collateral Fund currently over $260 million to cover any market deficiencies
◆ Provided a base upon which the Automated Trading Platform was implemented ◆ Achieved an A- rating from Thomas Murray the Global Rating agency for CSDs. ◆ Introduced Settlement of funds using Central bank money in line with the International Organisation of Securities Commissions (IOSCO) principles and International best practises.
◆ Continuous engagement of market participants in all key matters regarding the CSD. ◆ Interfaced with mobile and on line trading
platforms.
CDC implemented the CSD project in consultation with all stakeholders in the capital market.
In that regard, the Reserve Bank of Zimbabwe through the National Payments Systems & Exchange Control department, the stockbroking fraternity, the custodians, asset managers and the regulator as an observer, were incorporated into the CSD Project Steering Committee (PSC).
The business processes as well as the system in use were signed off by the PSC representing all stakeholders.
As a critical market infrastructure, CDC has remained open and transparent in the way it operates, opening itself to regular scrutiny by the Association of Global Custodians and Thomas Murray, a CSD global rating agency.
CDC has achieved an A-rating three years in a row, ahead of its regional peers.
CDC strictly adheres to the twenty four (24) principles for key capital market infrastructures issued by IOSCO as these principles aim at having robust CSDs that can withstand financial shocks.
Clear segregation of the trading function from post-trade transaction processing is one of the most important aspects of such infrastructures so as to avoid issues associated with collusion and fraud.
CDC has been able to demonstrate 100 percent system uptime through its AAA rated system, and currently the same system is being used in more than 65 countries worldwide.
The CSD system has been able to provide an effective quick response to the current Covid19 pandemic by enabling the deployment for use by all participants from their homes on a need basis since the beginning of 2020.
As such, we would like to assure all our stakeholders of our availability and commitment to working closely with all stakeholders in order to continue to positively contribute to Zimbabwe’s capital market.