The Securities Commission of Zimbabwe, the countrys securities regulator, has sent a directive to securities firms to register all client shares in safe custody to step up the security of share registers and to pave the way for the introduction of a central securities depository.
Firms have a period of 60 days from Sept. 10 2012 to comply. This process will involve transferring the shares securities firms hold on behalf of clients into the names of the underlying account holders and subsequently delivering them to the client or a licensed custodian, either Stanbic, Standard Chartered, Old Mutual or Barclays.
Following on-sight and off-sight inspections carried out on securities firms since 2009, the regulator found the following inconsistencies with respect to shares held in custody by securities firms: inconsistency of records/poor record keeping; low levels of capitalization/ capitalization levels not consistent with risk profile; insufficient insurance cover; high incidences of scrip frauds and abuse of client securities (the Commission has received complaints from clients who discovered that their securities dealers had transferred securities they own into their nominee companies without the clients knowledge and consent);and the custody of shares is in a deplorable state with some share certificates being sold or torn.
Securities dealing firms are not allowed to hold shares for a period of more than 30 days after the expiry of the 60 days unless they own a custody license.
(JDC)