Presentation to Journalists The Securities Commission S e c of Zimbabwe

 Introduction  Role of SECZ – Objectives & Functions  Structure  Expectations from the media  Conclusion

 Capital markets play a key role in the development of the economy, hence its necessary to regulate these markets.  Regulation of capital markets is designed primarily to give a basis for all participants in the markets to have confidence in its integrity and to make markets more credible and efficient  In order for capital markets to strive, there must be adequate safeguards which will enhance public confidence in the market

 These safeguards are usually the investor protection roles and functions of regulatory bodies of capital markets.  A well regulated market has the potential to encourage domestic and international investors to partake, and contribute in furthering the development of the economy

 The existence of a regulatory framework is therefore essential to:  To instil confidence in markets  To make markets more credible and efficient  To bring transparency and openness to markets  To curb unscrupulous activities and players from manipulating markets  It is within this context that SECZ plays a vital role

 SECZ is a regulatory body of the securities’ industry which was established through the enactment of the Securities Act (Chapter 24:25)  The Act was promulgated in 2004 and operationalised in  Section 3 of the Act provides for the establishment of the Securities Commission.

The 6 key objectives of the Commission are to:  Provide high levels of investor protection  Reduce systemic risk  Promote market integrity and investor confidence  Prevent market manipulation, fraud and financial crime  Ensure transparency in capital and securities markets.  Promoting investor education.

 Investor Protection  Protection against misleading, manipulative or fraudulent practices, including insider trading, and the misuse of client assets  Full disclosure of information which is material to investors’ decisions  Only duly licensed or authorized persons should be permitted to hold themselves out to the public as market operators  Supervision of market participants  SECZ established an independent Investor Protection Fund meant to meet the claims of investors against defaulting members.

 Reduction of Systemic Risk  Reduce the risk of failure (through measures including capital and internal control requirements)  Respond to market disruptions through facilitation of stable domestic and global cooperation and information sharing.( MOU with local financial regulator- RBZ,IPEC to facilitate information sharing)  Ensure that capital and other prudential requirements are sufficient to address appropriate risk taking

 Promoting market integrity and investor confidence  Confidence in any capital market, is perhaps the single most important pre-requisite for its sustenance and growth  Establishment and enforcement of strong and effective regulation which ensure fairness and prevent activities which damage investor confidence.

 Promotion of investor education  Undertaking programmes designed to inform and sensitise the investing public on the operation of capital markets (workshops, seminars, expo and exhibitions, career guidance programmes for school kids etc).  Instil basic knowledge about the capital markets, what is involved, how to participate  Equipping investors against some of the obvious risks and pitfalls that go with every investing opportunity.

To achieve its objectives,SECZ is vested with the following key functions :  Regulating trading and dealing in securities  Registering, supervising and regulating securities exchanges  Licensing, supervising and regulating licensed persons  Encouraging the development of free, fair and orderly capital and securities markets in Zimbabwe.  Advising the Government of Zimbabwe on all matters relating to securities and capital markets.

SECZ Licences and register the following capital market players:  Securities Exchanges ( e.g. ZSE)  Securities Dealers (i.e. stockbrokers and stockbroking firms)  Securities Authorised Dealers  Securities Client Liaison officers  Transfer Secretaries  Securities Trustees  Securities Custodians  Securities Investment Advisors  Central Securities Depository

SECZ administers the following pieces of legislation :  The Securities Act [Chapter 24:25)] Promulgated in 2004  Statutory Instrument 100 of 2010 Securities (Registration, Licensing and Corporate Governance Rules) SECZ will continue to develop rules and regulations that will cover various aspects in the market e.g. insider trading among others

 SECZ is headed by a non executive board of five Commissioners which was appointed by the Minister of Finance  The Board is led by Mrs Bonyongwe ( Chairman)  The Secretariat which oversees the day to day running of the Commission is led by the Chief Executive Officer ( Mr Chinamo)  The Commission has five departments

 SECZ STRUCTURE Chief Executive Officer Trading & Operations Corporate Finance Legal Affairs& Company Secretarial Corporate Communications Board of Commissioners Finance & Administration

 Trading & Operations which is responsible for:  Market Surveillance  Supervision  Inspections  Investigations  Compliance issues  Research & Capital market development

 Corporate Finance  Issues on disclosures of material information to the investing public by issuers of securities (IPOs, Corporate actions, Mergers & Acquisitions  Examination of Complex Securities (Relating to risk, desirability)  Information Communication Technology ( focusing on the designing and development of digital communication and computer based technology

 Legal Affairs  Legal advice and drafting of subsidiary legislation  Licensing and registration of market participants  Enforcement ( Disciplinary actions, Prosecutions)  Company Secretarial duties  Corporate Communications  Communication with all stakeholders  Formulating and implementing Investor/Public education strategies of the Commission.

 Finance & Administration  Day to day administration needs of the Commission  Internal control and procedures to safeguard assets  Preparation and adherence to budgets SECZ plays an advisory role on all matters relating to securities to the Government though it operates independent of it and is funded by the market it regulates

 The inclusion of financial journalists in section 112 of the Securities Act [Chapter 24:25], signifies the importance attached to the role financial journalists play in ensuring the fair and orderly operations of securities markets  A Financial Journalist is defined hereto to mean a person who contributes written advice, prepares analysis or reports concerning listed securities for publication in a newspaper or periodical.  The media (Financial Journalists) play a key role in the dissemination of information regarding securities markets to the public.

 The media is a significant stakeholder in the development and nurturing of transparent capital markets through timely and effective reporting of key issues affecting markets.  The media including print media, radio,television are the most important and independent source of information, if not the only source of information for everyday investors, in that regard it is important that the media disseminate accurate information to investors

 SECZ expects the media to :  sensitize the public on securities matters, thereby enhancing investors’ education on the capital (Securities) markets  produce informed, more knowledgeable and accurate information about the capital markets as what they report have a significant impact on the investing public  promote transparency through information dissemination to a broad audience,

 Attend annual general meetings to get an idea of what will be happening in the company for more informed reporting  Work hand in hand with capital market players in order to get more reliable sources of information  Give an analysis as well of regional and international markets

 The media need to understand that what they report can significant impact on the market and share price movements and as such SECZ expects them to be ethical, well researched about the subject before reporting  There is need for accuracy and to understand ones subject well  The media should uphold high ethical standards by not participating in market manipulation i.e. not take sides in publishing information that influence the movement of share prices.

 SECZ may require the proprietor or publisher of a newspaper or periodical to supply it with names and addresses of any financial journalist or all financial journalists who have contributed any advice or prepared any analysis or report published in such newspaper or periodical during a specified period of time

 The regulation of capital markets is essential for the market to play its economic and developmental role  SECZ will continue to:  Develop systems, regulations and codes of conduct to guide the market.  Contribute to both the protection of investors as well as the orderly development of the capital market  Interact more with the media in sensitising the public about capital market issues thereby promoting investor understanding of securities markets

Thank You