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QUICK HIGHLIGHTS

 CDSM selected as ZSE ATS Consultant  ZSE ATS Vendor Tender closed  Four bids received  Evaluation of bids in progress  Review of draft Trading Rules and Procedures underway

ATS Watch
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A word from the CEO
I am excited to be involved in a number of key projects that are at the heart of transforming the local bourse. Among these are demutualisation and the establishment of an Automated Trading System. The automation of the bourse stands out as a very challenging and interesting project as it opens up various possibilities that are already characteristic of more developed markets. The current open outcry system does not enable real time response and visibility of the trades. Automation will result in a quantum change in accessibility, availability, transparency and accuracy of trades. Although significant investment is in the software and hardware, the major determining aspect is people. More often, considerations on projects are limited to the product and process. Rarely, are human and business relationships within and surrounding the own endeavours. Overall, prevention of crisis intervention through early stakeholder engagement is crucial. It would however, be irrational to fantasise on the anticipated benefits of automation without pausing to think of the potential risks. Some downfalls and realities associated with such systems include technical failures and hacking . The impact of any failures can be devastating and thus risk management strategies will assume greater importance on the part of the ZSE. Closely related to this project is the setting up of the central securities depository that is being pioneered by Chengetedzai Depository Company. The ZSE is keenly following progress on this front.

Introducing ATS Watch

INSIDE THIS ISSUE:

Alban D Chirume, ZSE CEO
project examined. Stakeholders are at the centre of everything that we do. Bearing this in mind, the ZSE is interested in involving all stakeholders for their input and ensuring that they are running at the same pace in their

A word from the CEO Editor’s Note News
—ATS Project
Update — What’s Next ?

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I take this opportunity to urge all stakeholders to closely follow all key developments on the ZSE as these are aimed at facilitating the most favourable environment. Ultimately, the success of our stakeholders is the benchmark of our success. I hope through the start of this newsletter, the ZSE’s intention to be close to every one of you is evident.

Alban D. Chirume ZSE Chief Executive Officer

You are at the centre of everything that we do

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Editor’s Note
Introducing ATS Watch
The Zimbabwe Stock Exchange (‘ZSE’) is pleased to introduce its monthly e-newsletter, ATS Watch. The newsletter will be produced at the beginning of the issue month. Its main objectives include:

preparing stakeholders for a fundamental change in the market mechanism; and promoting dialogue between the ZSE and its key stakeholders.

Securities and Exchange Commission of Zimbabwe (‘SECZ’). In addition to the aforementioned objectives, the current ATS Watch Issue will attempt to clarify who the parties are. It is the hope of the ZSE that our monthly publication while being informative, will be thought-provoking and promote interaction between the ZSE and all stakeholders.

keeping ZSE stakeholders informed on the Automated Trading System (‘ATS’) and other projects’ progress; giving an insight into issues surrounding automated trading;

Interest on raising awareness and promoting dialogue between the ZSE and stakeholders also arises from the confusion that seems to exist in some sectors, with regard to differentiating between the ZSE, Chengetedzai Depository Company (‘CDC’), and the

“The Automated Trading System is expected to go live within the first quarter of 2014”

For information about the ZSE, visit our website www.zimbabwe-stock-exchange.com
For those not well versed with the mechanics of the market, here is a brief summary in the simplest terms, on how these three bodies fit into the big picture. ZSE The ZSE provides a regulated market place where securities (Equities and debt instruments) are traded. Currently, the trading is done manually with member representatives from stockbroking firms, converging at the ZSE trading floor daily to buy and sell stocks from each other. Member representatives trade in their capacity as agents for investors. The automated trading system is a mechanism to replace this physical interaction with an electronic platform. CDC When a transaction is completed on the floors of the ZSE, a change in the registered owner of the shares has to be effected. This involves removing the seller from the Company’s register, and new share certificates being issued in the name of the buyer who becomes registered as the new owner. Currently, this process is done manually. The central securities depository, which will soon be launched by CDC, will replace the manual system and the result is an electronic record of shares to replace the physical share certificate. SECZ SECZ is the apex regulator of capital markets in Zimbabwe. Following the enactment of the Securities Act amendment of 2013, SECZ now regulates all persons regisetered and or licensed to deal in , manage, market and invest in securities. The ZSE and CDC are thus bodies falling within SECZ’s regulatory purview.

Promoting I n f o r m e d Investments Decisions

ATS

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News
ATS Project Update
Background Automation of the bourse has been on the agenda of the ZSE since 2000, with earlier plans having been stalled due to funding constraints. As indicated in press statements, the ZSE has in principle secured funding. According to the Securities and Exchange Act (cap 24.25), it is a requirement that registered securities exchanges and licensed persons, employ automated electronic means when dealing in securities. The Automated Trading System is expected to go live within the first quarter of 2014. Steering the project In order to see the project to completion, two committees have been set up. The Project Steering Committee (‘PSC’) is responsible for overseeing the project. It is chaired by the ZSE CEO and includes two members of the ZSE Board. A User Consultative Group (‘UCG’) was also established to facilitate participation from all market players in the project process. Its members include representatives from the PSC, stockbrokers, custodians, asset managers and transfer secretaries. Input from the UCG is channeled to the PSC.

Who is CDSM ? Following the tendering for a Consultant to the automation project in July 2013, Central Depository & Settlement Co. Ltd Mauritius (CDSM) was selected from 18 applicants. The role of the Consultant is to spearhead the implementation of the ATS. Brief profile on CDSM It was established by the Stock Exchange of Mauritius (SEM) in 1996 and became operational in January 1997. CDS Mauritius has enabled the Mauritian stock market to meet international standards on clearing and settlement, namely, the G30 Recommendations and the CPSS/ IOSCO Recommendations for Securities Settlement Systems. SEM has outsourced the management of its IT systems to CDS Mauritius and the implementation of the automated trading system at the SEM in 2001 was spearheaded by CDS Mauritius.

Visit to Mauritius Work on the project kicked off with a visit to Mauritius by some members of the Project Steering Committee from 1 to 6 September 2013. The visit centered on getting ‘a feel’ of an automated trading environment.

M Matanda and M Zungu flanked by CDSM Management during the visit to Mauritius

Visit by Consultant and Stakeholders Meeting A representative of CDSM, Manoven Sadayen, visited the ZSE in September 2013 as the project started gathering momentum. Among activities lined up during his visit were consultations with key ZSE stakeholders, including members. A stakeholders’ meeting was held at Mandel Training Centre on 20 September 2013, where Mr Sadayen gave a presentation on the ATS. Delegates pay attention during the stakeholders’ meeting held at Mandel Training Centre.

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Trading Rules and Procedures Work on the Trading Rules and Procedures is currently underway. Feedback has been sought from members of the ZSE, to whom a call for timely and continuous interaction with the ZSE is made. These rules, once adopted, will govern trading procedures on the ZSE and the conduct of transactions as well as any other operations related to Exchange transactions. Examples of issues to be covered by the rules include:

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types of orders; types of markets boards; and nature of sessions. and

31 October 2013. The following are the vendors that submitted bids:
1. Chartered Systems Integration (Consortium) 2. National Stock Exchange of India 3. New York Stock Exchange Euronext 4. Infotech Middle East

What’s next?
A tender notice and request for expression of interest for the Supply and Installation of the ATS was issued on 18 September 2013 and closed on 27 September 2013. Vendors who were interested in the tender were required to submit their proposals by

calculation of indices;

The ZSE expects to have selected a vendor by the close of November 2013.

Zimbabwe Stock Exchange
101 Union Avenue Building Kwame Nkrumah Avenue Harare Phone: +263-4-701420 Fax: +263-4-762348 E-mail: info@zse.co.zw

We value your feedback Your views, questions and comments are welcome. To submit any form of feedback, including articles and photographs for the newsletter, please send your stories to atswatch@zse.co.zw.