A Central Securities Depository is an institution that keeps custody of securities (debt, equities, ETFs.) for investors in electronic form and also offer other related services such as securities clearing and settlement, securities transfer and pledges that are related to securities transactions.
- Facilitate the admittance of securities into the Central Securities Depository;
- Facilitate the deposit and withdrawal of certificates in respect of securities admitted in the Central Securities Depository;
- Facilitate the dematerialisation of securities accounts;
- Establish a proper and efficient system for the verification, inspection, identification and recording of book-entry securities with the Central Securities Depository;
- Facilitate the efficient transfer of securities;
- Facilitate the efficient process of cash payment in exchange for securities;
- Facilitate the registration of dealings in book-entry securities;
- Operate securities accounts for the handling of book-entry securities and cash;
- Designate one or more banks as settlement partner for the settlement of funds in respect of transactions cleared through a depository;
- Facilitate the efficient collection of fees and other charges that may be required
- Guard against falsification of any records or accounts required to be kept or maintained under this Act; and
- Perform other functions that are necessary to ensure orderly dealings in admitted or dematerialised securities, or as the SECZ may from time to time prescribe.
CSD is regulated by the Securities and Exchange Commission of Zimbabwe (SECZ).
A securities account is an account opened by an investor through a Depository Custodian (Custodians) in the CSD System. The account when open will hold all the securities owned or held by an investor and through which all transactions (such as trades, transfers) will be effected.
No. Moreover, no minimum amount is required prior to opening a securities account.
No cost is involved in opening a securities account. However custodians have different costs structures for account maintenance fees.
Yes. The investor will need to open a Nostro FCA Account which will be used to credit the investor’s dividends and also will act as a cash account for trade settlements.
- It will provide faster registration of securities thereby preventing long delays in the delivery, settlement and transfer of securities.
- It will eliminate risks associated with the use of paper certificate for securities such as risk of loss, misplacement, theft, forgery, mutilation, forfeiture etc.
- It will provide increased liquidity (increased activity in buying and selling of debts & shares) because of faster transfer and registration of securities.
- As an investor, you can easily track your investments because quarterly statements will be sent to all security holders indicating the total number of debts & shares you own on the debt & stock markets. As an investor, you can also request for statements at any time from the Custodians.
- As an investor, you can use securities statements in the same way as the paper certificates are used as collateral for loans from financial institutions. This will save the investor the tedious procedure and transaction cost involved with pledging of paper certificate for loans.
- Individual investors who are 18 years and above.
- Any corporate body.
- Societies, Trusts, Investment Clubs, Churches, Corporations incorporated by an Act of Parliament.
- Minors (anyone below the age of 18 years). In the case of a minor, an account will be opened in the name of the minor with his guardian or parent as the signatory.
- Account opening is opened to both Zimbabweans and foreign investors irrespective of their residential status.
The investor will submit a duly completed and signed Securities Account Registration (CSD 1) Form with a copy of an identification or authorisation document to a Custodian. For more details refer to VFEX Depository Operations Procedure Manual.
As an investor, you can buy securities issued by an issuer through any of the Registered Stockbroker either on the secondary or primary markets.
An issuer means a person whose securities are listed and traded on the VFEX
ISIN (International Securities Identification Number) is a unique 12 digit alphanumeric identification number allotted for a security. Equity fully paid up, equity-partly paid up, equity with differential voting /dividend rights issued by the same issuer will have different ISINs.
Yes. You can buy securities through your registered Stockbroker.
A custodian means the holder of a securities (custody) license.
When you submit your share certificates to a Custodian, you will receive a receipt (a copy of the deposit form), a proof of ownership. Once the certificates have been lodged into your securities account you will then receive statements on request or annually from the CSD.
Yes. An investor must update his registration details when changes occur by completing and submitting to the Custodian, a Securities Account Maintenance (CSD 2) Form showing the changes in the registration details.
A person authorized by you as your agent can operate your account on your behalf. You would in such a case, submit a power of attorney authorizing the relevant person to operate the account on your behalf along with the person’s signatures and ID.
No. There is no turnaround trading.
Yes. In the case of inheritance or bequest, The Client will submit in quadruplicate duly completed and signed Securities Transfer Form (CSD 4 Form) to the CSD through their Custodian. CSD also requires a letter of administration. And for gifts a tax clearance certificate must be submitted to CSD.
DVP or DvP stands for delivery versus payment. It basically means that securities are delivered to a buyer when (and only when) the buyer sends a payment to the seller. In practice, CSDs offer DvP facilities to their clients so that the transfer of securities from the seller to the buyer only occurs if the payment has been made from the buyer to the seller (and vice versa).
DVP model 1
Refers to systems that settle transfers of both securities and funds on a gross (or obligation-by-obligation) basis, with final (irrevocable and unconditional) transfer of securities from the seller to the buyer occurring at the same time as final transfer of funds from the buyer to the seller.
DVP model 2
Refers to systems that settle securities transfer obligations on a gross basis but settles funds transfer obligations on a net basis, with final transfer of funds from the buyer to the seller occurring at the end of the processing cycle.
DVP model 3
Refers to systems that settle transfer obligations for both securities and funds on a net basis, with final transfers of both securities and funds occurring at the end of the processing cycle.
Yes. An investor can open more than one account in the same name with the same Custodian and also with different Custodians. For all the accounts, investor has to strictly comply with know your client (KYC) norms including proof of identity, proof of address requirements as stipulated by VFEX. The first opened account becomes the main account and the subsequent accounts will be sub accounts.
Yes it is, you complete an intra account transfer form to authorize the transfer.
The Stockbrokers sends a deal note to you, confirming the purchase or sale and a monthly statement detailing your transactions will keep you informed of your investment portfolio.
The process is called dematerialization. In order to dematerialise physical securities one has to fill in the Securities Deposit (CSD 3 Form) which is available with the Custodian and submit the same along with physical certificates that are to be dematerialised. The complete process of dematerialisation is outlined below:
- Surrender certificates for dematerialisation to your Custodian.
- Custodian intimates to the Depository regarding the request through the system.
- Custodian submits the certificates to the registrar of the Issuer Company.
- Registrar confirms the dematerialisation request from depository.
- After dematerializing the certificates, Registrar updates accounts and informs depository regarding completion of dematerialisation.
- Depository updates its accounts and informs the Custodian.
- Custodian updates the dematerialization account of the investor.
No. You need to submit in the certificate to the Custodian when initiating the demat.
Yes, the investor needs to complete the Securities Withdrawal (CSD 6) Form and submit to the Custodian. The process is known as Withdrawal or Rematerialisation.
Shares purchased will be credited to your CSD account on settlement day which is transaction day plus three business days (T+3), For example, if you purchase shares on Monday, they will be credited to your account on Thursday, subject to payment being made for the same. If you sell shares, payment will be made to you on settlement date through your Custodian.
Shares purchased will be credited to your CSD account on settlement day which is transaction day plus three business days (T+3), For example, if you purchase shares on Monday, they will be credited to your account on Thursday, subject to payment being made for the same. If you sell shares, payment will be made to you on settlement date through your Custodian.
In case of any discrepancy in the transaction statement, the investor can contact his Custodian. If the discrepancy cannot be resolved at the Custodian level, Investor should approach the Depository.