Learning how to invest is an important skill, therefore developing a base of knowledge that will help you understand how to invest and determine what might be a suitable investment for you is crucial to every investor.
Investing on the ZSE
Before the introduction of online trading platforms, investors would solely trade on ZSE through a registered stockbroker. With the technological advancements, Investors now have two channels when investing on the ZSE. One can trade through a stockbroker or through online platforms like ZSE Direct.
A stockbroker is a market professional who buys and sells securities on behalf of clients at a Stock Exchange in return for a brokerage commission. Licensed by SECZ and Member of the ZSE (www.zsetraining.co.zw/glossary/stockbroker/)
Why you need a stockbroker
One of the most important questions asked is why one needs a stockbroker when trading on the ZSE. The ZSE provides a secure and regulated trading environment where only registered ZSE market participants have direct access to the market for trading securities. Registered ZSE market participants typically act in the capacity of a stockbroker, executing purchase and sale transactions on behalf of investors in return for a service fee (brokerage).
An investor can choose whether to make their own decisions regarding what and when to buy and sell or seek the advice from a professional or adopt both strategies.
Investing on the ZSE through a stockbroker
To start investing on the ZSE through a stockbroker, follow the below steps;
1. Open a Trading account
Practically more than one account is required for an investor to invest in the stock market. Bundled under the term “trading account” comprises the following:
A stockbroking trading account (with any of the current 20 stockbroking firms https://www.zse.co.zw/stock-brokers/ )
A Central Securities Depository (CSD) account
A custodial account (which can be provided by your stockbroker if they offer Broker controlled accounts or by one of the independent custody companies)
2. Submit Know Your Client (KYC) Documents
A trading account is opened by completing and signing account opening forms at your preferred stockbroking firm and submitting the following KYC documents;
2.a) For individuals
Copy of ID (passport for foreign investors)
Proof of residence (utility bill within three months from date of processing in name of account holder or accompanied by affidavit from lessor, if renting); and 2 passport size photos.
2.b) For companies/trusts/estates/NGOs
Registration certificate;
List of directors/trustees (CR14 etc.)
Registered office details (CR6)
Directors/trustees’ KYC (same as in Individuals)
3. Deposit investment funds with your custodian or stockbroker*
If your stockbroker acts as your custodian (broker controlled account) you deposit funds into your stockbroker trust account and if you have an independent custodian from your stockbroker you deposit the funds into the custodian account.
NB* – funds need to be deposited only when you intend to buy from the stock market.
4. Place orders with your stockbroker
Once you have made a decision to buy or sell securities in the stock market, you need to contact your stockbroker and convey your desire emphasizing the type, quantity and limit price (if any) of the securities to be transacted.
Other information like the time period the order will be valid is also required.
Your stockbroker then sends your request to the ZSE Automated Trading System (ATS), where it is entered on a central order book with all the other requests to buy or sell shares.
If the price you want to pay is matched with a seller at the same price, the transaction takes place and you will become the owner of the shares you decided to buy.
Information provided in this article is for educational purposes and does not constitute financial advice. You should obtain independent advice from a Registered Stockbroker or Financial Advisor before making any financial decisions.
For more information about how to invest on the ZSE, visit the ZSE training portal www.zsetraining.co.zw, email info@zse.co.zw or interact with us on our social media platforms @Zimbabwe Stock Exchange on Twitter, Facebook, Linkedin and Instagram.
