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The Zimbabwe Stock Exchange is set to automate its trading system with effect from July 3 2015. The Exchange has been operating on a manual open outcry trading system, which is prone to various inherent risks, since its establishment over a century ago.

Automation of the ZSE trading system is one of the major milestones in the capital market sector as it signifies the end of the manual trading system era.

Automation, which is also referred to as e-trading , is the method of trading securities such as stocks, using IT systems to bring buyers and sellers together through an electronic trading platform and networks that create a virtual market place, with minimal human intervention.

Automation literally brings the entire market (all buyers and sellers) to an investor’s home or office via electronic gadgets such as cellphones, laptops or iPads.

Such convenience not only increases the number of active traders and their trades but will be achieved at reduced costs to the broker or exchange. Streamlined processes and procedures of automated trading platforms will not only speed up transaction processing but will minimise the risk of frauds.

Electronic trading systems may indeed increase liquidity and improve efficiency by reducing transaction costs and increasing information availability.

These trading systems may also attract new pools of liquidity, by providing affordable remote access to investors.

With globalisation, Zimbabwean capital markets are being influenced by what is going on elsewhere in the world and thus need to align with international dictates in order to inspire confidence with international investors.

With this in mind, the capital market sector is working tirelessly to improve capital market efficiency by introducing transparent infrastructure that improves risk management frameworks, ultimately increases market liquidity and develop the economy as a whole, hence, the automation of the ZSE.

Source : The Herald