The Victoria Falls Stock Exchange Ltd (‘VFEX’) is a Stock Exchange in Zimbabwe regulated and governed by the Securities and Exchange Act [Chapter 24:25]. The VFEX is responsible for the Central Securities Depository (VFEX Depository).
In order to participate on an account or a securities account on VFEX Depository, one must hold an account and / or be a participant or a participant’s client. A securities account is used for transactions in the depository service and settlement service.
Types of accounts within the VFEX Depository
There are essentially nine types of accounts which include:
- Proprietary account;
- Client account;
- Registry account;
- Nominee account;
- Omnibus account;
- Special account;
- Segregated (custodian bank) account;
- Lien account.
Thus, a participant in terms of the VFEX Depository refers to an individual or corporate entity which holds in custody and administers interests in securities and has been administered as a participant and is registered by the Securities and Exchange Commission of Zimbabwe (‘SECZ’).
The classes of participants on the VFEX
The VFEX Depository has the responsibility for recommending entities that are admitted as participants on the VFEX. The participants on the VFEX include the following:
- The Reserve Bank of Zimbabwe (RBZ);
- A bank licensed by the RBZ;
- A holder of a securities (custody) license;
- A holder of a securities (transfer) license;
- Holders of securities (dealers) licenses;
- A clearing organisation recognised by the SECZ;
- Individuals operating special accounts; and
- Any other person or entity as the SECZ may prescribe.
Direct Negotiation of disputes between participants on the VFEX
In terms of section 171 of the Victoria Falls Stock Exchange Central Securities Depositary Rules, 2020 participants have an obligation to resolve any differences, disputes or controversies amicably through a multi-tier process. In the first instance, participants are encouraged to resolve their disputes firstly through direct negotiation.
Notification of Intention of Dispute
Where attempts at direct negotiation have failed i.e., have been unsuccessful, the participants are obliged to exchange a “notification of intention” of a dispute to the other participant and the VFEX which sets out a full description of the matters in dispute within a period of fourteen (14) days of such intention arising.
Arbitration of disputes on the Victoria Falls Stock Exchange Central Securities Depository
Upon receipt of the notification of intention of a dispute, the VFEX, depending on the nature of the dispute, has the discretion to appoint an arbitrator to resolve the dispute. In terms of section 171 (c) of the Victoria Falls Stock Exchange Central Securities Depository Rules, 2020, the VFEX must appoint an “appropriate arbitrator” to resolve the dispute within seven (7) days of the VFEX having received the notification of intention. The costs of arbitration are borne equally by the parties to the dispute.