eBusiness Weekly
Nelson Gahadza
The Zimbabwe Stock Exchange (ZSE) listing fees, quoted in USD, are believed to be significantly higher compared to regional peers; hence, the local bourse is extracting more value from listed companies and less from market activity, a market expert has said.
The capital markets regulator, the Securities and Exchange Commission of Zimbabwe (SecZim), earlier in the year gazetted new listing requirements with fees pegged in USD and payable at the prevailing exchange rate of the day of payment.
The listing requirements were gazetted through Statutory Instrument 218 of 2022, and according to SecZim, initial listing fees for Equity and REITs shall be 0,05 percent of the value of securities to a minimum of US$5 500 and a maximum fee of US$67 300.
Rob Stangroom, an expert in stocks, said the hike in listing fees follows significantly reduced trading commissions.
He said high listing fees should reflect the quality and value of the services and benefits an exchange provides to its listed companies and investors, such as access to capital, liquidity, transparency, credibility and exposure.
“The ZSE’s listing fees are quoted in and settled in ZWL. In that case, the spread between the official and parallel exchange rates determines how much the fees are overstated or understated,” he said.
He added that this official or parallel rate spread explains the difference between the ZSE and regional peers’ fees up to a point.
“But it’s only part of the story because, expressed in percentage of market capitalisation terms, the ZSE listing fees are a more than proportionate multiple of regional exchanges’ fees,” he said.
More simply, Stangroom said that whichever way you look at it, the ZSE listing fees are high compared to regional peers.
He said the ZSE recorded an operating loss in 2022 in inflation-adjusted terms, highlighting the need for effective measures to be put in place to turn the company’s fortunes around and ensure its sustainability in the long run.
“My calculations indicate that the listing fee revenues of the ZSE are set to rise from about US$500 000 per annum (2022) to over US$4 million in 2023 under the new fees,” he said.
Stangroom said VFEX’s listing fees are between 7 percent and 12 percent of the ZSE listing fees for the three companies chosen as large-cap, mid-cap, and small-cap.
He said should all ZSE-listed companies migrate to the VFEX, the ZSE’s revenues would fall by around 80 percent, negating the recent fee increases.
“To protect its overall earnings, VFEX’s listing fees will likely eventually increase to a point where the ZSE does not have to forego earnings for either exchange,” he said.
According to Stangroom, the JSE’s maximum listing fees are US$28 000 per annum.
