Market Profiles

RBC IS operates an omnibus account structure in this market.

For further information or support around accessing this market, please contact your RBC IS representative.

Client Notice

Please note not all financial instruments and exchanges listed below are available as an RBCIS product offering. Please consult our Terms & Conditions or reach out to your RBCIS representative for further details.

Lusaka Securities Exchange (LuSE)
LuSE was established in 1993 and opened in 1994 and was initially funded by the UNDP and the Government of Zambia. It consists of stock broking corporate members and is incorporated as a non-profit liability company. The exchange was formed as part of the government's economic reform programme aimed at developing the financial and capital market in order to support and enhance the private sector. It has been set up as a modern exchange based upon current international standards and practices.

The Lusaka Securities Exchange launched its current trading, clearing and settlement system on 18th December 2017 provided by Securities and Trading Technology.

The LuSE system supports multi-asset trading and clearing facilities.

The LuSE’s system is SWIFT compatible with the capability of communicating with other CSD’s, Settlement Banks, Participants, Central Bank Payment System or RTGS

The system also provides full order management and order placing capacity, coupled with real-time access to market data.

ISIN: Yes

Other: Local codes for government securities (i.e. Treasury Bills and Government bonds)

Securities and Exchange Commission Zambia (SEC): established by the Securities Act in 1993 to oversee exchange activities. The Securities Act also incorporates regulations regarding market registration, licensing and conduct.

Listed securities are immobilised, registered securities.

Treasury bills are in dematerialised form.

Government Bonds are in dematerialised form. recorded in book entry form at the LuSECSD.

Price arrestors - prices cannot move up or down by 25%

ZMW

In Zambia only treasury bills are traded over the counter.

Book-Entry

• Each account opened at boththe LUSE and BOZCSD will be issued with a unique ID number.
• Investors are expected to give their CSD ID Numbers to their brokers at the time of placing orders.
• A selling broker, for example, will allege the number of shares to be sold using the CSD ID Number.
• The assets to be sold will be frozen or earmarked until a sale order goes through or is cancelled.
• Accounts at the LUSE CSD will be segregated and Omnibus at the BOZ CSD

Purchases of securities must be prefunded. Failure to prefund will result in failed securities purchases. Failure to settle the cash side of a security transaction will result in a penalty fee of 1% per day of the value of the transaction, which the defaulting party must pay to the LuSE.

Effective March 10, 2014, the Bank of Zambia announced thatthere shall be a penalty on late settlement of Government Securities transactions.

Settlement Flow:

• On T+0 an initial settlement report will be availed at 15:00 to the brokers through their terminals and the LuSE will e-mail/fax the said report to the local custodian banks that currently do not have terminals.  
• From T+0 15:00 to T+1 15:00 the exchange will allow the brokers and local custodian banks to amend or cancel any of their respective trades.
• On T+1 15:00 the exchange will avail a second initial settlement report to the brokers and local custodian banks only where changes have been made in respect of the initial settlement report.
• On T+1 15:00 the LuSE will send the first settlement schedule for settlement partners to the commercial banks so that participants make arrangements to cover broker positions at designated settlement time of T+3 10:00.
• The brokers and local custodian banks must, with effect from T+1 15:00, notify all their clients in their obligations to make prompt payment for securities settling on T+3.
• On T+2 15:00 the LuSE will avail the first settlement schedule for settlement partners to BoZ and the commercial banks.
• On T+3 at 10:00 the LuSE will run settlement and avail the final settlement schedule for settlement partners to the brokers, local custodian banks, BoZ and the commercial banks.

Physical: Zambia is a dematerialized market

Not permitted

Not  permitted

None

There are two CSDs in the market, the LuSE CSD and BOZ CSDThe LuSE CSD is a subsidiary of LuSE and is used for the clearing and settlement of transactions, the deposit and withdrawal of certificates of title and the processing of pledge transactions. It is not mandatory, however, it is common practice to use the CSD Equities and bonds are safekept and immobilised at the LuSE Central Shares Depository with Treasury Bills and Government Bonds are safekept  at the Bank of Zambia BOZ.

The LuSE is currently undergoing demutualization process to allow the LUSE CSD operate independently from the LuSE.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

Bank of Zambia uses BIS Model 1 - a system in which there is a simultaneous transfer of securities and associated funds from the buyer to the seller. All transfers occur on a trade-by-trade (gross) basis with all transfers made via book entry. All transfers are final.

LSCD uses BIS Model 2: Gross simultaneous settlement of securities followed by net settlement of funds, with finality at 11.00, 15.45 and 17.45.

Central Depository

T+3

Share holdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel. 

Failure to comply with reporting requirements may lead to penalties and / or other sanctions.

Investors acquiring more than 25% of a banking sector company must report this in writing to the Bank of Zambia (BoZ).

Public disclosure by the investor is required on T+1 if, following the acquisition or disposal of shares, the investor holds between 20% and 35% of a company's voting rights, or if the investor's holdings decrease below 20% of a company's voting rights. Disclosure follows specific rules; the LuSE must first grant disclosure approval prior to publication in the daily press. 

During a take-over, an investor holding 5% or more of shares in a company must inform the LuSE and the Securities Exchange Commission of their desire to sell the shares. 

A mandatory offer to purchase shares from other shareholders is required whenever:

• an investor acquires 35% or more of a company's voting rights
• an investor holding between 35% and 50% of a company's voting rights has increased his holdings by 5% within the last twelve months.

Brokers must advise their clients of the above disclosure obligations. Failing to disclose or to follow the proper disclosure procedures may result in penalties and possibly a jail sentence for repeated offenders.

Brokers are charged penalty fees and may face suspension if they fail to pay the stock exchange on time. 

If a trade is failing due to a lack of funds, the LuSE uses the Settlement Guarantee Fund to settle the trade. Should the fund be exhausted, the LuSE will also draw on a letter of credit from the failing broker. 

If the trade is failing due to a lack of securities, the stock exchange initiates a buy-in and purchases the necessary securities on T+4 to complete the settlement on T+5. All buy-in costs and penalties are borne by the defaulting broker. 

In both cases of either a shortage of securities or of cash, the defaulting party must pay the stock exchange a penalty equal to 1% of the failed trade consideration per day.

None

Protects investors in the event of broker default

As an UK-incorporated financial institution, Standard Chartered Bank is regulated by the Financial Services Authority (FSA) in UK. In response to the Money Laundering Rules implemented by the FSA; Standard Chartered has introduced the Know Your Customer (KYC) programme in early 2003 and also put in place a Money Laundering Prevention Group Policy. In addition, all overseas offices of the Group are required to comply with their local anti money laundering laws and regulations, which may be more stringent. 

The main regulator for supervising anti-money laundering and counter-terrorist financing programs in the country is Bank of Zambia

We have our own policies and procedures on Sanctions, as a part of Anti-Money Laundering Program at group-wide and country level.

All new client relationships must be accompanied by complete set of account opening documentations according to category of customer type and domicile. The relationship managers must complete the KYC form and conduct integrity checks on the customer including customer shareholders and executives before the KYC form and the supporting documents are passed to the line manager and independent controller for approvals. A thorough background check is completed on all individuals with powers of instruction for each new account and the organisation(s) for which an account is opened.

Standard Chartered maintain its own database on Sanctions Lists which is based on the information from various regulators and government bodies. These Sanctions Lists are kept updated regularly by a centralised team. New accounts must be checked against this list before these are opened. 

In addition, we also have the Sanctions Filtering (SF) solution in place. Under this SF solution, incoming and outgoing messages are sieved through a filter. The filter will identify matches between information contained in these messages and those in the database of Sanctions Lists. Where there is a match, an alert will be generated for further investigation to determine if it is a true match or not and whether the transaction should be blocked or released. 

Every new employee has to undergo compulsory training on Know your customer (KYC) anti-money laundering (AML) and suspicious transaction monitoring as part of the induction process. There are also regular training programmes – usually on the bank's intranet medium – on the topic that every employee needs to complete. The frequency of these ongoing trainings varies with world events and sentiments

For clients serviced out of certain locations this is an FII market. Please refer to the Terms & Conditions for Global Custody or contact your RBC Investor Services' Client Manager before making portfolio investments.

Local brokers will only accept orders from investors with a CSD ID Number (issued at the global custodian level).

The Bank of Zambia issued a directive effective March 2, 2009, prohibiting the extension of loans/credits and providing other sources of Kwacha funding to non residents.

The services and products affected by this decision include the following:

• Providing Zambian Kwacha loans to non residents for any maturity period of less than one year.
• Providing any intraday overdrafts.
• Placing Zambia Kwacha in the form of deposits or other similar means in non-resident institutions for a period of less than one year; where options are embedded in such deposits, such options may be exercised within a period of not less than one year.
• Investing in Zambian Kwacha denominated assets issued by non-residents except for those assets with a residual maturity of at least one year at time of investment.
• Unless proof of underlying economic activity is shown, engaging in foreign exchange derivative transactions, including but not limited to swaps and forward transactions, in which one of the currencies is the Kwacha.
• Transferring Kwacha to non-residents without any underlying economic activities in Zambia.
• Transferring Kwacha from residents to non-residents is no longer allowed, except for settlement on non-resident accounts with local financial institutions related to domestic economic activities, such as, equity participation, securities transactions, foreign debt repayment in Kwacha, import Letters of Credit in Kwacha, goods and services purchased in Zambia, and non-resident living cost in Zambia.

This ruling relates to the extension of credit to foreign investors, but does not impact foreign investors' ability to buy or sell LuSE listed or Government debt instruments.

Dividends, interest and profits can be repatriated freely.

Purchases of securities must be prefunded.

Local subcustodians can only make a payment upon receipt of cleared funds. In the event a foreign exchange is booked with our subcustodian, they will only be able to credit the ZMW once the foreign currency equivalent has been confirmed as received at their correspondent.

The Lusaka Securities Exchange (LuSE), the Bank of Zambia (BoZ), local brokers and custodian banks agreed to settle the cash payment of all security trade transactions through the Zambia Interbank Payment and Settlement System (ZIPSS); this was implemented effective 2012.

ZIPSS is a real time gross settlement system and will therefore create a delivery versus payment mechanism to provide for immediate, final and irrevocable settlement of same day funds and eliminate the use of cheque payments.

Permitted in the market. Financial service providers are allowed to avail loans/credits and overdrafts to non-residents only for activities with underlying economic activities. The permitted activities include equity participation, securities transactions and settlement of capital market securities transactions.

Dividends are paid, by cheque/via electronic funds transfers, based on the registrar's records as of record date (locally known as the “the last day to register”). 

For shares registered in the central depository's nominee name, the transfer agents issue cheques/transfers electronically directly to the account holder based on holdings report provided by the Lusaka Securities Exchange Central Shares Depository (LuSECSD) prior to payment date. 

Record date is approximately two weeks after the announcement date. The last day to trade (LDT) is three days before record date; ex-date is one day before record date. Pay date is generally two weeks after record date. 

The Lusaka Securities Exchange encourages companies to make payments within seven days of the announced payment date.

Semi-annually

Semi-annually

365/basis

Corporate actions are announced by the issuing company directly to the local shareholders, to the LuSECSD, and are published in two local newspapers. 

Bonus issues, rights issues and stock dividends must first be approved by the Lusaka Securities Exchange (LuSE) and by the Securities Exchange Commission.

Beneficial ownership of rights on shares is recognised on settlement date. If the last day to register falls between trade date and settlement date due to settlement delays, the buyer's local custodian must claim the dividend proceeds from the delivering broker/dealer.

Unrestricted voting rights

Not applicable

Provided in English. Companies must announce meetings in the local press 21 days in advance.

On request, subject to availability. Mailed to shareholders on the company register and upon request.

On request, subject to availability.

Not required if holdings are registered in the nominee name.

Not applicable

20% withholding tax at source.

15% withholding tax at source.

All bonds with maturity date after January 1, 2016 will not attract 15% withholding tax on discount income. The withholding tax has been maintained on the coupon income.

Withholding tax exempt on interest income earned on green bonds listed on a securities exchange in Zambia with maturity of at least 3 years.

None

Refer to below link showing the most recent list of tax treaties and rates published by the tax authority - https://www.zra.org.zm/download/double-taxation-agreement-rates/

None

All transfer or sale transaction on property and/or quoted shares will attract a property transfer tax of 5%

Value Added Tax (VAT) rate of 16%.

Zambia Holiday Calendar

• Lusaka Securities Exchange luse.co.zm
• Bank of Zambia boz.zm
• Securities Exchange Commission Zambia seczambia.com
• Zambia Revenue Authority www.zra.org.zm