VICTORIA FALLS, – The Victoria Falls Stock Exchange (VFEX) has partnered with Mauritius-based broker VCG Markets to launch a new financial product called Contracts for Differences (CFDs), aiming to deepen the local capital markets.
A CFD is a financial agreement between two parties to speculate on the price movement of an underlying asset, such as a company stock or commodity. The parties agree to exchange the difference between the opening and closing price of the asset.
According to The Herald, Mr. Justin Bgoni, the CEO of the Zimbabwe Stock Exchange (ZSE) group, described the introduction of CFDs as an exciting development in the investment landscape.
“CFDs allow traders access to a wide range of global markets that would otherwise be difficult to access,” he said, highlighting the product’s potential to offer trading on a regulated platform with access to diverse global markets.
Trading CFDs on commodities like gold, silver, oil, and various global indices simplifies the process for individuals to participate in the market without directly trading the underlying assets.
Mr. Abdallah Garib, CEO of VCG Markets, emphasized the socioeconomic benefits of bringing CFD trading to Zimbabwe. He expressed VCG Markets’ vision of empowering the trading and finance community through innovation, technology, and excellence.
The launch event also featured remarks from Mr. Anymore Taruvinga, CEO of the Securities and Exchange Commission of Zimbabwe. He confirmed that CFDs would be regulated by the commission, which approved the necessary requirements in November 2022. These include capital adequacy, risk management, and disclosure obligations to ensure investor protection.
“The rules are designed to achieve three primary objectives,” said Mr. Taruvinga. “First, to ensure that investors are adequately informed about the risks associated with CFD trading and understand the mechanics of these complex financial instruments.
Second, to safeguard the integrity of our markets by preventing market abuse, manipulation, and other forms of misconduct. Third, to promote fair and transparent trading practices.”
Mr. Taruvinga underscored the commission’s responsibility to safeguard investors, maintain market integrity, and foster investor confidence. He emphasized that introducing CFDs under the supervision of an exchange was a prudent decision given the leveraged nature and risk dimensions of these financial instruments.
VCG Markets is authorized and licensed by various regulators, including the Financial Services Commission in Mauritius, as well as authorities in the UAE, Iraq, and now Zimbabwe under the VFEX.
“They are essentially the first foreign-headquartered broker that we have registered,” Mr. Bgoni noted, highlighting the significance of this partnership in broadening the scope of Zimbabwe’s financial market.
The introduction of CFDs marks a significant step forward for the VFEX and the broader Zimbabwean financial market, promising to enhance market depth and provide new opportunities for investors.
