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Victoria Falls Stock Exchange and VCG Markets Launch CFDs to Expand Local Capital Markets

The Victoria Falls Stock Exchange (VFEX), is a wholly owned subsidiary of the Zimbabwe Stock Exchange (ZSE) established to kick start the Offshore Financial Services Centre (OFSC) earmarked for the special economic zone in Victoria Falls.

The Victoria Falls Stock Exchange (VFEX), in partnership with Mauritius-based broker VCG Markets, introduced a new product called Contract for Differences (CFDs) yesterday, aiming to deepen local capital markets.

A CFD is a financial contract between two parties that speculates on the price movement of an underlying asset, such as company stock or commodities. The parties agree to exchange the difference between the asset’s opening and closing prices.

This new product provides a regulated trading platform with access to a broad range of global markets that were previously difficult to reach, according to Zimbabwe Stock Exchange (ZSE) group CEO Justin Bgoni. “CFDs allow traders access to a wide range of global markets that would otherwise be difficult to access,” said Bgoni, calling the introduction of CFDs an exciting new chapter in the investment space.

Trading CFDs on commodities like gold, silver, oil, and various global indices allows individuals to participate in the market without directly trading the underlying assets.

VCG Markets’ CEO, Abdallah Garib, noted that bringing CFD trading to Zimbabwe would benefit the country’s socioeconomic fabric. He emphasized that VCG Markets’ vision is to empower the trading and finance community and drive positive change through innovation, technology, and excellence.

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Securities and Exchange Commission of Zimbabwe CEO, Anymore Taruvinga, stated that CFDs would be under the commission’s supervision, with requirements including capital adequacy, risk management, and disclosure obligations approved in November 2022. The rules aim to ensure investors are informed about CFD trading risks, safeguard market integrity, and promote fair and transparent trading practices.

Also read: Zimbabwe’s New Currency, ZiG, Faces Rejection as Local Businesses Struggle for Foreign Currency

“The rules are designed to achieve three primary objectives: ensuring that investors are adequately informed about the risks associated with CFD trading, safeguarding market integrity by preventing abuse and misconduct, and promoting fair and transparent trading practices,” said Taruvinga.

He emphasized that the commission’s primary responsibility is to safeguard investors, maintain market integrity, and foster investor confidence. “As such, we deemed it prudent that CFDs, which are leveraged and present a new dimension of risk, should be introduced in our market under the supervision of an exchange,” he added.

VCG Markets is authorized and licensed by various regulators, including the Financial Services Commission in Mauritius, UAE, Iraq, and now Zimbabwe under the VFEX. “They are essentially the first probably foreign headquartered broker that we have registered,” said Bgoni.

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