VFEX launches CFDs Professor Mthuli Ncube

Leonard Ncube in Victoria Falls

THE Contract for Differences (CFDs) launched by Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube here on Friday marks the operationalisation of the Offshore Financial Services Centre, which would be a catalyst for foreign direct investment.

Prof Ncube launched the contract for differences (CFD) at the Victoria Falls Stock Exchange (VFEX), thereby positioning Zimbabwe as a regional financial hub and attracting both domestic and international investors.

Vision Capital Group (VCG) is pioneering the CFD product in partnership with VFEX, which was launched in October 2020 to kick-start the Offshore Financial Services Centre (OFSC) earmarked for the Special Economic Zone SEZ) in Victoria Falls as the Government designated the city as an international financial services centre in the last leg of reforms to make the SEZ attractive to investors.

The move is part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets while helping companies raise capital in foreign currency.

A CFD is a financial contract that pays the differences in the settlement price between the open and closing trades. CFDs essentially allow investors to trade the direction of securities over the very short-term.

They enhance protection of investors’ money given the background of loss of savings in the past as they offer a unique opportunity rather than owning the underlying asset.

Market participants buy or sell units to trade based on a particular financial instrument’s underlying price depending on whether they believe its value will go up or down.

Speaking at the launch Prof Ncube said VFEX was strategically placed as a global competitive platform for the trading of stocks in hard currency. 

“It gives me great pleasure to be here with you today as we launch a new product on the Victoria Falls Stock Exchange, the Contract for Difference. “The birth of VFEX in 2020 was one of the many initiatives implemented by the Government of Zimbabwe to stabilise our economy and attract foreign direct investment,” he said. 

“Today, we stand here celebrating the continued growth of VFEX, not only in terms of new listings but also addition of new products. The launch of CFDs on VFEX speaks to the focus of National Development Strategy 1 as this product will deepen financial inclusion and will significantly aid in promoting financial inclusion and literacy.

“The trading of CFDS on the VFEX marks a significant milestone in the evolution of our capital markets and reaffirms Zimbabwe’s commitment to fostering innovation and progress in consolidating economic transformation as reiterated in the 2024 national budget,” said Prof Ncube. 

He said the introduction of the CFDs trading on the VFEX represents a positive step as it provides investors with versatile and dynamic tools to participate in the financial markets through regulated instruments.

The launch of CFDs will enable investors to trade CFDs on a regulated platform and also increase retail participation and aid in financial inclusion.

Minister Ncube said investors can gain access to various assets including equities, indices, commodities and currencies without the need for ownership of the underlying asset itself.

He said Government has been working tirelessly to revitalise domestic and foreign investments, which are critical to growing the economy.

Capital markets complement policy initiatives and become the transmission mechanisms through which Government can gauge the vitality of its policies. 

Prof Ncube said the launch of CFDs has come at an opportune time given the rapidly changing global finance landscape as it has become crucial for investors to have access to innovative instruments that can assist them in managing their risk and seize opportunities in volatile markets. 

He said the CFDs’ introduction aligns with the broader vision of positioning Zimbabwe as a regional financial hub and attracting both domestic and international investors.

VCG Markets chief executive Mr Abdallah Garib said they were committed to complementing Government saying investments in technology are paving the way for a new era in international collaboration thereby enabling the African markets to tap into the global market and positioning Africa’s ecosystem as the gateway to unlocking the expansion of investments.

 

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