The gist of what happened is that the first foreign-based broker to operate in Zim. They offer a new financial product called Contracts for Differences (CFDs). CFDs allow traders to access a wider range of markets and the Securities and Exchange Commission of Zimbabwe (SECZ) will oversee CFD trading to protect investors.
Zimbabwe has always been unsophisticated when it comes to financial markets. There are only a few types of assets you can legally trade in – mostly just stocks and bonds. If you wanted the good riskier stuff, you had to jump through hoops. That has changed.
The very first broker that offers hundreds of products including foreign currency, cryptocurrencies, shares, commodities, indices and precious metals has been licensed to operate in Zimbabwe. To get the license, VCG Markets had to partner with the Victoria Falls Stock Exchange (VFEX).
It was a forced partnership. The SECZ reasoned that the kind of financial products that VCG offers present a new kind of risk in the market. Hence why they decided that VCG had to be under the supervision of an exchange and VFEX was chosen for this. CBZ will offer custodial services.
VCG Markets is registered in Mauritius, the UAE and Iraq. They say they offer access to international clients, brokerages and professional traders. This is all available for Zimbabweans now. Let’s unpack what this means.
CFD
Let’s first understand what CFDs are. Contracts for Differences are essentially bets on whether the price of something (like a stock, gold, or oil) will go up or down.
You don’t actually own the thing you’re betting on, you’re just agreeing with someone else on what the price will be in the future. If you’re right, you make money; if you’re wrong, you lose money. Simple as that.
When you take on positions like these, VCG will offer leverage. This simply means you will be able to trade with more money than you have. Basically, it’s like they offer you a loan to increase your investment amount. If you win, you win big but if you lose, you also lose big.
Example: A trader with a $100 balance and 100:1 leverage wants to trade gold.
- Without leverage: They could only buy a small amount of gold. Their profits (or losses) would be limited to the price movement of that small amount.
- With 100:1 leverage: They can control a position worth $10,000 (100 x $100). This means they can buy a much larger amount of gold.
- If the price of gold goes up by 1%, their profit is $100 (1% of $10,000). This is a 100% return on their initial investment.
- However, if the price of gold goes down by 1%, their loss is also $100. This means they lose their entire investment.
You don’t have to leverage if that’s too risky for your appetite and you could go with a lower leverage as there are also tools like stop-order losses that limit how much you will lose should the markets go against you.
What can you speculate on?
You can speculate on price movements of foreign currency, cryptocurrencies, shares, commodities, indices, precious metals and other stuff.
Do you think Apple’s share price will rise after they share their AI plans at their upcoming WWDC conference? – you can take such a position. Do you think the Japanese Yen will gain on the USD? – you can put your money where your mind is.
If you prefer to place your trust in gold’s millennia of unparalleled value? – why not? Or maybe you have always wanted to get in on the crypto thing but were worried about the murky stuff you had to do to participate. No murky deals are required from now on.
Remember, you won’t be buying the actual shares in this CFD scenario but if the Apple stocks appreciate, you will get the rewards. The same applies to other products.
Do note that it appears VCG does offer the option to just outright purchase shares in some markets. This is where you actually get share certificates and not just speculate on price movements. We are trying to get clarity on whether this particular thing is available in Zimbabwe and we will update you when we know more.
New to Zim?
What’s new is that there is now a registered broker offering these services in Zimbabwe. However, traders have been dealing with CFDs for decades, they just had to tow the legality line at times and also take the risk that brokers who have no presence in Zimbabwe would screw them over.
So now you can trade in cryptocurrencies (in a way) legally from the comfort of your Zimbabwean home. You can withdraw funds directly from CBZ and not through that other guy you meet in some dingy office downtown.
Going official like this presents its own drawbacks as we will discuss in the future. We will also get into exactly how you can go about registering if this all sounds interesting to you.
Tell us what you think about this development. Also, if you have questions you would like answered feel free to ask and we will work to get the answers from VCG.
Also read:
- Online forex traders, there’s a new broker with Zim-specific solutions in the market now
- ZSE & SECZ want more retail investors – Stockbrokers will have to improve their online presence for that to happen
- Crypto undermining power of the West to cripple economies through sanctions – Ukraine-Russia war shows
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23 comments
Wow
E-CREATOR FUTI
Know the difference zimbos
Sad you don’t know what you talking abiut
This is good news, tell me more about CFDs i thi nk i would love to.
Rega nditambe na deriv wangu
Yah sure deriv BOE manje I have never had any problem with deriv even their customer support is good
He is back!!!
How much is the minimum a lay man like me can invest?
How do l get started and connected to the Victoria falls stock exchange?
to register visit vfexdirect.vfex.exchange or download the VFEX Direct mobile app on Play Store or Apple App Store.
How do I register
Very interesting
to register visit vfexdirect.vfex.exchange or download the VFEX Direct mobile app on Play Store or Apple App Store
I like this guy Leonard sengere.. gud work bro
I have questions
– How much is the minimum balance allowed on the account
– Are there any future plans to allow more banks to link to the system or is set and locked to cbz only
– How much is the government going to tax traders?
– Android/ IOS app availability?
– Are they using Metatrader or it’s alternatives?
– And most importantly how fast is it to process deposits and withdrawals?
Oh yeah… It’s good to have you back.
This is stuff for Finance guys. It has always been around. What you described above is called margin trading. This part of derivative trading and yeah not really new in Zim. Our Mthuli wanted to introduce them when he started Barbican but maybe regulation disallowed him. Our dear guys at C-Trade have Derivatives too.
This is a good opportunity to gain wealth but also with high risk
Where is the link?
Search results are not guaranteed to take you to the correct site
I am definitely interested. Does it mean opening a CBZ FCA account? I tried to register with VFEX and it ended in the air , even today I haven’t heard from them.
CFDs awesome. PAPS awesome too, let’s get PAPS moving though
Well this is interesting but I believe this won’t be much of a deal to Traders/Investors who have offshore accounts and reliable brokers. You are making it sound like it was impossible to find reliable brokers outside of Zimbabwe. If you consider Trading as a full time job you’ll have to make a few trips outside of this financial dead zone and explore other ways and channels you can move your finances in a somewhat legal way from Zimbabwe to another offshore account. By the way if someone is going to say that’s illegal always keep in mind that the Ministry of finance itself is responsible for robbing many citizens and cover their asses. So if this deal smell even a bit of the government’s fingerprints in it which it already has. It’s just a matter of time until many people lose there money or get robbed again by the so called Zimbabwe government. I’d rather put my money on an offshore broker than any local broker with ties and a forced deal with the Zimbabwean Government. I seem to have trust issues especially after the USD-Bond stunt they pulled on us in 2016 which they legally robbed every citizen.