You can now easily and legally trade in foreign company shares, crypto, precious metals etc in Zim

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 […] The post You can now easily and legally trade in foreign company shares, crypto, precious metals etc in Zim appeared first on Techzim.

May 19, 2024 - 10:02
 0  65
You can now easily and legally trade in foreign company shares, crypto, precious metals etc in Zim

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:

The post You can now easily and legally trade in foreign company shares, crypto, precious metals etc in Zim appeared first on Techzim.

What's Your Reaction?

like

dislike

love

funny

angry

sad

wow

David Lee Munemo David Lee Munemo is a rising Zimbabwean journalist with a passion for making complex news discoveries accessible to the public. Driven by a belief in the importance of information communication, David's work tackles a variety of news fields, from groundbreaking entertainment research to the latest political news.