Financial Securities Exchange (FINSEC), successfully launched the inaugural derivative trading platform in Zimbabwe yesterday with trading beginning today. Registrations began yesterday with the pilot trading going for six months as a trial period.
Speaking at the virtual launch, FINSEC chief executive officer Collen Tapfumaneyi said, “The new way of trading is upon us, and this is the step in the right direction as it gives retail investors and other investors the opportunity to move into more trading instruments rather than equities alone.”
This will enable trading by retail investors of Index Futures, Stock Futures and Stock Options listed on the FINSEC Derivatives Market. This is meant to widen opportunities for investors to diversify their portfolios and offer them risk management tools in line with global trends.”
A derivative is an agreement between traders for selling or buying of shares, commodities, currency in future at a price agreed today hence little or no investment is needed to enter into such a contract.
The market will be on a 6-month trial window to enable market participants and investors to familiarise with the derivatives market. During the pilot window, retail investors will be subject to maximum position limits of $100 000.
Derivative instruments that will be available for trading will be Simbisa Stock Futures, Econet Wireless Stock Futures, Innscor Stock Futures, Delta Stock Futures and Ecocash Stock Futures.
While for the Stock Options we have Delta Stock Options, Ecocash Stock Options, Simbisa Stock Options, Econet Wireless Stock Options and Innscor Stock Options. For Index Funds FINSEC partnered with Morgan and Co. for the creation of the indices.
Tapfumaneyi said, “The companies selected here were based on how liquid they were, as we felt it was a critical factor in the drive to have working derivatives.”
Nairobi Securities Exchange (NSE) chief executive, Mr. Geoffrey Odundo who was the guest of honour at the launch reiterated that there is need for market flexibility in order to produce more products for investors.
Mr Odundo said, “For the market to work efficiently and effectively, there will be need for significant support from both trading participants and the regulators. Trading participants are the main client touch points and need to market the products to clients.
“There will be a great need for the market to adopt to investor needs. The NSE recently introduced a mini-index in response to market and investor needs.
“Exchange traded products exists to minimize the risk of trading in unregulated Derivatives products. The market should be very keen to ensure no default risks arise to maintain the integrity of the market.”
FINSEC said technology capacitates securities dealers and other market intermediaries to harvest deal traffic from various channels in real-time and to interface using intelligent and versatile world standard technology.
FINSEC said the aim is always to have capital markets that are responsive to the needs of all the citizenry and play a pivotal role in lubricating the wheels of the larger economy – Harare