Nelson Gahadza-Senior Business Reporter
The Victoria Falls Stock Exchange (VFEX) is conducting stakeholder awareness campaigns in preparation for carbon credit trading on the exchange, following the publication of legislation governing the securities.
Carbon credits are created from a project that reduces, removes, or limit greenhouse gas emissions.
These projects include the planting of trees, investing in renewable energy or improving energy efficiency.
They are traded on platforms where buyers and sellers can trade the credits. Buyers of carbon credits can use them to offset their own emissions, while sellers can generate revenue from their emission reductions.
Carbon credits provide incentives for businesses and individuals to reduce their emissions, and help to finance projects that reduce emissions in developing countries.
In August this year, the Government published carbon trading regulations that allow carbon credit project developers to keep up to 70 percent of the proceeds for the first decade of the project, with the remaining 30 percent paid as an environmental levy.
“The carbon credits forum, which was recently held in Victoria Falls, managed to shed more light on the issuance and trading of voluntary carbon credits in the context of the Zimbabwean market.
“Therefore, VFEX is conducting stakeholder awareness before trading on the exchange,” VFEX said in its latest newsletter.
Before regulation, the country’s carbon credit projects were largely unregulated and required registration with authorities.
Zimbabwe is believed to be the world’s 12th largest producer of offsets, with 4,2 million credits generated from 30 registered projects last year.
The country’s largest project, encompassing a 785-kilometer stretch of forest in northern Kariba, is run in part by the South Pole, the world’s foremost seller of offset.
By trading voluntary carbon credits on the Victoria Falls Stock Exchange, it becomes possible for buyers and sellers to connect easily.
This can lead to increased trading volumes, which can in turn make the market more efficient and transparent.
The exchange can help to standardise the trading of carbon credits by implementing a set of rules and regulations that govern the market.
This can help to reduce transaction costs and improve market transparency. In addition, the stock exchange provides a platform for buyers and sellers to discover the true market price of voluntary carbon credits while ensuring that carbon credits are priced accurately and reflect their true value.
Further, trading voluntary carbon credits on a stock exchange can help to increase the availability of capital for carbon reduction projects as well as drive the development of new projects and technologies that help reduce carbon emissions.
It can also enhance transparency by providing a standardised platform for trading and reporting while reducing the risk of fraud and increasing investor confidence.
Meanwhile, the VFEX said the application for Contract for Differences (CFD) trading has been approved by the Securities Exchange Commission of Zimbabwe (SecZim) with the approved member now in the process of setting up systems to start trading.
“It is expected that CFD trading will commence before the end of the year,” it said.
CFD is a type of derivative contract that allows investors to speculate on the price movement of an underlying asset without actually owning it.
CFDs can be used to trade a wide range of assets, including stocks, commodities, currencies, and indices.
When you enter into a CFD contract, you agree to exchange the difference between the opening and closing price of the underlying asset with your CFD broker. If the price of the asset goes up, a profit is made.
CFDs are leveraged products, which means that investors can control a large position with a relatively small deposit.
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