Local start-up plans derivatives exchange

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A LOCAL start-up based in Bulawayo is planning to launch the first derivatives exchange in Zimbabwe by August this year.
Divine Jigu, Qubit Quark’s co-founder and director of operations says the “technology and data science” company has been working on the project, which it is calling the Bulawayo derivatives exchange (Budex), since its establishment three years ago.
“We have finished working on the whole backend and frontend of the system. We are now seeking regulatory approvals. As it stands our target for launch is August 09,” Jigu told The Financial Gazette last week.

“Our economy is constantly under threat of severe shocks, creating a high-risk environment. Now more than ever, we need to reduce that risk and one of the most prudently proven ways of doing this is options and futures,” he said adding that the company has designed several options and futures that it plans to roll-out on the exchange, including “instruments which will enable farmers and related industries to hedge against price volatility”.
Options and futures are similar trading products that provide investors with the chance to make money and hedge current investments.
Options give the buyer the right, but not the obligation, to buy or sell an asset at a specific price at any time during the life of the contraåct, while a futures contract gives the buyer the obligation to purchase a specific asset, and the seller to sell and deliver that asset at a specific future date unless the holder’s position is closed before it expires.
Jigu said QQ has plans to introduce options and futures covering commodities such as maize, soya beans and wheat.
“With increasing threats of climate change and extreme weather, the agriculture business is becoming risky and there are not many insurance options at the moment… this is where Budex comes in,” he said.
He said QQ has held a few stakeholder awareness meetings and the buy-in has been “overwhelming”.