Earlier this year, Finance Minister Mthuli Ncube said the government was planning to introduce a Victoria Falls Exchange (VFX) which would operate along principles not too different from those of the Hong Kong Exchange. The Victoria Falls Exchange is supposed to use USD as it’s base currency freeing it from the shackles of the beleaguered Zimbabwean dollar. The exchange is also supposed to host the dual listed stocks such as Old Mutual which were kicked off the Zimbabwe Stock Exchange.

Despite all these details there are still a lot of unasnwered questions with regards to how the exchange will actually operate. The Exchange Control (Special Provisions for Securities Listed on Victoria Falls Stock Exchange) Regulations attempts to answer some of these questions. It deals specifically with how foreign currency will be handled on the exchange. Here are some of the provisions in the instrument.

  1. Under the regulations, securities listed on the Victoria Falls Stock Exchange shall be tradable and settled in United States dollars or a convertible currency ( probably does not include the Zimbabwean dollar here)
  2. Zimbabwean companies already listed on the Zimbabwe Stock Exchange may list on the Victoria Falls Stock Exchange a maximum of 20 % of its capital on the Zimbabwe Stock Exchange, but these foreign currency shares have to be funded from an offshore source or from free funds.
  3. Foreign companies may list on the Victoria Falls Stock Exchange, but any capital raised by such company on the Victoria Falls Stock Exchange is from an offshore source or from free funds.
  4. A foreign company that had de-listed from the Zimbabwe Stock Exchange in the five years preceding its listing on the Victoria Falls Stock Exchange must, however, reinvest or employ in Zimbabwe 20 % of the capital raised on the Victoria Falls Stock Exchange no later than five years from the date that it was raised. (It’s not clear whether this applies to those companies which were forcibly delisted because they are dual listed)

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