Canada    FinTech Guide    Chapter 4    South Africa


4. Trading Platforms / Social Trading Platforms / Signal Following
South Africa  South Africa

Because competition is low and it is a relatively new concept people are skeptical of it. Apart from the aforementioned, the bulk of South Africa’s populace are not financially literate and shy away from the products for more traditional savings products such as investment clubs. Unfortunately the saving culture itself is lacking and over-indebtedness prevents many from investing at all.



Legal Affairs


Because social trading platforms are rendering advisory and intermediary services on regulated products they need to be registered with the FSCA as a financial services provider in terms of the Financial Advisory and Intermediary Services Act 37/2002. Costs for licences vary depending on the size and type but start around R4000 to R40 000. Liquidity and running costs also differ widely depending on the type of company.

If the trader is also directly trading stocks on the Johannesburg Stock Exchange it needs to be a registered member of the stock exchange for equities, bonds or derivatives market. Licensing costs and liquidity requirements differ depending on the registration of the member.



Economic Conditions


The exact size is unknown due to the contemporary nature of the service and subsequent lack of statistics on the market. Some of the players are:


  • Plus500
  • Saxo Capital Markets
  • CopyOp
  • eToro
  • Investocopy
  • BestoCopy
  • Ayondo


Miscellaneous


Although it is somewhat regulated it is foreseen to become much more regulated in the immediate future as part of the twin peaks model of regulation to which South Africa is transitioning. The Financial Advisory and Intermediary Services Act 37/2002 will be replaced by the Conduct of Financial Institutions Act where more focus will also be placed on regulating Fintech companies. The FSCA is currently busy consulting some of the main Fintech players to understand how they operate and how to best regulate them.



Contributing Authors

Garlicke & Bousfield Inc

Brian Jennings
Durban, South Africa

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 August 2019