Trading platforms / social trading platforms / signal following
FinTechs belonging to this category operate trading platforms or online marketplaces for investment opportunities or certain financial contracts – e.g. securities, factoring etc. and sometimes furthermore provide contact to financial experts and tools for the decision-making.
FinTech-signalling and social trading platforms provide users with the opportunity to exchange opinions on financial investments and offer signal providers and traders the possibility to make their securities portfolio publicly visible. This way the portfolios can be linked to and followed by other traders via the platform automatically, so that the trading and investment strategy of the followed traders can be copied.
The platform often cooperates with a financial services provider or a credit institution where both the trader and the follower hold their securities accounts, and which execute the orders both of the trader and the follower and to which the platform passes on the trading decisions.
Attitude of the country towards trading, social trading or signalling platforms
The acceptance of trading platforms, social trading platforms and signalling platforms in Tanzania is low, although not as low to the younger generation who are aggressively trying to engage in these platforms.
Most people do not understand how these platforms operate and thus they refrain from trading through them. The vast majority is refrained from trading in the platforms to avoid risks since it is unregulated.
Obligations and requirements to provide trading, social trading or signalling platforms described above
In Tanzania, forex trading platforms, social trading platforms and signalling platforms are not currently regulated as there is no legal framework in place. Also, there are no locally licensed brokers thus using a regulated broker is not a legal requirement.
The Central Bank issued a public notice in 2019 and this notice made trading in the said platforms illegal. To-date, the only legal tender recognised is Tanzania Shillings. Other Foreign currencies are traded by licensed institutions in the country in line with foreign exchange regulations where the currencies could be issued and redeemed in the country of issuance as a legal tender.
Additional comments regarding the legal situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area
It is advised for investors in Tanzania to not engage in trading platforms in Tanzania as it is not regulated and thus not legal.
Market size for trading, social trading or signalling platforms and biggest companies in this business area
There is no market for trading, social trading or signalling platforms in Tanzania because as mentioned, most of these platforms are restricted within the country. Users that wish to participate in trading, however, use the global platforms that are available worldwide.
Additional comments regarding the economic situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area
Due to the lack of regulation, trading, social trading and signalling platforms are quite unsafe in Tanzania because of this risk and more uncertainties surrounding it. Unregulated brokers do not have any regulatory authority governing their services, which exposes users to many possible scams against which they will not have any protection from a local authority.