Last week XTrade became the third forex and CFDs trading brokerage to receive a license to operate in South Africa. The interest of retail brokerages in this market has been growing in recent years as companies are seeing the vast possibilities associated with the growing population in the country.
Earlier this year, Cyprus based HotForex and FXTM acquired licenses to operate in South Africa and have already started to onboard clients from the country.
Speaking to Finance Magnates, the company’s Chief Operating Officer Mark Leigh shared that XTrade is entering a forex and CFDs trading market that is estimated to grow exponentially. The process of licensing with the Financial Services Board (FSB) of South Africa took about six months.
The company is focusing on this lucrative market at a time when its economy and population have been growing exponentially. In addition, the country’s currency, the South African rand (ZAR), has been quite volatile. As such, traders from the region are looking for ways to capitalize on the rapid moves.
Plus500 Reaffirms its Commitment to Social ResponsibilityGo to article >>
The main benefit from having a license for brokerages which are operating in South Africa is that they allow clients to retain funds onshore. The South African government has put up a wall of regulations that are limiting the amount of funds which citizens are able to hold offshore.
The hefty taxation mechanism on offshore funds is preventing the flow of money abroad, as the local currency has been depreciating as of late in tandem with many other emerging market currencies.
XTrade’s Expansion Plans in South Africa
XTrade expects that local traders will be keen to embrace local brokers as the red tape on foreign accounts becomes increasingly restrictive. The company’s estimates regarding the potential of the South African market are based on the solid uptake that other companies have seen in the region.
Standard Bank WebTrader, which only opened for business in South Africa in late 2013, had hundreds of traders on its platform by late 2014. Other large trading providers — for example, Investec — are planning to offer their trading platforms to South African traders because of the insatiable demand for trading in the country.
Commenting to Finance Magnates on the prospects of the brokerage in the country, the Mr Leigh elaborated: “We’re fully regulated and our Xtrade Academy (trading education centre) is popular among new traders. Its impossible to know exactly how many traders will we attract, but I don’t think its presumptuous to think in the hundreds.”
As well as in South Africa, Xtrade is now licensed by the Cyprus Securities and Exchange Commission (CySEC), which gives the firm passporting rights under the European Union’s Markets in Financial Instruments Directive (MiFID), and by the Australian Securities and Exchange Commission (ASIC).