The South African Supreme Court of Appeal (SCA) passed a judgment on Wednesday, stating the country’s financial market regulator was wrong in shutting down online broker JP Markets.
The Financial Sector Conduct Authority (FSCA) first moved against JP Markets, then the largest brokerage in the country, by suspending its license, citing a persistent issue in processing its clients’ withdrawals. That later resulted in the liquidation order by a High Court against which the broker appealed to the SCA.
In the latest order, the Supreme Court overturned the previous lower court order of liquidation and directed the regulator to pay the legal costs of the hearings to the brokerage.
Additionally, the Supreme Court ruling said that the broker did not make its services obscure, did not possess systematic risks to clients and financial markets and had no conflict of interest in dealings.
“All of the allegations brought against JP Markets by the FSCA, the media or otherwise, have been expunged and JP Markets is, for all intents and purposes absolved and its character as Africa’s biggest forex broker restored,” Justin Paulsen, Founder and CEO at JP Markets, told Finance Magnates. “JP Markets had sufficient capital adequacy and was not guilty of any fraud or misconduct and therefore posed no risk to its clients.”
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Returning to Business
Before shutting its services JP Markets had more than 300,000 clients and was operating in the country since 2016. It is now considering the option to legally move against the regulator with damage claims.
“In terms of the future of JP Markets, we have full intentions of returning to the industry. At the moment our ODP application is being assessed by the FSCA where we hope to have a fair application review and process,” Paulsen added.
The judgment in favor of JP Markets will provide relief to 16 other South African trading platforms that are under investigation for possible regulatory transgressions, the regulator confirmed.
In a statement, the FSCA said: “The Authority intends to abide by the judgment and will now proceed with the processing of the application by JP Markets for an over-the-counter (OTP) product provider licence, and the consideration of all outstanding enforcement actions.”
“The FSCA brings to the attention of the public that JP Markets is not licensed as an OTP product provider, neither is it entitled to conduct the business of an OTP product provider until a decision has been made by the Authority on the status of its application.”