We recently sat down with the Managing Director of Finalto South Africa, Solomon Gounden, to discuss how Finalto’s efforts in the region has seen it awarded an ODP license, and what the future brings for traders and brokers.
Following the introduction of the FMA 2016, financial institutions in South Africa have required an ODP licence to market and price derivative products.
Only a few providers met the stringent requirements. Why was Finalto chosen as an institution to have a ODP licence?
The ultimate goal with ODP licences is to ensure responsible derivative activity by brokers and consumer protection, drawn along similar regulatory lines that both the FCA, European regulators and ASIC developed for their markets.
The submission and subsequent interview process was rigorous, taking into account liquidity and capital, client data protection, IT and platform consistency and reduced downtime and of course governance of the SA entity. Finalto came through adhering to all metrics.
What sets Finalto apart from other companies in the region offering similar services?
The Finalto Group offers proprietary technology and has a proprietary market-making ability in both local South African assets and international assets.
Finalto’s regulated presence in markets outside of South Africa also sets it apart from other local providers. These two attributes together, with other unique deliverables, makes Finalto a competitive and compelling broker for clients.
Can you explain about the addition of African Pairs to our asset list and how that would impact South African traders/brokers?
Finalto is committed to the African story. Bringing African currency pairs and other African assets to clients, differentiates us in the local region. SA residents know and want to trade in African currency pairs, and it was important and critical that we make this possible, so we can show our clients our commitment to the region.
What would you describe as the biggest differentiators of the South African market?
SA is a relatively new market in derivative trading and the discerning trader will use a broker that is credible.
South Africa has plenty of opportunities for traders that do this as a profession or as a sideline. Because South Africa has a very liquid and well-developed exchange market, coupled with its ability to launch in the rest of Africa, it is a lucrative trading destination.
Markets around the world are still reeling from the impact of Covid, fuel crisis and inflation – what’s your take on the South African market for the rest for 2022? And into 2023?
South Africa is an open economic system, and so will therefore feel any global event. As a significant producer and supplier of commodities such as platinum, chromium, gold etc, we have increased volatility from the supply vs demand effects of commodities, and this is reflected in the currency.
The local bourse has not seen much breakout, but certain sectors have had better trading conditions such as the mining stocks & financial stocks, look for these sectors to move around MPC meetings on rates, inflation, and price announcements.
This is also because SA is a rates-sensitive market and the mining sector being a rand hedge, and this will carry through into 2023. The local indicators will see GDP at 3%, inflation towards 4% (for the first time US inflation higher at 9% vs SA at 4%) and improved trade accounts at this level of the rand, suggests SA is well poised as we go into 2023.
What are your predictions for Finalto and the South African markets for the next six months?
We continue to forge good relationships with the regulators, professional institutions, and retail clients alike, and have commitment and confidence in the region.
Our clients demand the best service in the pre, during and post-trade execution and we make sure to deliver by having relationship teams that service both retail and institutional clients, bringing new products including African specific products to the platform. We encourage feedback and suggestions from our clients in the region to continue to improve our offering.
The ODP licence allows us to put other FAIS brokers into a solution that can competently and compliantly service the market in a responsible way. Our hope is to be the top non-bank ODP broker in 2023, so watch this space.
