FSCA fines Globex for unauthorised ODP activities

The FSCA has fined online trader Globex360° (Pty) Ltd R50 000 for acting as an over-the-counter derivative provider (ODP) without authorisation.

In a statement issued on 1 February, the Authority said Globex’s non-compliance was not because of a wilful desire to evade the applicable regulations but a result of a misinterpretation of the legal position. It has not previously contravened a financial sector law.

The FSCA said an investigation found that Globex offers its clients the means to trade contracts for difference in equities, currencies, indices and commodities through the Metatrader 4 trading platform. Globex has a Category I FSP licence, which means it is authorised only to provide advice and render intermediary services in respect of derivative instruments, among others.

Globex fully co-operated during the investigation and conceded that its activities fell within the scope and ambit of the ODP regulations, the FSCA said.

It said Globex has submitted an application for authorisation as an ODP, and the application is under consideration.

Specifically, the FSCA found that Globex contravened:

• Section 2 of the regulations published in terms of the Financial Markets Act, which prohibits a person from acting as an ODP or advertising or holding itself out as an ODP without authorisation.
• Section 111(1) of the Financial Sector Regulation Act (FSRA), which states that a person may not provide, as a business or part of a business, a financial product, financial service or market infrastructure except–
  • in accordance with a licence in terms of a specific financial sector law, the National Credit Act or the National Payment System Act; or
  • if no specific financial sector law provides for such a licence, in accordance with a licence in terms of the FSRA.