South African retail brokers acting as clients’ trading counterparties face first-year costs nearly 3x those of the agency model

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FM Intelligence estimates that South African retail brokers acting as clients’ trading counterparties need R68.5 million ($3.8 million) in their first year, compared with just R24.6 million ($1.4 million) under the agency model. An FSP license only allows firms to market CFDs; taking on the role of a trading counterparty requires authorization from the FSCA to become an ODP. ODPs must also hold equity capital equivalent to at least six months of operating expenses, which amounts to R17.4 million in this scenario.