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JIMMY MOYAHA: The investing world has changed over the last couple of years, and part of those changes has been the introduction of things like online trading and multi-asset trading. We’re going to be taking a look at this in a bit more detail with the head of region at PrimeXBT South Africa. He joins me on the line now to see what we make of this.
Sihle, lovely to have you on the show. Thanks so much for taking the time. Let’s start with just what’s been happening in the online trading space. I imagine with all of the geopolitical tensions and developments around the world, there has been an increased level of interest and even volatility in the online trading space.
SIHLE TUTA: Most definitely, Jimmy. The online trading space has evolved [from] what it was about 10 or 15 years ago.
We’ve seen more interest both locally, abroad and obviously across the continent, particularly from younger traders – the ones who are obviously curious, more techno-savvy, who are looking for more opportunities to earn an extra income – and also from people who really want to take away the responsibility of growing their money from traditional hedge funds and professional money managers to making their own investment decisions.
So definitely, the interest in online trading has quadrupled over the last decade or so.
JIMMY MOYAHA: Now, Sihle, even though individuals might want to go into this for themselves, it’s not as easy as it might be made out to be. Sometimes there are risks, there are rewards. But more importantly, individuals need to know what it is that they’re doing before they enter this space. Let’s talk about the importance of education and the importance of understanding the kinds of products you are getting into.
SIHLE TUTA: Most definitely, Jimmy. I think education is one of the most important pillars whenever you’re getting into online trading. We try obviously, by all means, to educate our clients to make sure that they understand both the risks and rewards that come with online trading.
I think it’s a bit unreasonable just to push the reward narrative without shining a spotlight on the risk that’s involved.
It is a double-edged sword, it cuts both sides, you can make a little bit of money, but you can also lose it.
So that is how, as a company, we empower our traders.
We actively encourage responsible participation by helping them understand both, again, the potential and the risk. It’s not just as much money as I can make and that’s it.
There’s money to be lost, there’s money to be made. As long as you understand both and then take the necessary actions to make sure that you safeguard yourself against unnecessary risk, you should be on the safe side.
JIMMY MOYAHA: Speaking of responsible practices, Sihle, I want to take a look at the importance of regulation. Anyone who listens to this show, and there are a lot of people who do, will understand the importance of regulation because we frequently have the FSCA [Financial Sector Conduct Authority] on our show discussing all matters of regulation.
I speak about this quite openly around the fact that it is important for brokerages and those that are providing these services to be adequately and properly regulated.
I want to get your thoughts around that and what that means for the trust that it builds with clients.
SIHLE TUTA: Absolutely, Jimmy. I think regulation is one of the top priorities that any investor or trader needs to look at whenever handing their money over to a broker, a bank or any FSP [financial service provider].
I think regulation is important for many reasons, including, one, investor protection.
Regulation ensures that client funds are safeguarded through segregation, and secondly, market integrity.
So regulated FSPs, including brokers like PrimeXBT, must follow strict operational and reporting standards which help maintain trust, transparency and ethical conduct in financial markets as a whole.
Thirdly, for the sake of accountability and oversight, the regulators around the world, including the FSCA, monitor broker activities, ensuring compliance with anti-money laundering and client due diligence requirements to prevent any financial crimes. Also, for the sake of dispute resolution and recourse.
Things do go wrong. Sometimes clients and traders feel that they are hard done by, and once any internal processes have been taken on, only then can clients approach the regulator. In that case, the regulator will play the role of becoming a mediator.
So clients have the confidence of knowing that if things go wrong and they can’t get any recourse with the broker, they can approach the regulator.
Obviously, the last one is for the sake of credibility and investor confidence. So operating under a recognised authority like the FSCA enhances the broker’s reputation. It also attracts serious investors and promotes long-term sustainability.
So regulation is absolutely critical, Jimmy.
JIMMY MOYAHA: I’ve emphasised that on many occasions to say that if brokers are not regulated, please do not place your funds with them.
Sihle, before I let you go, I want to take a look at the South African market. It’s an interesting landscape that we find ourselves in, and it’s even more interesting for the brokerage and online trading space. There are a number of participants here that are looking to get a slice of the South African, and indeed the African, market.
How then does a brokerage come into a marketplace and say, look, from a value proposition perspective, we might be doing things a little bit differently from other service providers, and how important is it to stand out from your competitors?
SIHLE TUTA: It’s absolutely critical, Jimmy, because as we said earlier, if we look at the last five years alone, the number of players that have entered the South African market, I think, are more than 10.
The regulator is issuing licences left, right and centre, and PrimeXBT is one of the few which has both the CFD [contracts for difference] licence and the crypto asset provider licence.
It’s very important to obviously set yourself apart and stand out and provide what traders and clients are looking for in terms of pricing, because one of the most important levers that investors and traders look for is pricing, which comes in terms of spreads and commissions.
So how products are priced is one thing, and secondly, the execution quality.
When traders are trading online, they also want to ensure that their trades are placed at the prices they requested without having any delays.
Obviously, customer support, because money is at play here; clients and investors are risking their hard-earned money. They want to have the confidence that there’s always going to be somebody on the other side of the line in case they need any support.
I think the one thing that sets us apart from our competitors is obviously our fair pricing, especially when you’re trading CFDs on gold and forex, our approach to client relationship management, our customer support and obviously our institutional-grade execution on all our trading tools that are available on our platform.
Also, lastly, the variety of asset classes that are available to trade on our platforms, I think are second to none.
Any asset class that any trader or investor wants to play around with from a CFD point of view, the chances are that we have it on our platform already.
JIMMY MOYAHA: The world of online trading has increasingly become more popular, and it is important for investors and retail traders alike to make sure that they deal with the correct kinds of individuals and companies. We’ll leave the conversation on that note.
Thank you so much to the head of region at PrimeXBT South Africa, Sihle Tuta, for joining us to take a look at the world of online trading.
Brought to you by PrimeXBT.
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