Why partnerships with authorised over the counter derivative providers are essential for introducing brokers
Introducing Brokers in South Africa can maximise and secure their business portfolios by partnering with a broker such as Khwezi.
As the name implies, an introducing broker (IB) operates as a go-between, connecting a client looking to get access to the Forex markets with a broker who is ready to function as the counterparty.
IBs provide advice to clients while trading in software and market access is provided by the broker. Forex brokers benefit from introducing brokers since they help them save time and work more efficiently.
Both the IB and the Forex broker are able to specialise in their respective areas, with the former focusing on the customer and the latter on the business of trade.
Because Introducing Brokers get paid a percentage of their referrals’ trading volume, it’s in everyone’s best interest for their traders to do well. To this end, one of the most important aspects of running a successful IB business is to provide clients with access to an authorised ODP like Khwezi.
The role of regulation for Introducing Brokers
An IB’s first step should be to verify the Broker’s regulatory status. Making sure a CFD broker is supervised by a competent regulatory agency is the most crucial step in the process of choosing a CFD broker.
Having a broker that is overseen by a regulatory authority means that you can rest assured that they will adhere to all rules and regulations. This is something IBs should constantly keep in mind when making a decision about which online broker to work with.
Any IB dealing with an unlicensed broker is taking a risk with their own credibility. As a result of this, the company’s reputation will suffer, and so will sales and earnings in the future.
New regulations for the trading of over-the-counter derivatives like CFDs have been implemented in South Africa to improve financial industry regulation and oversight.
Central clearing, stronger operating requirements, and higher margin requirements for non-centrally cleared derivatives are only some of the changes that will be implemented.
This increased scrutiny of all existing and future FSCA registered CFD and forex firms leads to more openness in OTC market transactions.
The South African financial regulator has been tasked with ensuring that all forex and CFD brokers operate lawfully. Brokers and their customers are now subject to more stringent regulations as a result of this.
Khwezi is a fully regulated member of the FSCA since 2013. This business holds licences as an ODP (Over-the-Counter Derivatives Provider) and an Authorised FSP (44816). Customers can transact in an open and safe setting as a result.
Final thoughts
Introducing Brokers operating in South Africa should make it their primary objective to partner with an authorised ODP broker, such as Khwezi. This will ensure that the IB business retains a sound reputation for transparent dealings, and allow for a long and profitable trading career for their referrals.
Those IBs who do not partner with an authorised ODP broker in South Africa run the risk of losing their reputation in the industry. Reputation and trust are the keystones to success as an Introducing Broker.
