OTC Compliance Solutions: From Licensing to Ongoing Compliance Support
What are OTC derivatives?
OTC (over-the-counter) derivatives are financial contracts traded directly between two parties, without the involvement of a central exchange or broker. These contracts are customisable to meet the specific needs of the parties involved. Common underlying assets for OTC derivatives include stocks, bonds, commodities, currencies, interest rates and market indexes.
Compliance obligations for OTC derivatives
Navigating the complex regulatory landscape of OTC derivatives can be challenging. The Financial Markets Act 19 of 2012, promulgated in June 2013, regulates financial markets and OTC derivatives in South Africa. This Act aims to improve OTC trading in derivatives, eliminate misleading and conflict-of-interest trading and prohibit insider trading and other market abuses.
What is an OTC Derivative Provider (ODP)?
An ODP is a person who as a regular feature of their business and transacting as principal:
- originates, issues or sells OTC derivatives; or
- makes a market in OTC derivatives.
ODPs can include financial service providers (FSPs), banks, insurance companies and any entity involved in significant OTC derivative transactions.
The Financial Markets Act requires ODPs to be licensed as FSPs. Additionally, they must adhere to specific regulations laid out by the Financial Sector Conduct Authority (FSCA). This includes maintaining adequate risk management frameworks, reporting obligations and capital adequacy requirements.
Learn more about OTC derivatives in a South African context.
Why choose Masthead for your OTC derivatives compliance needs?
Our team is dedicated to helping you navigate the compliance challenges associated with OTC derivatives. We understand the importance of compliance in the OTC derivatives market and are committed to providing you with the support you need to manage your trading activities effectively and avoid market abuses.
By choosing us, you benefit from:
- Expert guidance: Our team has extensive experience in the OTC derivatives market and provides expert guidance on all aspects of compliance.
- Tailored solutions: We offer tailored compliance solutions that meet the specific needs of your business, ensuring that you remain compliant with all relevant regulations.
- Comprehensive support: We provide comprehensive support throughout the compliance process, from obtaining licenses to managing reporting obligations.
Contact us
Want to ensure that your OTC derivatives trading is fully compliant? Contact Masthead today to learn more about our tailored solutions and expert guidance.