Tradition, the world’s third-largest interdealer broker, is entering the fray in the South African marketplace. It says South Africa offers real potential for their business, but also feels it is unfair that the country suffers under the weight of its emerging-market status.
The company’s CEO, Robin Houldsworth, says: “We are very interested in the emerging-markets arena. However, it’s a little unfair to label South Africa that way if you look at the quality of management and various other issues. It’s unfair to be lumped into that group.”
“International players often make decisions as a group — and you suffer as a result of that,” he said, adding that his company has noted benefits in the South African market and an increase in its client base, which is why it is now entering the market in a bigger way.
He also views this as the first step to a potentially bigger role in Africa. “We would like to use South Africa as our gatepost into Africa. There are a lot of opportunities if you look at growth in Namibia, Uganda, Kenya, even Nigeria,” he said.
“Your economy is pretty robust — for instance, we recently had Turkey where a response comes and then your market bounces straight back. It’s not totally fair to label you the same way as other emerging markets,” he said.
Announcing the opening of its subsidiary in Johannesburg on Wednesday night, he said his company has offices in 20 countries around the world and is used to being exposed to different external requirements.
He said he does not see black economic empowerment as problem at all. “We are expanding and see this as part of the programme. We are in 20 countries and are used to having to deal with different requirements.
“For instance, we are also going into China and have to abide by their strict rules regarding shareholding. The same thing applies in Japan, where we have a presence. There are many different local rules, which is fine. We like to see ourselves as contributors and facilitators in this regard.”
He added: “We would like to be seen as supporting the local market and will fit in with the local infrastructure.”
The office in Johannesburg will initially cover South African government bonds and interest-rate derivative products.
“If you look at your long bond, for instance, rates of around 8% in SA are very interesting for international investors. We therefore see lots of opportunities here.”
Forex interest rates make up 54% of the business flow for Tradition, equities and derivatives 33% and commodities and other activities 13%. The company has approximately 7 000 institutional clients. — I-Net Bridge