At Finance Magnates Africa Summit 2025, a pointed discussion between industry legal and
compliance leaders underscored a growing consensus: regulatory shortcuts may
offer early gains, but they increasingly carry reputational and financial
consequences.
During a panel discussion titled “Lost & Funds: Traders’ Trust Amid Regulation and Fraud,” moderator Jimmy Moyaha spoke with Eva Crouwel, the Head of Financial
Crime at Hidden Road Partners, and Shawn Barnett, the Director at Norton Rose
Fulbright South Africa.
The panelists, drawing from their respective roles, mentioned that South
Africa’s derivatives sector is fast outgrowing its informal past, and those
still relying on outdated models may soon find themselves under regulatory
fire.
From Informal to Institutional
“For a large part of the traditional financial institutions
in that space trust comes through regulation , and trust comes, through being
able to evidence that you have and uphold golden standards when it comes to
your onboarding, when it comes to the safety of your product, and the safety of
your platform, Crouwel said.
“I always jokingly say that’s what we sell, we
don’t sell cross margining, although we also do that, we don’t sell credit,
although we also do that, we sell trust.”
Barnett said the industry is entering a phase of
regulatory self-awareness. While non-bank institutions like CFD and FX brokers
once operated under looser frameworks or referral models, many are now opting
for formal ODP (Over-the-counter Derivative Product) licensing, particularly to enable local rand deposits and
demonstrate credibility to clients.
“In the last 18 months, people have been moving
more towards the ODP licenses. I’m currently working on a couple where they’ve decided that it makes financial sense for them to be able to go to clients and say, “Listen, we’re locally regulated, we can take your RAM deposits locally, and then from there, they can of course hedge with liquidity providers all over the world.”
Compliance or Consequences
That pivot, however, has come too late for some firms.
Barnett revealed his team is currently involved in multiple investigations into
brokerages operating without proper licenses—cases that have seen client funds
frozen by the South African Reserve Bank due to exchange control violations.
“We’ve had brokerages that took cash deposits in a
referring broking model, in other words where they had no ODP license in South
Africa but were merely referring clients offshore and those cash deposits were
blocked in South Africa because the Reserve Bank said and quite correctly that
when an individual is investing with an offshore institution it has to take its
money offshore, can’t keep it in South Africa.”
Red Flags for Retail
For retail traders, the conversation took a cautionary
turn. Moyaha pressed the panelists on how ordinary investors can identify
trustworthy brokers in an increasingly crowded—and occasionally
predatory—market.
Barnett urged clients to look past glossy marketing
and ask hard questions about licensing, advisory authority, and operational
transparency.
“If you believe at any point this brokerage has given
you advice, you should ask yourself did they ever ask me questions around
whether this is an appropriate investment for me, did they do an assessment of
how I should be looking at these instruments, did they do any record of the
advice they give me. And I promise you in almost 90% of those cases that does
not happen.”
More from FMAS:25: “By the End of 2010, Every Second Person in Cape Town Was Trading,” FMAS:25 Leaders Roundtable
Crouwel echoed the sentiment, adding that aggressive
onboarding, easy deposits, and inflated returns are often warning signs. “A
fast buck is an expensive buck,” she said.
“Due diligence is a process where you establish trust
and where you establish reputation, and only if you’re satisfied with that
should you be trusting people with your money.”
The Regulatory Road Ahead
The panel concluded with a forward-looking view on
regulatory evolution, particularly as South Africa prepares for the
introduction of the Conduct of Financial Institutions (COFI) Bill.
Barnett warned that many client agreements in the
market today remain “materially non-compliant,” giving brokers excessive
discretion over client assets. “These agreements wouldn’t survive a test for treating
clients fairly,” he said.
“Once COFI comes in, we’ll see much stricter conduct
standards—similar to what’s already been implemented in insurance. Once COFI becomes
law, and it will essentially replace numerous other financial market legislation,
the conduct standards we’ll see under that will be very “treat your customers
fairly focused.”
Crouwel welcomed the development, but stressed that
investors must also evolve. The message
was clear: in South Africa’s evolving derivatives and crypto landscape,
regulation is no longer a future concern; it’s now the cost of doing business.
At Finance Magnates Africa Summit 2025, a pointed discussion between industry legal and
compliance leaders underscored a growing consensus: regulatory shortcuts may
offer early gains, but they increasingly carry reputational and financial
consequences.
During a panel discussion titled “Lost & Funds: Traders’ Trust Amid Regulation and Fraud,” moderator Jimmy Moyaha spoke with Eva Crouwel, the Head of Financial
Crime at Hidden Road Partners, and Shawn Barnett, the Director at Norton Rose
Fulbright South Africa.
The panelists, drawing from their respective roles, mentioned that South
Africa’s derivatives sector is fast outgrowing its informal past, and those
still relying on outdated models may soon find themselves under regulatory
fire.
From Informal to Institutional
“For a large part of the traditional financial institutions
in that space trust comes through regulation , and trust comes, through being
able to evidence that you have and uphold golden standards when it comes to
your onboarding, when it comes to the safety of your product, and the safety of
your platform, Crouwel said.
“I always jokingly say that’s what we sell, we
don’t sell cross margining, although we also do that, we don’t sell credit,
although we also do that, we sell trust.”
Barnett said the industry is entering a phase of
regulatory self-awareness. While non-bank institutions like CFD and FX brokers
once operated under looser frameworks or referral models, many are now opting
for formal ODP (Over-the-counter Derivative Product) licensing, particularly to enable local rand deposits and
demonstrate credibility to clients.
“In the last 18 months, people have been moving
more towards the ODP licenses. I’m currently working on a couple where they’ve decided that it makes financial sense for them to be able to go to clients and say, “Listen, we’re locally regulated, we can take your RAM deposits locally, and then from there, they can of course hedge with liquidity providers all over the world.”
Compliance or Consequences
That pivot, however, has come too late for some firms.
Barnett revealed his team is currently involved in multiple investigations into
brokerages operating without proper licenses—cases that have seen client funds
frozen by the South African Reserve Bank due to exchange control violations.
“We’ve had brokerages that took cash deposits in a
referring broking model, in other words where they had no ODP license in South
Africa but were merely referring clients offshore and those cash deposits were
blocked in South Africa because the Reserve Bank said and quite correctly that
when an individual is investing with an offshore institution it has to take its
money offshore, can’t keep it in South Africa.”
Red Flags for Retail
For retail traders, the conversation took a cautionary
turn. Moyaha pressed the panelists on how ordinary investors can identify
trustworthy brokers in an increasingly crowded—and occasionally
predatory—market.
Barnett urged clients to look past glossy marketing
and ask hard questions about licensing, advisory authority, and operational
transparency.
“If you believe at any point this brokerage has given
you advice, you should ask yourself did they ever ask me questions around
whether this is an appropriate investment for me, did they do an assessment of
how I should be looking at these instruments, did they do any record of the
advice they give me. And I promise you in almost 90% of those cases that does
not happen.”
More from FMAS:25: “By the End of 2010, Every Second Person in Cape Town Was Trading,” FMAS:25 Leaders Roundtable
Crouwel echoed the sentiment, adding that aggressive
onboarding, easy deposits, and inflated returns are often warning signs. “A
fast buck is an expensive buck,” she said.
“Due diligence is a process where you establish trust
and where you establish reputation, and only if you’re satisfied with that
should you be trusting people with your money.”
The Regulatory Road Ahead
The panel concluded with a forward-looking view on
regulatory evolution, particularly as South Africa prepares for the
introduction of the Conduct of Financial Institutions (COFI) Bill.
Barnett warned that many client agreements in the
market today remain “materially non-compliant,” giving brokers excessive
discretion over client assets. “These agreements wouldn’t survive a test for treating
clients fairly,” he said.
“Once COFI comes in, we’ll see much stricter conduct
standards—similar to what’s already been implemented in insurance. Once COFI becomes
law, and it will essentially replace numerous other financial market legislation,
the conduct standards we’ll see under that will be very “treat your customers
fairly focused.”
Crouwel welcomed the development, but stressed that
investors must also evolve. The message
was clear: in South Africa’s evolving derivatives and crypto landscape,
regulation is no longer a future concern; it’s now the cost of doing business.
This post is originally published on FINANCEMAGNATES.