While online share trading in South Africa has been dominated by one company for several years, a new bank-backed entrant appears poised to shake things up.
A recent survey by Daily Investor showed that EasyEquities is the most popular local online share trading platform by a significant margin.
Out of 2,013 responses gathered from South African retail and institutional investors for Daily Investor’s South African Investor and Banking Report, 44% preferred EasyEquities.
That is more than the combined portion of surveyed investors who preferred to use the platforms of the country’s four major banks — Absa, FNB, Nedbank, and Standard Bank.
The chart below shows the results of Daily Investor’s survey on the preferred online sharing trading platforms of South African investors.
However, EasyEquities’ decision to make its R25-per-month Thrive subscription mandatory for users without net-positive deposits from November 2023 infuriated some customers.
The move came shortly before its parent company, Purple Group, announced it had swung from a R70.95 million profit in its 2022 financial year to a R35.2 million loss in 2023.
In the same month that it made this change, Investec introduced the Clarity trading platform, with no monthly or admin fees, zero commission, and highly competitive rates.
Although it is currently only available to a limited number of Investec clients, it is planned to launch to the general public sometime in early 2024.
Despite not having launched, the CEO of EasyEquities parent group Purple Group, Charles Savage, has already criticised the platform as an alternative for investors.
Savage has maintained that Clarity is aimed more at traders than investors and is nothing like EasyEquities.
He explained that because Clairty worked on synthetic contracts (CFDs), it offered no share ownership or voting rights and was treated differently regarding taxes on dividends and profits.
Clarity business head Tinus Rautenbach dismissed Savage’s criticisms, arguing that Clarity’s link to Investec meant it did not need to rely on high-frequency trades to be successful.
“Because we are a bank, we have a different value we can place on the cash on the platform,” he explained.
“We have a business model where we need the savings clients and a smaller group of trading clients on the platform,” he said.
“If we look at the collective, we are very comfortable that the platform can be commercially viable without having to incentivise speculative or high-frequency trading.”
MyBroadband asked Investec for more details on Clarity’s plan to capture the online share trading market.
Investec said Clarity had already recorded “incredible” uptake over the last few months, and that it was excited to open the platform up to the South African investing community.
The bank said Clarity was aimed towards digitally-comfortable investors looking to experience the freedom of investing on their own terms with simple and accessible entry to the local and international markets.
“It is really about empowering a new breed of retail investor who wants to trade, invest and save online and in real-time – and bringing these independent investors to a place where they’ll have the best of Investec’s capabilities at the touch of a button.”
Investec said although it was aware it was entering a highly-contested market, the fact that the platform is powered by one of the world’s most trusted and respected financial institutions gave Clarity and advantage.
“As a bank and authorised dealer to facilitate foreign exchange, there is also seamless exchange and international exposure — making investing easy for those that want to grow their portfolios in their own way,” Investec said.
“Backed by Investec’s trading and investing capabilities, Clarity provides fast and efficient access to shares, foreign currencies and savings products.”
As it stands, investors can buy exposure to shares from the likes of the JSE, London Stock Exchange, New York Stock Exchange, NASDAQ, Euronext Paris, Stockholm Stock Exchange, and others.
Because all shares are bought through a CFD, it allows for quick sign-ups and immediate trading.
It also means users don’t have to buy a minimum number or value in shares.
Although the underlying ownership is held by Investec Bank, clients own the rights to the shares and any income derived from them.
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