Online share trading company Global Trader 247 (GT247) is unaffected by its UK relative, Global Trader, which is in administration from today.
Charles Savage, GT247 CEO, says the two companies are completely separate and his clients are continuing to trade normally, while those of the UK firm could only close positions and are not allowed to open any new ones.
The UK Global Trader has found itself in deep water following reports that at least one of its clients had failed to meet a margin call for contracts for difference (CFD) held in British telecommunications company Artilium.
CFDs are financial derivative instruments used by large and small investors to get some exposure to expensive and heavily traded shares at only a fraction of the cost, normally around 10%. These instruments are not for long-term investing as the profit loss is determined by the difference between the buy and sell prices. If a share price falls, the investor has to put in more cash, and this is termed a "margin call".
In the case of Global Trader, the firm actually buys and holds the underlying share and its clients trade the values among each other in almost a virtual stock exchange environment.
UK financial authorities began their investigation last week when Global Trader started selling large numbers of Artilium shares and rumours spread that it was due to one, or more, of its clients not being able to meet such a margin call.
Savage says the local company supports the international operations, which are located in London, Canada and the Far East, with operational and software support.
The South African company was founded seven years ago and pioneered the CFD concept here. It is also the entity that develops and maintains the Global Trader trading platform that was built on Java.
Savage says there are about 2 000 South African clients and about 400 in Europe.
Global Trader is owned by JSE-listed investment firm Purple Capital, whose share price was last seen at 125c, up 5c in light trade.
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