Do you need ODP authorisation?
Some firms discover they have been operating without authorisation for years — usually CFD brokers, and offshore groups with a South African entity. Others assume they need a licence and turn out not to.
Not every business dealing in derivatives in South Africa needs authorisation. This page sets out the test.
The test
The Financial Markets Act Regulations, 2018 define an OTC derivative as an unlisted derivative instrument, executed whether confirmed or not, excluding:
foreign exchange spot contracts
physically-settled commodity derivatives
An OTC derivative provider is a person who, as a regular feature of its business and transacting as principal:
originates, issues or sells OTC derivatives, or
makes a market in OTC derivatives
Each element has to be present. A firm that deals as principal but only occasionally does not meet the definition. Nor does one that trades derivatives constantly but never takes the other side of a client's position. It is the combination that triggers authorisation.
Regular feature of business
Not a one-off. Not occasional treasury hedging. A recurring part of what you do.
Transacting as principal
You are the counterparty. Your client's position is against you, not against a third party you pass the order to.
Originate, issue, sell, or make a market
You create or offer the instrument, or you quote two-way prices in it.
Regulation 2 provides that a person may not act as an OTC derivative provider, or advertise or hold itself out as one, unless authorised by the Authority under section 6(8) of the Financial Markets Act.
So: if you deal in OTC derivatives, as principal, as a recurring part of your business, you need authorisation. If you are unsure about any one of those three, that is the conversation to have with a specialist — and it is usually a short one. We'll connect you with one.
Where firms get this wrong
"We're an STP broker, so we're not principal."
Check how flow is actually booked, not how the marketing describes it. Hybrid models internalise some flow. If any of it sits on your book, look again.
"We hold an FSP licence, so we're covered."
An FSP licence authorises advice and intermediary services. It does not authorise you to be the counterparty. These are different authorisations, and a firm may need both.
"We're offshore, so South African rules don't apply."
The test is the activity and who you are facing, not where you are incorporated.
"We only deal in spot FX."
Spot FX contracts are excluded from the definition. Forwards, swaps and options are not.
If you have been operating without authorisation
It happens — usually where a business model drifted over time, or where an offshore group established a local entity years ago under different assumptions.
Regulation 2 is not a technicality. The remediation path depends on scale, duration, and whether the FSCA has already raised questions.
We treat these enquiries discreetly. Depending on the situation, the right first call may be a regulatory attorney rather than a licensing specialist — we'll tell you plainly which, and connect you accordingly.
Exemptions
The FSCA can exempt a firm from Regulation 2(1)(a). These are granted entity by entity, on conditions. You cannot read someone else's exemption and assume it covers you.
What one looks like in practice: in FM Notice 1 of 2026, published 12 March 2026, the FSCA exempted Sanlam Capital Markets to the extent set out in a schedule. The conditions show what the Authority required before granting relief:
Transactions confined to members of the Sanlam Group
No origination, issuance or market-making with external third-party clients or counterparties
Issuance limited to unsolicited requests from group members, with no active solicitation
Transactions to remain below the applicable intra-group thresholds under Joint Standard 2 of 2020, as amended
Monthly reporting to the Authority, and on request
Valid for 36 months from publication
If your OTC derivatives activity is genuinely intra-group and unsolicited, an exemption may be worth exploring with a specialist. If you face external clients, it is not available to you.
Tell us what your business does and we'll connect you with the people who can confirm whether ODP authorisation applies to you — and what it would take.
Regulatory sources: Financial Markets Act 19 of 2012 · Financial Markets Act Regulations, 2018 (GN R98) · FSCA FM Notice 1 of 2026 · Joint Standard 2 of 2020 (as referenced in FM Notice 1 of 2026)
Last reviewed: August 2026
ODP Gateway
FSCA ODP authorisation, run as a single project. We connect you with the specialist practice that prepares the application.