The article reports that South Africa’s Supreme Court of Appeal (SCA) overturned an earlier High Court decision that had placed online brokerage JP Markets into liquidation. The Financial Sector Conduct Authority (FSCA) had argued that JP Markets should be liquidated because it was operating as an over-the-counter (OTC) derivatives provider without the required licence.
The SCA found that although JP Markets did not yet have the necessary licence, it had already applied for one and that application was still pending. The court concluded there was no evidence that the company posed a systemic risk to its clients or to South Africa’s financial markets. It therefore ruled that liquidating the company before deciding its licence application would not achieve the objectives of the Financial Markets Act.
The judgment stated that if the licence application were ultimately refused, the FSCA could seek an order preventing JP Markets from continuing to operate as an OTC derivatives provider.
As a result, the SCA held that winding up the company was neither just nor equitable and set aside the liquidation order. Following the ruling, the FSCA said it would abide by the judgment, continue processing JP Markets’ licence application, and pursue any remaining enforcement actions where appropriate.
The regulator also noted that JP Markets could not legally conduct OTC derivatives business until a licensing decision had been made. JP Markets’ CEO, Justin Paulsen, welcomed the decision and described it as a vindication for the company.
