South Africa has always felt far away from the rest of the world, never more so than in the world of investments.
Higher costs and lack of personal service, rather than physical distance, confined most South Africans to investing in local markets using local exchanges, a tiny fraction of the global securities market.
Mexem is a relatively new player in the SA market, but its mission is nothing short of revolutionary: to bring low-cost broking services to the masses and to make it possible to purchase securities in 135 markets worldwide in 23 different currencies. It does all this from a single, customisable trading platform made possible by way of an agreement with US-based Interactive Brokers, which is ranked #1 for International Traders, Active Traders and the Best Low-Cost Broker in the latest study conducted by Barrons in 2020.
For all the efforts to open access to global markets for South Africans, it has remained an arena occupied predominantly by the wealthy and the fund managers.
If Mexem’s head of product development and special projects, Brad Suttner, has his way, millions of South Africans will soon own stock trading accounts, much as they already own bank accounts.
With the recent crash in global markets, this may seem an unfortunate time to be promoting broking services, but Mexem has never been busier, with many people seeing opportunity in this environment, says Suttner.
“Previously, it was complicated and expensive to get offshore market exposure, especially for lower net worth individuals. People can now get access to offshore markets at a much lower cost than was possible in the past.
“We want people to take control of their own wealth and be in control of their own investment decisions. We’ve noticed a trend of people wanting to be more involved in their own decision-making when it comes to investing, but one of the main obstacles to this was the difficulty in accessing offshore investments and the high costs of trading in these markets.”
So, what are the costs?
Mexem charges US$0.50c for a US stock or exchange-traded fund (ETF), with a minimum charge of $1 per trade (regardless of the number of shares being purchased) and a maximum of 1% of the total trade value. This is much lower than that charged by most brokers, where commissions as high as US$3c to US$6c per share and a minimum commission as high as $20 is not unusual.
There are no monthly admin charges or ‘inactivity fees’ which are common among other brokers.
No minimum investment required
One of the most attractive features of the Mexem offering is that – unlike most other brokers – no minimum investment amount is required, meaning you can open an account and fund it with any amount you can afford and get started on your journey to wealth creation.
South African banks have hogged the online investment market in SA, and while they have been relatively efficient at it, clients are inevitably tied into a basket of bank-offered services, raising questions of independence. Mexem has remained scrupulously independent with no ties to any specific bank, and is in fact available to anyone as long as they have a means of funding their trading account.
What about the complexities of navigating exchange controls for those who want to purchase stocks in offshore markets?
Accounts can be opened and the necessary documentation uploaded online in minutes.
Then you can use your annual R1 million single discretionary foreign exchange allowance (or a portion thereof) to transfer funds into your secure Mexem trading account. You will be required to select a base currency, which can be changed at any time – for most people seeking exposure to the giant US stock markets, this would be US dollars. Then you are ready to start trading.
Mexem understands that most people don’t have the time to study the markets, so has invested heavily in hand-holding clients through the baby steps of trading. The Mexem trading platform is relatively intuitive and user friendly, but clients have access to personalised assistance and online resources on how it works – whether individual or institutional investors. Clients are also able to tap into a vast library of market data and research tools to help guide their investment decisions.
Many first-time investors would like to hold blue-chip stocks such as Apple, Microsoft and Amazon, and hold them to retirement. As Suttner points out, building a truly diversified stock portfolio means tapping into the global market, which Mexem now makes possible for SA investors, whether day traders, beginner investors or institutional fund managers.
Strategy guides on the horizon
One exciting development on the horizon is the launch of a strategy-selection service called Signals Bank which will allow clients to select from a menu of different investment strategies that have been thoroughly tested, and then mimic these on an automatic or manual basis.
“This service will be launched in the foreseeable future and is ideal for clients who don’t have time to study the thousands of different stocks, futures, options and commodities that are out there, while still achieving outperforming returns,” says Suttner. “We are in the process of finalising the strategy selections, which will range in style from conservative to aggressive. Access to such strategies will be made available through a modest monthly subscription fee model.”
Signals Bank leverages off the brains trust at Mexem’s sister company, Rimar Capital, which is a new-generation technology research and investment management company developing rigorously tested trading algorithms and machine trading systems. A variety of strategies will be available for investors with different goals and different risk criteria.
Mexem is building an expanding network of partnerships to round off its full-service offering, the latest being a joint solution with Bloomberg to provide high-level and in-depth portfolio analysis tools to assist clients with their portfolio management and analysis. It has also partnered with Investec to smooth the process of moving funds offshore. Several other such partnerships are currently in the works.
Although Mexem currently focuses on the South African market, it has clients all over the world – from Africa to Europe and Asia – and plans to expand further into other regions in the foreseeable future.
Brought to you by Mexem Africa.