Exclusive: INTL FCStone takes its FX and commodities business into Africa

INTL FC Stone, a prominent global execution, clearing and advisory services firm within the commodities, capital markets, securities, global payments and FX industries, is preparing to expand its presence across 28 African countries, leveraging the company’s relationships with banks and counterparties that have been fostered over several years of operating as a commodities tour de force across the resource-rich continent.

Whilst Africa is rich in commodities, and has been home to a very large scale commodities industry since the imperial days, with mining and exploration companies from across the world having gained a very strong foothold in the continent, FX is notable by its relative absence, especially among institutional businesses from overseas.

The company intends to operate in every nation across Africa with the exception of Somalia, and the company began its introduction with regard to how it will structure its FX business in Africa.

Stuart Ponder, Senior VP EMEA at INTL FCStone said “We don’t actually have a physical presence in Africa, but we spend a lot of resource deploying to Africa to look after our banking relationships, and we also liaise with the central banks, so this happens in every country in Africa bar Somalia.”

“We are looking to expand our FX business on a more traditional G20 FX trading desk and looking forward to working with a lot of new counterparties in the region” – Ian Ronnie Steadman, Head of European FX Sales for INTL FCStone Ltd.

With regard to the structure of the company’s team in Africa, Tom De Boinville, Precious Metals Broker at INTL FCStone Ltd explained “The Africa team is made up of people from the various departments and product offerigns from within INTL, incouding cocoa, base metals, precious metals, currencies and from within those desks, there are many people with a very experienced view of Africa, and will be part of the Africa team.”

Julian Dixon, Commodity Broker at INTL FCStone said “We already have a lot of experience with our global payments team, and what we are looking to do is to leverage that experience and introduce to our clients who already have commodity function.”

Mr. Ponder continued “The relationships that we have built up in Africa now give us a springboard to introduce our wider commodities capability and we see this as a huge opportunity for the future.”

Mr. Dixon drew a comparison between some of the fastest growing economies in the world, which are located in Africa, and the shift from subsistance living more toward commercial enterprise and therefore one of the reasons for INTL FCStone going into Africa is to maximize that growth. For example, there is a gold refining reserve in the continent which is the largest in the world.

The company intends to grow this division of the business and concentrate on the emerging commodity markets, and provide seminars which are interactive events in order to provide a broad vision of what the role of investors, regulators, clearing and settlements entities and trading participants will be long term in the region.

Mr. Steadman said “The biggest challenge in entering Africa is the infrastructure of technology, and also building the expertise in the local markets, and working closer with them.”

On the African continent political risk is a large consideration, as is currency risk, elements which INTL FCStone has borne in mind, however the company is able to mitigate its counterparty risk in these regions within currency markets due to its global commodities and raw materials business.