2021 December-January Analysis

A look at Galt & Taggart’s new equities trading app

Given historically limited access to capital markets, the main investment vehicles in Georgia have traditionally been real estate and physical assets like gold. Galt & Taggart’s new equities trading app hopes to offer new investment options to residents of Georgia and educate platform users about the benefits of long-term investing.

Global retail capital markets exploded in 2020 with nearly 15% of today’s retail investors having got their start at some point last year.

Up until now, Georgia has not been part of this trend, nor could it have been had it wanted – but the retail investing craze may soon be here, with Bank of Georgia’s brokerage arm Galt & Taggart recently announcing the launch of an easy-access equities trading platform on the bank’s ever-growing ‘super app.’

While several financial and banking services including G&T have offered equities trading in Georgia for several years now, the existing brokerage portals have targeted experienced investors who are often using advanced financial instruments. G&T now plans to bring stocks to the average banking customer.

While Georgians did not have the experience of amassing savings during the pandemic as happened in a number of other, more advanced economies, G&T says the market for equities trading in the country has matured.

“What we are seeing globally and in the region is that retail trading is booming everywhere across the world. And so now we have decided to enlarge our offerings to our customers. We think our customers are ready for more sophisticated investment options, which otherwise have not existed yet in Georgia”, Otar Sharikadze, CEO of Galt & Taggart, told Investor.ge.

The platform will be built on Drivewealth technology, a U.S. company and pioneer in fractional equities trading and embedded investing systems. Drivewealth has provided G&T with the back-end architecture of its equities trading platform and is among the top 250 fintech startups, according to CB Insights’ 2021 list; its partnership with G&T is its first in the region.

Open to all BoG clients, the app will offer customers the opportunity to invest in stocks on the NYSE and NASDAQ and engage in fractional trading without minimum requirements for investment. Accessibility in the Georgian language means everyday customers will be able to take advantage of the platform’s offerings in their native language.

Fees are comparatively low for the region, at just $1 minimum per trade, or 2 cents per share and a monthly maintenance fee of $2.

G&T plans to run an extensive active education campaign to explain the benefits of investing in equities to a population which has otherwise had little exposure to the basic tenets of investing.

Given that customers will not be able to day trade or execute a buy and sell trade within a five day period, G&T will be looking to educate its customers on the benefits of long-term investing.

“What we’ve traditionally seen in Georgia is that the local population only saves money in cash accounts, real estate or physical assets such as gold. While it used to be profitable to hold US dollar CDs, increased dollar liquidity and stability in the Georgian banking system means this is no longer a viable option for real returns. Meanwhile the Georgian GEL has never enjoyed significant trust as an investment vehicle despite the high rates of return, and investing in stocks simply hasn’t really been an option for many until now”, Sharikadze says, adding that there is a large educational gap to be filled, “so we plan to have plenty of content in the coming months to explain the basics, much like Robinhood has done in the US.”

With no capital gains taxes for Georgian citizens, G&T hopes equity investing will prove a popular local option.

“The idea is ultimately to show that compared to saving money in deposits or real estate, which is also very cyclical and risky, investing in stocks is a strong alternative if you’re willing to wait. Our main educational message is not ‘get rich quick.’ It’s ‘invest in your future.’”