Is Forex trading legal at all in the country? This is the most obvious question that needs to be answered here and the answer is indeed: yes. While at first glance, this means that South Africans can fund their Forex accounts at will, whenever and with as much money as they want to, things are a tad more convoluted than that.
Also, whenever we consider Forex trading in certain country, we need to take a peek at it though the lens of regulation, which means that the local regulatory authority comes into the picture as well.
That is not to say though that South Africans can only trade at FSB (Financial Services Board)-regulated brokers. In fact, they can pretty much trade with any regulated broker they wish to, and possibly unregulated (and thus illegally operating) brokerages as well, if they’re dead-set on doing just that. Obviously, for South Africans, we warmly recommend FSB-regulated brokers, or – in the worst case – international brokerages with solid standing, regulated by some kind of other prestigious regulatory entity.
|Broker||Features||Min Deposit||EURUSD Spread|
|74% of clients lose money. Capital at risk. US Clients: Yes Regulated : Yes||
||$100||from 0.1 Pips||
Sign Up 74% of clients lose money. Capital at risk.
|Your capital is at risk US Clients: Yes Regulated : No||
– Trade 15 cryptocurrencies
|Your capital is at risk US Clients: No Regulated : Yes||
||$25||From 0.4 pips|
For South African Forex traders, funding a brokerage is a little more of a challenge than for those residing in some other countries. The root of this problem is in the exchange control regulations of the country. South Africans cannot just move arbitrary amounts of money in and out of the country. There are strict limitations in place in this regard and everything is automatically reported to the SARS (South African Revenue Service).
While in the past, these limits were quite crippling, these days, they are generous enough to provide traders plenty of room to maneuver. Investors can move around $500k per year, so retail traders should not really feel limited at all. Institutional investors have means at their disposal to increase these limits.
As said, the FSB is South Africa’s regulatory authority for the non-banking financial industry. The organization, which currently employs almost 500 people, was set up in 1991.
Besides the promotion of a “sound financial environment in South Africa”, the FSB’s responsibilities are mostly focused on consumer protection. To this end, the authority has to ensure that regulated brokerages comply with the laws meant to govern their activity in the country and that they also comply with the capital adequacy requirements set forth by the said laws. By keeping these brokerages on financially sound footings, the FSB effectively protects traders from sudden meltdowns provoked by unexpected market events.
In addition to capital markets, financial service providers and collective investment schemes, the FSB also regulates retirement funds, friendly societies, insurers and various credit agents. Certain aspects of market conduct in the banking industry also come under the authority of the FSB.
The bottom line
The obvious conclusion here is that the FSB is an integral part of the South African online Forex scene. Trading with a brokerage regulated by the FSB carries scores of advantages for traders, whether these are South Africa-based brokers or not. Indeed, several of the largest online brokerages with a global reach are also regulated by the FSB. Controversy-wise, the authority has a much cleaner record than some of its peers, so that’s a major plus as well.
If a FSB-regulated brokerage does anything fishy with trader funds/trade execution etc, the FSB can be called upon to investigate the issue. The same obviously cannot be said about an unregulated broker.
As far as popularity goes, South Africa cannot be counted among the global online Forex powerhouses, though its market is certainly a vibrant and expanding one. Though credit card-based deposits are still a tad problematic for South African Forex traders, overall, the situation is definitely not as dire as some make it out to be.
See more forex brokers regulated in other markets