Forex Trading in South Africa

forex trading in south africa

Forex trading in South Africa is getting quite popular. South Africa is the largest forex market in Africa. By comparison, South Africa has a daily trading volume of $ 2.21 billion, a far cry from Nigeria’s $ 314 million daily. Moreover, the average client deposit in South Africa to South African forex brokers is $ 742, while in Nigeria, deposits averaged $ 514.42. The country’s vibrant and active forex trader community is now much better off in part thanks to foreign investment support.

In turn, this attracted many forex brokers to South Africa, and now their number in the country is very significant. South Africa’s mature economy and population of 50 million make foreign exchange trading attractive to foreign brokers and South Africans. Hence, Forex trading in South Africa is now taken as a serious profession.

However, trading in the forex market and having experience in the foreign exchange market does not depend on the trader’s geographic location. Also, traders living in South Africa need to keep in mind the many forex trading elements for the reason that they are unique to the country.

How to start Forex Trading in South Africa?

Before you start Forex trading in South Africa, you need to understand the forex market and legal aspects of trading.

The forex market is unique in the world; nothing like this exists anymore.

The forex market is also superior to all other capital markets combined. This is associated with an average daily income of over $ 5 billion. Again, this market has its dynamic range, which depends on the countries’ relative economic conditions that issue their currencies.

The Financial Sector Conduct Authority (FSCA) is South Africa’s Financial Sector Conduct Authority. The management’s main office is located in Pretoria in the Republic of South Africa.

forex trading in south africa, South Africa rand currency exchange market and financial concept with zar code sign and the South African flag on cubes 3D illustration on white background.

History of South African Financial Services

The Financial Sector Conduct Authority of South Africa was established in 1990. The financial regulator’s main task is to oversee the activities of companies and organizations that conduct financial activities and provide related services to residents of the South African region.

A few years after the formation of the state structure, the FSCA regulatory powers expanded. The Financial Advisory and Intermediary Services Act, approved in 2001, added oversight of the banking sector and the Johannesburg stock exchange to the agency’s mandate.

Today, the financial regulator also controls pension, mutual funds, insurance, and brokerage companies. This means that the South African regulator monitors the work of market makers, brokers, dealers, large traders and investors, ETF funds, and all issuers of stocks, bonds, bills of exchange, derivatives, and other financial instruments. The Commission oversees companies that have been listed on the Johannesburg Stock Exchange by issuing their securities. As of early April 2019, the capitalization of the trading floor amounted to 950 billion dollars.

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FSCA area of ​​responsibility

Companies wishing to conduct business honestly in the African market must obtain a license from a notified body before commencing business. Financial institutions licensed by the FSCA automatically fall under the management regulation and are required to comply with all its requirements. The list of powers of the South African regulator includes the following tasks:

  • registration and licensing of financial institutions that wish to provide services in South Africa;
  • constant monitoring of the work of the reporting companies, the primary purpose of which is to protect clients from fraudsters;
  • application of penalties to companies that violate established rules or their obligations;
  • consulting activities.

The South African regulator is quite active in the fight against fraud and other illegal actions on controlled companies. Upon detection of various kinds of violations, the management can apply sanctions. Depending on the severity of the recorded violation, the regulator’s reaction can be different – from the imposition of a monetary fine to the revocation of the license.

Forex brokers licensed by the Financial Sector Conduct Authority of South Africa

The South African Financial Services Authority is quite loyal to foreign organizations. The regulator is ready to cooperate with various companies. It is noteworthy that even companies that do not have an office in South Africa can carry out activities in the South African region. This fact in itself is indicative.

Organizations wishing to become FSCA license holders must provide an impressive amount of documents not only in the process of obtaining permission. Also, companies must meet several requirements:

  • the presence of at least one director;
  • the company must have a registered office located in South Africa or abroad;
  • the potential license holder must have an account with one of the local banks;
  • compliance of the organization with all norms and regulations of the regulator.

After all, documents have been submitted, the decision to issue a license is made within one year. After successfully obtaining a permit, the licensee undertakes to submit audit data and other financial statements to the department at least once a year.

Financial institutions licensed by the regulator can operate throughout the southern part of the African continent. The authorization document is also valid in Zimbabwe, Zambia, and Botswana.

What is the South African Financial Sector Conduct Authority aware of?

In recent years, South Africa has strengthened itself in the global market as a popular financial centre. Investors are showing interest in the promising South African market. The region is one of the ten largest capital markets and has an audience of thousands of traders. Therefore, more and more brokerage companies are considering entering the South African market.

The FSCA is governed by a council appointed by order of the African Ministry of Finance. Board members are four executive directors, each of them is responsible for a specific area (pension funds, financial advisory, self-help societies, and intermediary services).

Despite the existence of regulatory mechanisms, fraudulent structures operate on the territory of the African continent. Supervision of the activities of organizations is included in the list of powers of the Reserve Bank of South Africa.

To foreign entrepreneurs, South Africa offers a flexible tax system, similar in characteristics to the rules of work in offshore jurisdictions. However, companies’ operating environment in the southern part of the mainland is more like a mid-shore. Owners of foreign companies have the opportunity to register in a prestigious jurisdiction that is not included in any blacklist.

Companies deprived of the FSCA license can operate in any other offshore zone, having received a preliminary certificate from an authorized regulatory organization. This means that the South African regulator can deal with unscrupulous companies exclusively in South Africa.

However, the FSCA is the only regulator on the continent, which improves the governance rating. In general, investors and traders trust companies regulated by the FSCA, but certain financial institutions are treated with caution.

The Take-Away of Forex Trading in South Africa – Regulation

Forex trading in South Africa is becoming immensely popular amongst South Africans. If combined with a Regulated broker it can be a very positive experience, full of long-term success!

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