Do you have a plan to start forex trading in South Africa but are not sure whether it is legal or not? If yes, then diving into this article can prove helpful. South Africa’s government has defined some rules for forex trading that we are going to discuss below.
Rules of Forex in South Africa?
In South Africa, forex trading is authorized and quite famous among people. FSCA(Finance Service Conduct Authority) authorizes and regulates forex trading in South Africa. It ensures that no illegal conduct is taking place by either broker or trader.
If the broker is Non-African, they are required to have the FSCA license to provide their trading services to the people of South Africa. In addition, they have to work per the operating capital minimum defined by the regulatory body. The main office of this regulatory body is located in South Africa.
Furthermore, brokers that provide securities like Contract for Difference(CFD) need to make sure that their traders can handle the essential volatility. On the Johannesburg Stock Market, the local traders can access derivative securities, but they usually assess their customers carefully before permitting them to trade such volatile products. It is also worth mentioning that the investors residing from South Africa are also allowed to trade derivatives on the Johannesburg Stock Exchange.
Is it legal to go for non-FSCA licensed foreign brokerage?
It is completely permitted to go for non-FSCA licensed foreign brokerage, but you should go for the one that at least has one license from any well-known and authentic broker. Moreover, it is comparatively convenient to use a locally-based broker because you will not have to pay the currency conversions. In addition, you will have to deal with their banks that you may find difficult.
If you are not comfortable with banks, then luckily, you can avail of other options as credit or debit cards. Wire Transfer is a great option if you search for a secure and safe way for sending the hefting amount of money. Some banks allow trade-in ZAR. So, if the bank you have chosen provides you with a ZAR-based account, you prefer to go for it.
Financial Regulations in South Africa
A few years back in South Africa, a dual regulation system was introduced. Two bodies were made that were independent and had their own particular supervision missions.
The first regulatory body is FSCA that issues licenses to forex brokers, and in addition, if the company breaks the rules, it has the power to put sanctions.
Another regulatory body that is operating in South Africa is PA(Prudential Authority). It monitors the financial institutions with the exception of banks. In addition, the South Africa Reserves Bank ensures that the market remains stable, issuance of local ZAR currency, and managing the supply of gold.
Well, that’s all about the article. Now, you must have come to know about the legality of forex trading in South Africa. If you have any questions, you can ask in the comments section. Moreover, if you have plan to be a part of forex trading then do consider going for trade 245.