It is no wonder that such an advanced nation like South Africa has people like you taking more and more interest in forex trading. Hello, let’s talk about your concerns regarding regulations on forex trading in South Africa and, more importantly, why are regulated forex brokers in South Africa a must!
South Africa has laws about illegal trading, and you cannot get away with doing the wrong stuff. It is also a G-20-member state, so it keeps its exchange market laws pretty uptight as well. That being said, let’s talk a little about forex trading and why their regulations are over it. It is an open day trading marker that is accessible to anyone from anywhere, right? So why is a country investing in imposing regulatory measures over it?
Well, it might or might not surprise you that despite its conveniences, it is still just like a stock exchange market but more accessible and easier to trade in for anyone, which only makes it more prone to scams and frauds. Hence, the government has to keep an eye on it, and you, for your safety, should always go through regulated brokers now. Let’s dive in a little deeper into some more detail.
Table of Contents
Who’s a broker, and what is there to know about forex brokers in South Africa?
Put it is an individual or firm intermediary between the trader and the securities exchange and charges the person for its services.
A forex broker is a financial services company that provides traders access to a platform for buying and selling foreign currencies. Unlike other exchange markets, forex exchange markets are 24- hour open, so brokers are necessary.
Most foreign exchange transactions are between pairs of the currencies of the ten nations that make up the G10. Using a forex broker, a trader opens a trade by buying a currency pair and closes the trade by selling the same pair.
To better understand the reasons for the importance of regulated forex traders in South Africa, we must have an understanding of their system
Regulations in South Africa
South African Forex rules
Forex trading is very popular in South Africa; hence the FSCA (Financial Services Conduct Authority) is put in charge by the government to keep the process in check and regulate it, ensuring that the whole process is clean and legal.
Non-African brokers need to get a license from FSCA first, and they have to cooperate with the authorities and abide by the rules set by the regulatory body. They also should have a main office in South Africa
Brokers that trade in CFD’S (Contracts for Difference) should ensure that their traders can handle the volatility in the market.
Are non-licensed brokers illegal to trade with?
No, it is not illegal to trade with them, but it is highly recommended that you trade with a regulated broker or use a broker that has at least one leading jurisdiction title.
Account Funding
It is quite easier to deal with foreign banks if your broker has a local license.
Financial regulation in South Africa
The recent system that was introduced a few years ago is a two-body system that splits the regulatory bodies
FSCA regulated the trading exchange markets and licenses the brokers. It approves the firms that operate under its jurisdiction and also sanctions the ones which violate its rules.
The SA’s Prudential Authority monitors finance-related entities except for banks. It regulates non-bank financial institutes like markets and financial conglomerates
Why should you choose a regulated broker?
The FSCA, as we mentioned earlier, is a watchdog that protects the citizens and saves the economy from money laundering and fraudulent schemes.
The most important reason to go with a regulated broker is that if your broker goes bankrupt tomorrow, you’ll have a local authority that could restore your funds.
Security
It is safe and secure to go with regulated brokers because, in case of a fraud scheme, your local authority will save you and keep your funds intact
Local Laws
If there is some legal action against the broker, you’ll go through the laws you’re more familiar with rather than foreign laws.
Best regulated Forex brokers in South Africa
We picked up a shortlist of some top-rated forex brokers in South Africa which are licensed and regulated by the FSCA so you can learn a little about them and pick one to go with if you like
AvaTrade
First off on, our list is Avatrade. Even though we feel like the minimum deposit limit is a bit higher, it will surely pay off because it is one of the best forex trades in the country and offers many features and services for traders.
One stand-out feature is that it includes the availability of Islamic accounts as well.
FXTM
Even if you don’t have a lot of money, the broker will get you started with just ten dollars, and it has the maximum leverage flexibility.
Hot forex
It is the go-to broker for those just trying out forex trading but will invest more in the future. With only 5 dollars minimum deposit, you cannot go wrong with hot forex.
Frequently Asked Questions
How should I choose a broker in South Africa?
Just make sure that you choose a regulated broker in South Africa, don’t fall for some fishy bonus offer or be fooled if the broker is licensed in another country like Cyprus.
Will I be taxed out on my income and b=profit based on the broker?
No, it doesn’t’t matter which broker you go with. You” have to pay tax on both your income and profit to the south African government and stealing tax money is a crime.
Final Word
Going with an unregulated broker is not worth it. It doesn’t matter how good of a deal they could get you. The stability and security that the local authorities provide by regulating the broker are unmatched. So, it would be best if you went with a regulated forex broker in South Africa.
