South Africa is a growing forex trading market. According to some estimations, there are over 200,000 traders in the country, and they deposit an average of around $1000 with their brokers. There is no bigger market for Forex on the continent, and due to the policies of the FSCA, the regulatory body in the country, brokers from all over the world offer their services to South African clients.
If you are one of these clients, it could be slightly overwhelming to pick a broker. Not only are there a lot of licensed firms that will compete for your attention, but there are also a lot of scammers to avoid. It is important to stick to licensed brokers – and in this article we have listed the top 5 most regulated firms in the country to go for. Before we outline them, however, a quick introduction of the regulatory framework of the country is in order:
The regulatory regime in South Africa
The markets in the country are overseen by a regulatory body called the Financial Sector Conduct Authority (FSCA). This regulator is not particularly strict, at least when compared to its counterparts in Europe, the UK and the States. It does not really set any formal requirements for a broker, except for the company to get on the register the FSCA operates online. This register still manages to make it so in the case of a broker running a scam, you know who to litigate against – but there are a lot of protections that are not available to clients of brokers licensed by the regulator alone.
For example, the brokers in the jurisdictions we mentioned are required to come up with a certain minimum capital to be allowed to operate on the markets – this amount is different between jurisdictions, with the EU and UK demanding at least €730,000 in liquid funds, and the States requiring much more – $20m, to issue a license to a broker. The purpose of each of these high requirements is the same, however. They aim to ensure brokers have the necessary liquidity to actually meet their costs and stay afloat on the competitive markets. Brokers in South Africa that do not have licenses with these other regulators are not bound by the same rules – there is no guarantee these firms have the …….