The past 2 decades have witnessed Forex Trading in South Africa taking a strong hold in the foreign exchange space evidenced by the increased interest by the countries citizens and foreign investors alike. Like most countries experiencing an unprecedented spike in forex activity, the market has been met with stringent rules and regulations from responsible authorities aimed at protecting both the involved traders and prospective foreign investors. Though there are regulations being imposed on the South African forex market, it is showing no signs of slowing down with more robust figures piling up with each passing year. This article will cover forex trading in South Africa by looking at how the market is fairing on the global financial market, regulation issues, and other issues relating to forex brokers in the country.
On the global scale, South Africa is ranked on 31st based on the Gross Domestic product. The country is considered as a middle income emerging market boasting of well-engineered energy, legal, financial and transport sectors. Its industrial sector is well diversified and enjoys a leading spot as far as production of commodities is concerned. The country uses the South African Rand as the currency regulated by the Reserve Bank of South Africa.
When it comes to forex, there is a total of about 1.4 Trillion Rands in circulation, and it is estimated that the country has a Volume of 60 Billion Dollars being traded in the country’s foreign exchange market.
Forex trading in South Africa is regulated by two independent institutions namely; Financial Services Board and The Reserve Bank of South Africa. The FSB's main task is to act as an agency responsible for regulating and overseeing the non-banking financial sector in the country. In other words, it is basically the South Africa’s equivalent of NFA in the US. The organization is responsible for providing licensure to all forex brokers who meet the requirements and also oversees Stock exchange markets such as the Johannesburg Stock Exchange.
SOUTH AFRICAN FOREX BROKERS
South African Forex brokers obtain their licensure from the FSB but the numbers aren’t as impressive as most countries on the rally towards an advanced foreign exchange market. The major reason is that traders find offshore trading platforms as options offering much more competitive conditions like a wide assortment of payment options, tighter spreads and account bonuses. For this reason, most of the forex trading is done through off-shore platforms. The most popular offshore platforms are licensed under European regulatory Agencies such as the Cyprus Securities and Exchange Commission (Cysec), Financial Conduct Authority (FCA) and the Australian Securities and Investment Commission (ASIC).
CHOOSING A BROKER IN SOUTH AFRICA
As is the case with most Countries, getting a grip on an appropriate broker starts with establishing credibility, and in this case, it’s all about verifying if the Broker is licensed with the Authoritative body which is the FSB. However, if the conditions are not as appropriate for the trader, there is an option of engaging with traders who are offshore based. Whichever the case, the principles behind choosing the best trader for you still stand. Let us have a recap of the additional basic rules.
Firstly, it is imperative to look at the efficiency of the whole trading system. You will need to evaluate the payout mechanism and efficiency by comparing several brokers. This can be done by going through expert reviews and input from other users which is something that can be done online. Secondly, it also helps a great deal to make sure you are conversant with all the conditions stipulated by the broker. Always take the time to go through all the conditions and policies as this helps you to evade any traps that may render you in a disadvantageous position when conducting the trades. This especially applies when it comes to commissions. Always make sure the commissions are reasonable and make comparisons between brokers to make sure you chooses the best fit for your needs.
If you fall for off shore brokers like most traders do, the online broker rules still apply. In addition to regulation issues, it is always prudent to take the necessary steps to choose platforms that provide the highest possible quality and are based on a highly efficient system that is when it comes to handling transactions.
In a nutshell, South Africa remains one of the largest economies in Africa which offers exciting forex trading opportunities to both traders and forex brokers. Any cautious and patient prospective investor or would-be forex broker is guaranteed a safe environment through sound regulatory Authorities. Here is a list of forex brokers that accept traders from South Africa .. click here.