Best Forex Brokers in South Africa of 2023
Popular FSCA Regulated Brokers in South Africa
Here’s a breakdown of some of the best and most popular forex and CFD brokers in South Africa that are regulated by the FSCA.
Maximum leverage 1: 2000, FSCA licence no 51024
Min. deposit 15 ZAR/1 $
Maximum leverage 1:400, FSCA licence no 45984
Min. deposit $ 100
How to find the best forex broker in South Africa?
In the paragraph above, we presented you with some of the best forex and CFD brokers in South Africa. To understand why it is important to trade only with brokers regulated in South Africa, one has to understand how the forex market in South Africa is organised.
Trading in the financial markets is not native to the African continent. Rice trading on the financial market was already going on in Japan in the 1700s. Trading of some sort as far as financial assets were concerned was also going on in Europe and the Americas in centuries gone by. The influence of financial trading in South Africa was actually boosted by the discovery of gold in the Witwatersrand area of South Africa in 1886. This discovery brought on the mineral revolution that saw the founding of Johannesburg as a city. The mineral revolution also saw the advent of large scale prospecting of minerals such as diamonds and gold by large corporations which were awash with cash and which had the financial resources and equipment needed for deep mining.
The minerals that were mined as part of South Africa’s mineral revolution required a transparent marketplace where miners could trade them with dealers and large corporations. A London businessman known as Benjamin Minors Wollan started the Johannesburg Exchange & Chambers Company, which later metamorphosed into the Johannesburg Stock Exchange in 1887. At this time, most of the African continent was under colonial rule and there was no access for local populations to any form of financial trading. The colonialists did not set up any exchanges before the independence of many African nations. By the time most of Africa started to gain independence between 1960 - 1965, South Africa’s financial market was already more than 70 years old and had taken root.
South Africa’s financial market has since evolved into a one-stop-shop where equities, commodities, bonds and FX instruments can be traded. No other African financial market has the degree of market depth that is offered in South Africa. It is safe to say that the mineral revolution secured South Africa’s status as the number one financial market destination in Africa. Over time, South Africa has become the major hub for FX trading and boasts of superior infrastructure and advanced regulatory processes which are far ahead of other African exchanges. There is a great potential for expansion of this market. Due to the fact that FX brokers in South Africa are regulated (unlike other African markets except for Kenya), South African forex brokers have come to gain the trust of traders and market participants from other regions as well as the global trading community.
The South African financial market is regulated by the Financial Sector Conduct Authority (FSCA). The FSCA was created in 2018 as a spin-off of the now-defunct Financial Services Board (FSB). The FSB was split into two new agencies of which the FSCA is one. The other agency is the Prudential Authority (PA), which is responsible for the regulation of the banking and prudential industry in South Africa.
What does the FSCA bring to the table in terms of regulation of the South African financial markets?<strong> The FSCA is responsible for the regulation and supervision of all financial services companies and entities doing business in the forex market in South Africa.</strong> The FSCA ensures the integrity and efficiency of the markets and promotes the creation of fair dealing environments by financial institutions for their clients.
The FSCA also appoints representatives to provide secretarial support to the Financial Services Tribunal. The Financial Services Tribunal handles cases which have been referred to it if there are complaints by the trading public against providers of brokerage services in the financial services sector. The FSCA also runs an Appeal Board, headed by an attorney that has legal experience of at least 10 years, or a retired judge. Members are required to have a wide knowledge of the financial services industry.
The Appeal Board is where persons who feel aggrieved by a prior decision of the FSCA in its capacity as a financial market regulator, can seek redress. Any entities that are aggrieved by decisions of the Ombud for Financial Services Providers, or aggrieved by decisions from an exchange, can file an appeal. The Appeal Board functions like an appellate court of sorts, where a previous decision by the FSCA can be challenged by either a trader or a broker.
Trading with an FSCA-regulated broker gives a large measure of protection to the trader. When you trade with an FSCA-regulated forex broker, you can be sure that the same quality of regulation applied in the EU or UK will apply to you. Verifying a forex broker that is supposedly an FSCA-regulated broker is easy. The FSCA maintains a register of brokers it regulates. On the home page by default, there is a facility where the trader can enter the name of the brokerage in question and immediately find out from the internal search engine on the FSCA website what the regulatory status of the brokerage is.
On the FSCA website home page, you are prompted to enter details of the brokerage you want to check on when the slideshow on this page shows the “Financial Services Providers Search” icon click it or use directly their website's official link - https://www.fsca.co.za/Fais/Search_FSP.htm. Here, enter either the name of the forex or CFD broker you want to check on or the broker's license number or the name of the CEO or other important contact of the company. Once you do that, the FSCA website will show you the details of the forex broker in question that has been licensed to do business by the FCSA in South Africa. You may also contact the FSCA call centre on 0800 20 37 22.
A search of various South African forex brokers indicates that the use of bonuses, which used to be popular in years gone by, seems to have fallen out of favour. This may have to do with the crackdown on the use of bonuses by various regulators across the world. However, there are still a couple of brokers that still offer bonuses to their traders. One of such particularly popular in S.A is XM.com, which still offers a $30 Trading no deposit Bonus. Unfortunately for traders from South Africa, this broker is not regulated by the FSCA.
If you receive a no-deposit bonus, you are given a little money to test the trading platform or other features of the broker without making a commitment to deposit funds into a live account. Alternatively, you can receive a deposit bonus, which is a percentage of the capital that you deposit into a live account. The deposit bonus percentage will vary from one broker to another. Cashbacks are not provided by South African forex brokers.
Leverage in forex simply means an enhanced ability to trade a forex pair. In practical terms, leverage is the additional capital provided by the broker to enable the trader to hold positions than would ordinarily have been possible with the trader’s capital.
The price movements of currency pairs are small; usually in the order of 0.0001 points. Compare this with the price movements of gold which can occur in whole numbers and not in decimals. To be able to convert these small decimal movements into appreciable monetary value, it is essential to trade forex with large amounts of money. Most traders cannot afford the sums required.
To set up a Standard Lot position on the USDZAR for instance requires a capital of $100,000. How many traders can come up with $100,000 to set up one position on the USDZAR, using a Standard Lot trade size? It is for this reason that forex brokers came up with the concept of leverage. By offering the trader additional capital which is collateralized using a portion of the trader's capital known as margin, the trader can initiate such large trades. Using leverage, the trader gets the full value of the trading profit or loss of the enhanced capital.
Unlike what is obtainable in the EU, UK, US and lately in Australia, the leverage available for forex traders on South African forex exchanges is often as big as 1:300. This equates to 300 times leverage, which is the same as a trader with 15,000 Rands (i.e. $US 1,000) having access to trading capital of 4.5 million Rands!
Base Currency: USD or ZAR?
From a trader’s perspective, it is better to have the ability to fund and withdraw any profits made in the local currency. This helps the trader escape some of the losses in value that come from exchange rate fluctuations. It is also important to understand that the South African Reserve Bank (SARB) has strict foreign exchange controls in place, which set the limit of all foreign currency transactions. This means that a trader wanting to fund the trading account with a minimum of $10,000 may encounter problems doing so, whereas a deposit of up to 200,000 rands will have no issues scaling through banking scrutiny.
At this point, it is also pertinent to note that the South African Rand is the default trading currency for many platforms in South Africa. However, the US Dollar is also offered as a base currency for trading purposes.
Popular Forex Pairs in South Africa
One of the advantages of forex trading in South Africa is that it gives the local trading populace an opportunity to fund accounts and also trade the local currency, the South African Rand (ZAR). No other currency in Africa is traded on the global forex market. The South African Rand holds the distinction of belonging to the emerging forex currencies (EMFX) class of currencies that also feature the Brazilian Real, Mexican Peso and the Turkish Lira.
Therefore, traders from South Africa can not only trade major currency pairs like the EURUSD and GBPUSD, but they can also trade various pairings of the ZAR such as the USDZAR, GBPZAR and EURZAR. Of these, the USDZAR and the GBPZAR are the most popular of all the Rand pairings.
Popular Deposit and Withdrawal Methods in South Africa
The opportunity to deposit funds into a South African forex trading account using the local currency allows for the use of local banks such as First National Bank (FNB), Capitec Bank and Investec. Many of these banks provide online banking services that allow for deposits to be completed within minutes. These banks also provide debit cards, which are linked to bank accounts. Deposits using these cards come with instant processing.
In conclusion, we can say categorically that the best deposit/withdrawal methods of South African forex platforms are bank transfers and bank-linked debit cards.