Best South Africa Forex Brokers for 2023 [Updated]
With a population of over 25 million, South Africa is the 5th most populous country in Africa and ranks #25 in the world. It is also a country with multi-ethnic and multiracial political constitutions. The has 11 official languages as well as a number of unofficial dialects. Most of the population is younger than 40 years and financially literate.
The country's GDP has not been consistent. Despite having a very diverse economy and being a G20 member, the GDP growth rate reached its lowest point in 2016. In 2020 it increased by 2.2%. Services make 60% of the GDP, including the forex industry. South Africa is one of the rising forex hubs having the best regulatory and financial foundations for brokers looking to expand business across the whole continent. This is especially evident with new regulations (ESMA), Brexit, and COVID-19 implications.
According to BIS, South African Rand (ZAR) is the 19th most traded currency on forex, accounting for 1.1% of the total trading volume. Although it is regarded as an exotic currency, it is commonly seen among brokers' asset ranges. Additionally, some brokers will also offer ZAR-based trading accounts. Some estimates say that South Africa has about the same number of forex traders as Nigeria. However, South Africa has much stronger financial regulation and more than double the GDP per capita in comparison to Nigeria. In the past 3 years, CFD trading has been promoted extensively, attracting a lot of attention. This led to the 2019 South African Financial Sector Conduct Authority (FSCA) new regulation act that controlled CFD trading as every provider was obliged to have a license.
FSCA regulation has been much stricter since 2019 to the point event the some very large forex brokers, had problems obtaining the license in late 2020. The FSCA does not seem to be shy to revoke licenses either. This puts the FSCA far above many regulators that just collect an annual fee and do little to protect investors. In 2021 FSCA issued warnings against some of the biggest entities in the forex industry, further solidifying their intention to create fair service for traders. The FSCA is very active in providing education across the country, spreading awareness of COVID-19 effects, and financial scams. Although restrictions on leverage are not as strict as in the EU or UK, FSCA will may reign in leverage to further protect clients in the future. CFD trading will change in South Africa into a more tightly regulated environment that also means more security at the cost of less trading abilities.
South Africa does not have a regulated crypto market and it is a target for many crypto scams. In 2019 The South African Reserve Bank (SARB) planned to bring new laws controlling digital currencies. The effort had a variable effect as the market is still largely unregulated. One of the biggest crypto ponzi scams involving Mirror Trading International (MTI) happened in South Africa. Before the MTI closure, FSCA warned clients to withdraw their funds following a warning flag from Canada. You can read more about the MTI Ponzi scam in the forums.
Since cryptocurrency regulations are still in development around the world, for now South African regulation may only limit the industry by using strict KYC policies. Since June 2021, South African banks do not approve credit or debit transactions to international crypto exchanges.
Lately, many overseas brokers are obtaining FSCA licenses and entering the South African market, with some offering South African stocks and ETFs, such as XBT, EuroTrader, Exness, and ETX. ThinkMarkets are also interesting since they are offering over 170 JSE listed companies and ETFs.
How to check if a South African broker is legit?
The FSCA is the most respected, oldest main regulatory body for brokers in South Africa. You can check all the entities registered and licensed here.
How to file a dispute with a South African registered broker?
FSCA has a detailed complaint form that you can find here.
Are South African brokers reliable?
Since South Africa is a target for many scams, always be sure to check to be sure that the broker is registered with FSCA using the link above. Lately, the FSCA has become more proactive and effectively tightening control. Even the largest brokers do not have any special treatment. Therefore, FSCA brokers can be considered reliable.
Can a South African Trade use a broker that is not FSCA regulated?
Legally, yes, but local regulation makes regulatory complaints over serious issues easier.