South African Forex traders can trade with either FSCA regulated brokers or any other international broker.
Regulated brokers in South Africa provide traders with bankruptcies and scams protection. See below the list of our updated top-rated South African Forex brokers. South African Forex traders can trade with either FSCA regulated brokers or any other international broker. Regulated brokers in South Africa provide traders with bankruptcies and scams protection. See below the list of our updated top-rated South African Forex brokers.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- FP Markets, ECN trading with leverage up to 1:500.
- Markets.com, Excellent educational offerings.
Best FSCA Brokers Comparison
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Regulators | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | ASIC, CMA, CySEC, FSCA | ASIC, BVIFSC, CySEC, FCA, FSCA |
Year Established | 2006 | 2005 | 2008 |
Execution Type(s) | Market Maker | ECN/STP | Market Maker |
Minimum Deposit | |||
Average Trading Cost EUR/USD | 0.9 pips | 1.2 pips | 0.7 pips |
Average Trading Cost GBP/USD | 1.5 pips | 1.4 pips | 1.1 pips |
Average Trading Cost Gold | $0.29 | $0.16 | $0.30 |
Trading Platform(s) | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | Proprietary platform |
Islamic Account | |||
Negative Balance Protection | N/A | ||
| Visit Website | Visit Website | Visit Website |
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade gained a reputation as a highly trustworthy multi-asset broker. It provides South African Forex traders with the best all-around product and services portfolio. Headquartered in Ireland, AvaTrade maintains regulation in seven jurisdictions, including FSCA. Over 300,000 international traders have signed up since its inception in 2006, for which SharpTrader, its educational division, takes partial credit. New traders have access to over 40 lessons and 200 videos. With a minimum deposit of $100, AvaTrade ensures access to all traders. The maximum leverage of 1:30 is not competitive, but traders have access to more than 1,250 assets in a commission-free trading environment for slightly higher spreads. 24/7 customer support is available in 14 languages, and AvaTrade has a global footprint and expands its market share.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
FP Markets
In Summary ECN trading with leverage up to 1:500FP Markets has a reasonable $100 minimum deposit requirement, and traders get a choice between the MT4, MT5, or cTrader platforms. All three trading platforms support algorithmic trading and have embedded copy trading services. FP Markets also features an in-house copy trading service and third-party solutions by Myfxbook Autotrade and fee-based Signal Start. It places FP Markets high on my listing for the most competitive FSCA-regulated brokers for copy traders.
Traders benefit from low commission-based trading fees consisting of raw spreads from 0.0 pips for a commission of $6.00 per 1.0 standard round lot and a well-balanced asset selection, including cryptocurrencies and ETFs.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
Markets.com
In Summary Excellent educational offeringsI rate Markets.com among the best FSCA-regulated brokers. Besides a 20% first deposit bonus up to 38,000 ZAR, which can increase to 50% via the four-tier markets Club program, available for deposits between $200 and $1,000, traders also benefit from commission-free Forex spreads from 0.6 pips or $6.00 per 1.0 round lot with maximum leverage of 1:200.
Markets.com features a cutting-edge proprietary trading platform and in-house copy trading service next to MT4/MT5. The well-balanced asset selection includes cryptocurrencies and ETFs. Beginners get an excellent educational program, and passive income seekers can join 13,000+ partners who received $300,000+ in commission payouts.
Pros & Cons
- Competitive commission-free Forex fees from 0.6 pips
- Well-balanced choice of trading instruments with 2,200+ CFD Assets
- Competitive proprietary trading platform alongside MT4/MT5
- Excellent Customer Support
- Commodities and indices fees higher than Forex costs
What is the FSCA (Formerly FSB)?
South Africa presents a growth market and excellent regional headquarters for expansion plans across Africa. The Financial Sector Conduct Authority (FSCA), created in 2017 via the Financial Sector Regulation Act (FSR Act), is the financial regulator of South Africa, effective April 2018, when it superseded the Financial Services Board (FSB).
A quick overview of the FSB:
- The FSB was formed as a result of the Van der Horst Committee in 1990.
- The Financial Advisory and Intermediary Services Act (FAIS) of September 2004 expanded the FSB’s responsibilities.
- With the Financial Intelligence Centre Act (2001), last updated in April 2019, the FSB received a mandate to combat money laundering.
- The South African Minister of Finance appointed the chairman and members of the FSB.
- An additional four deputy officers oversaw the Financial Advisory and Intermediary Services, Retirement Funds and Friendly Societies, and Insurance and Investment Institutions.
- The Executive Officer also served as the Registrar of Non-banking Financial Institutions, including South African Forex brokers.
- Failure to comply with FSB regulations, misconduct, and other violations resulted in enforceable fines that carried the same weight as a judgment of the Supreme Court of South Africa.
- The August 2017 Financial Sector Regulation Act (FSR Act) split the super-regulator into two entities, the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA).
South Africa aimed to increase the trust and stability of its financial system following failures by the FSB. The dual model consists of a prudent supervisor and a market conduct regulator to improve efficiency and effectiveness.
Why Trade with FSCA Brokers?
Since its creation, the FSCA is on track to rebuild trust in the South African financial sector. It has been a challenge, but it started to promote a deeper understanding of financial markets.
Here are the core benefits of FSCA-regulated brokers:
- The FSCA maintains the financial stability of the South African financial sector.
- The FSCA assists in its development and openly communicates regulatory changes to the public.
- The FSCA regulates all derivatives, including contracts for differences (CFDs) for the Forex markets and other sectors as derivatives & non-banking financial products.
- Trading with regulated Forex brokers in South Africa ensures that local courts enforce domestic laws to resolve disputes and prosecute misconduct.
- While there are not many South African ones, a growing number of international brokers acquire an operating license from the FSCA.
- FSCA-regulated brokers must have a local office with at least one South African director.
- FSCA (FSB) regulated Forex brokers in South Africa offer domestic traders security and protection against bankruptcy, fraud, or malpractice by brokers.
The choice of brokers with an FSCA license remains limited, and most traders should seek the best Forex broker to trade with and not place the most significant emphasis on the FSCA. Each trader must conclude the importance of domestic regulation, but well-established international choices may provide superior trading environments. Regulation remains necessary, and traders should avoid unregulated brokers, but FSCA regulation, even for South African traders, is not necessarily a top priority.
How to Verify if a Broker is FSCA-Regulated
The Forex industry is home to many scammers and fraudsters. Therefore, I always recommend traders double-check and confirm regulatory licenses. Verifying if a broker is FSCA-regulated is simple and takes less than a minute via the FSCA Authorised Financial Service Providers database.
All regulated Forex brokers in South Africa have a Financial Services Provider (FSP) number. Traders can locate it at the bottom of the broker’s home page. A missing FSP number represents a red flag. Confirming a broker’s status with the FSCA is most convenient via an FSB license check on the FSCA website. After entering the five-digit FSP number and clicking Submit, a new page will load with the search results. Traders can get more information by clicking on details. I also recommend checking the Products Approved category, the last one available under Details.
Over-the-Counter Derivative Provider (ODP) License
Since 2019, all FSCA (FSB) regulated Forex brokers in South Africa must apply for an Over-the-counter Derivative Provider (ODP) License. Brokers must complete due diligence and assess if the prospective client understands the risks of trading the volatile Forex market. Brokers must also report every transaction to regulators to force open opaque transactions and promote transparency. Regulated Forex brokers in South Africa who fail to apply for the ODP license may face prompt liquidation at the request of the FSCA.
Requirements to obtain an ODP license include:
- Brokers must adhere to Principle 7 of the King IV Report on Corporate Governance for South Africa (King IV).
- Brokers must establish an audit and risk committee.
- Each broker must have sufficient capital and liquid assets to operate for six months.
- Brokers must have a funding plan to raise funds in the event reserves fall below the requirement to cover operating expenses.
- Brokers must submit details of provided services and assets.
- Brokers must provide proof of the qualifications of the management team and essential personnel.
- All key staff must have direct employment with the broker or possess disclosed legal service agreements.
- Segregation of client capital from corporate funds.
- Brokers must submit a description of the onboarding process of new clients.
Additional FSCA Protections for Forex Traders
The FSCA monitors the domestic Forex market to ensure that FSCA-regulated Forex brokers comply with rules and regulations. It also tries to identify scams, weed out fraud, and protect South African Forex traders from avoidable losses. Through the FSCA FSP search, traders can confirm if their broker maintains regulation from the FSCA. Traders must know that there is no requirement to trade with an FSCA-regulated broker and that international Forex brokers do not require a license to accept traders from South Africa.
Besides the FSCA FSP search tool, another beneficial service is the media release section of the regulator’s website, where it updates on fraudulent brokers and provides information about them. While South African Forex traders can trade where they wish, and no international broker has restrictions against this G-20 member, checking the media release of the FSCA can provide useful information and protect against scams and fraud from a domestic player operating on a global scale.
FSCA Strategy & Structure
The South African National Treasury oversees the FSCA. The FSCA consists of several divisions overseen by the board, and its Commissioner and Deputy Commissioners. The support infrastructure includes the Chief Risk Officer, General Counsel, and Media Liaison Officer. The FSCA also maintains a customer complaint service and a self-policing appeals board.
The FSCA mandate includes:
- Enhance the efficiency and integrity of financial markets.
- Promote fair customer treatment by financial institutions.
- Provide financial education and promote financial literacy.
- Assist in maintaining financial stability.
- Promote competitiveness and fairness.
- Enforce rules and regulations
Bottom Line
The FSCA has a challenging task as scams and fraud stemming from a lack of education are widespread, not just in South Africa but across Africa. South Africa, with the FSCA at its core, markets itself as a financial gateway to Africa, and many Forex brokers obtain a regulatory license from the FSAC, which requires establishing a physical presence in South Africa. Therefore, the FSCA must display its ability to combat scams and fraud to create a trustworthy trading environment. Over the past few years, the FSCA has displayed its ability to clean up the Forex trading landscape, but more work lies ahead.
One of the core principles the FSCA requires from Forex brokers is education, making it a rare regulator to push the issue of educating new traders. I rate it an excellent approach, as education can help beginners avoid scams and fraud. The FSCA appears on the right track to establish South Africa as a well-regulated offshore destination from where international Forex brokers can enter the African Forex market, which is ripe with opportunities. It represents a core growth market for many Forex brokers, and many African traders consider FSCA-regulated brokers among the best in Africa.
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