The Best Forex Brokers in South Africa 2020
It can be hard to know where to start when forex trading in South Africa. As a South African trader, you are in a unique and advantageous position as you can choose between both local and offshore forex brokers. This gives you a wealth of options but also makes selecting the right broker more important than ever.
Thankfully, our team is here to help. Our experts have evaluated hundreds of FSCA licensed forex brokers, as well as international brokers, to bring you a comprehensive list of the very best.
Every broker on our list is regulated, trustworthy, and offers specific benefits to South African traders. These include accepting deposits from South African banks and payment services, ZAR based accounts, mobile platforms, and rewarding bonuses.
Select a great broker for forex trading in South Africa below or continue reading our guide to learn about:
- How the forex market is regulated in South Africa
- Comparing FSCA vs overseas brokers
- Opening a SA trading account
- The benefits forex bonuses can provide
- What South African payment methods are available
Our list of the best forex brokers in South Africa are:
- AVA Trade
Best and most trusted forex brokers in July 2020
How we find the best South African brokers for you
If you want to get involved in forex trading in South Africa, you’ll need to find a good broker. Unfortunately, this can be a complicated and time-consuming process as there are many factors you have to take into account.
The good news is that we’ve done all the hard work for you. We have a team of professional forex traders who test and assess each broker, allowing us to bring you the best possible South African brokers.
We have developed a rigorous methodology over the years, which we keep updating to make sure that it is in line with current forex trends. When evaluating each broker, we use over 200 criteria across 10 main categories, ranging from licensing and reputation to trading platforms and security.
While each category contributes to the final score, some areas weigh more heavily to better reflect what is important to you as a South African forex trader.
The licencing and regulation category contributes the most to the final score, followed by reputation. So, you’ll never have to worry about choosing the wrong broker because only the very best South African brokers make it onto our list.
Below you will find information on how our forex broker review team makes sure that the brokers on our list offer certain features that will appeal to you as a South African trader.
- Regulation – While South African brokers don’t have to be regulated to operate, it’s much safer for you to work with a forex broker licenced by the Financial Sector Conduct Authority (FSCA). The latter is the main regulatory body for anything to do with forex trading in South Africa. Therefore, all South African brokers we recommend are FSCA-regulated.
- Localised payment methods – When you can make withdrawals or deposits in rand using local South African payment methods, you save time and money. Local payments are processed faster, carry lower fees, and help you save money on the exchange rate banks charge. All the South African forex brokers we recommend offer a variety of convenient local payments methods for you. These include all the popular credit cards, but also Electronic Fund Transfers via some of the largest South African banks, such as Absa, Capitec, and Finbond, as well as alternative payment systems, like PayPal, M-Pesa, FlickPay, Zapper, and more.
- Accounts based in rand – We also look for South African forex brokers who offer accounts based in rand. Forex trading is complicated enough. You don’t need the additional worry of having your account in a base currency you’re not familiar with. When your account is in rand, you’re far less likely to make errors because it’s the currency are used to using.
- Leverage – Forex trading in South Africa doesn’t have any leverage limitations like some other forex jurisdictions in the world. For this reason, we always recommend brokers that offer good leverage to allow you to maximise your profits.
- Bonuses – South African forex brokers are permitted to offer incentives to prospective clients. So, one aspect we consider when recommending a South African forex broker is the bonuses they have on offer. The more attractive the bonus, the better.
- Competitive spreads on ZAR pairs – Trading what you know is the most effective path to forex trading success. Therefore, we make sure that the South African forex brokers we recommend offer attractive spreads on ZAR-based pairs, including the more popular USD/ZAR and EUR/ZAR, but also more exotic options that are important to the South African economy, like the ZAR/CNY and the ZAR/INR.
How is forex trading regulated in South Africa?
Until recently, the South African regulatory environment for forex trading offered very little in terms of protection for traders. There was no specific regulatory framework in place.
However, the Financial Sector Regulation Act 9 of 2017 (the FSR act) created the Financial Sector Conduct Authority (FSCA). The FSCA was founded to become the dedicated financial market conduct authority. It replaced the Financial Services Board on April 1, 2018. The FSB’s mandate was only to regulate nonfinancial institutions, whereas the FSCA is responsible for both financial and nonfinancial organisations.
The FSCA is tasked with:
- Improving the integrity and efficiency of financial markets
- Ensuring financial institutions treat customers fairly
- Promoting financial literacy among the population by providing financial education
- Helping to maintain financial stability in South Africa
As part of its mandate, the FSCA recently instituted a new regulatory regime known as the Over-the-Counter Derivative Provider act.
For a South African forex broker to become recommended by us they must be licenced with the FSCA and conduct due diligence on their clients. Brokers also have to abide by stricter capital adequacy requirements.
The FSCA also requires brokers for forex trading in South Africa to provide constant access to all their transaction data. The goal is to ensure that South African forex brokers are treating clients fairly.
Forex trading with offshore brokers in South Africa
South African law does not restrict forex traders from trading with unlicensed brokers. However, it is unwise to work with a forex trader that has no regulation or licence whatsoever as you are exposing yourself to unnecessary risk.
If you want to work with an offshore forex broker, you should find a broker that is authorised by another respected regulatory authority, such as the UK’s FCA, the Cyprus Securities and Exchange Commission, the Australian Securities and Investment Commission, and so on.
The advantage of trading with an offshore forex broker is that you have many more brokers to choose from. However, there is also a downside to this kind of forex trading in South Africa.
The Reserve Bank of South Africa limits individuals to offshore investments beyond the Common Ministry Area of up to R10 million per calendar year. To do so, you will need a Tax Clearance Certificate and you are not permitted to reinvest these funds in any member state of the Common Monetary Area.
However, you can transfer up to R1 million within the single discretionary allowance facility without the need for a Tax Clearance Certificate.
If you want to invest more than R10 million per calendar year, you will need approval. Therefore, you will have to apply to the Financial Surveillance Department of the South African Reserve Bank to receive approval. Once again, you will have to supply a Tax Clearance Certificate.
The Common Monetary Area combines South Africa, Namibia, Lesotho, and Eswatini into a monetary union. This agreement makes the South African Rand legal tender in all member countries, even though the other states still issue different currencies. The exchange rate is on par with the rand, though.
It’s quite clear that the South African Reserve Bank influences forex regulations and the monetary policy throughout the Common Monetary Area.
The benefits of trading with South African forex brokers
While it is perfectly legal for you to trade with an offshore broker, there are certain advantages to trading with an FSCA-registered broker.
- Brokers regulated by the FSCA offer South African rand-based accounts as well as localised payment methods. This is not quite as frequent with offshore brokers, especially considering that the ZAR is considered a relatively exotic currency.
- It’s easier to take legal action if you are engaged in forex trading in South Africa with an FSCA-registered broker. This can be more of a challenge when working with an offshore broker as you’ll usually have to take legal action in the country where they are based.
The best way to avoid experiencing any problems with an unscrupulous broker is to trade with one of our recommended South African forex brokers.
Choosing between offshore and FSCA licenced brokers – Expert verdict
Trading with South African forex brokers offers quite a few advantages, but so does trading with offshore brokers.
When you use a local broker for forex trading in South Africa, you will enjoy benefits such as South African rand-based accounts, localised payment methods, and a simpler means to resolve problems. However, they must be regulated by the FSCA.
Working with an offshore forex broker also offers advantages. These include a wider choice of forex brokers to work with and more competitive spreads on other currency pairs.
Regardless of whether you choose to go with a South African forex broker or an offshore broker, your best bet is to choose a firm from our list of the best forex brokers in South Africa.
How to open a forex trading account in South Africa
The procedure to open a forex trading account in South Africa is relatively standard. You’ll need to fill out an online application in which you have to provide various personal details. These include your name, address, date of birth, ID number, the name and address of your employer, and your email address.
Due to the new regulations, you may also have to answer a series of questions proving your level of expertise and experience in trading forex. You also have to provide documents proving your identity and address, which usually consist of your government issued ID or passport and a utility bill.
After the forex broker has verified your documents, they’ll open your account. You’ll be able to fund it and start trading.
Benefit from forex bonuses in South Africa
South African forex trading regulations permit brokers to offer prospective customers and existing clients a variety of incentives that take the form of bonuses.
You’ll find all sorts of bonuses available when looking to trade forex in South Africa, including:
- Welcome bonuses: this is a very common type of bonus that’s offered to new clients who have just made a deposit. It’s usually under the form of a percentage of the amount you deposit.
- No-deposit bonuses: this type of bonus is usually for new clients and is designed to encourage you to start trading without risking any of your own money.
- Loyalty bonuses: as the name implies, these bonuses are meant to reward you if you are an active trader to ensure that you stay loyal to the broker you’re working with.
- Cashback bonuses: some forex brokers offer cashback under various forms. It can either be a rebate on part of the commission or spread for loyal customers with a high trading volume, or it can be cashback as a percentage of any losing positions. The goal is to maintain customer loyalty.
Keep in mind, that these bonuses often come with restrictions, such as:
- Not being able to withdraw the bonus at all;
- The need to conduct a specific volume of trades (usually quite significant) to withdraw the bonus;
- A cap on the total bonus you can receive;
- A minimum limit on the deposit you make to qualify for the bonus.
However, keep in mind that forex bonuses aren’t difficult to find. The complicated part is ensuring that the offer you found is legitimate. Some unscrupulous forex brokers will use a bonus as bait to get you to sign up with them, but then never fulfil their promise.
To ensure that the bonus is legit, all you have to do is choose one of the firms on our list of recommended South African forex brokers.