Forex trading is becoming increasingly popular in South Africa, and brokers are sprouting there weekly. Both global brokers and local brokers are looking to attract South African traders to deposit funds and to begin trading. We recommend choosing a broker regulated by the Financial Services Board (FSB) in South Africa to ensure that your funds will be entirely secure.
Trading Accounts & Deposits in South Africa
There are complex regulations regarding moving your money offshore from South Africa. It is relatively easy to deposit funds into a trading account in South Africa but the broker then must make sure to comply with the rules when purchasing other forms of currency and moving it around. This is where the government has put most of the restrictions. Each South African citizen is given a limit of 4 million Rand that is allowed to be exchanged. Then each person can apply for an extra 1 million in a discretionary allowance which is doable but requires a tremendous amount of paperwork.
Trading Regulations in South Africa
The South African government doesn’t seem to be looking to outlaw Forex trading but it does have tight regulations on trading to make sure that all transactions are appropriate for both the trader and the broker, and to try to keep as much money within the country as possible, by making it difficult to trade with offshore Forex brokers. This isn’t an uncommon restriction, but Forex traders in South Africa should consider the reasons and the applications carefully when choosing a Forex broker.
The best advice we can offer if you are setting up an offshore brokerage account is probably to open a bank account offshore first because credit card use is much more restricted for overseas investing than bank transfers. Getting permission to do the bank transfer can then be done once and you can use that bank account to fund your brokerage accounts.
Choose the Right Forex Broker
Unfortunately, there are many Forex brokerages in South Africa that operate under the radar of the regulatory bodies. Be careful to check references, read reviews and trust your instincts when considering investing with a brokerage that is offering you something that sounds too good to be true. Because of the fear of these scams, it is that much more important to educate yourself before getting involved in Forex trading, especially in South Africa. Luckily, the educational resources available have increased as the number of people involved in the currency market has grown. Make sure to take advantage of all of the opportunities to learn about Forex that you can before you put in any money.
The South African government restricts the amounts you are allowed to invest in Forex Trading, no matter which country your brokerage account is in. This means that there are limits to your investment but not your profits, so invest wisely and you can still be just as profitable as you might be investing without these limits.
South Africa has joined Forex Market relatively recently as compared to many other countries so make sure you are aware of the long-term story before you enter the currency market.