South Africa may be a country known for its vast parks and safaris, but when it comes to its economy, it is greatly connected to global commerce and retail Forex trading, though not yet mainstream, has become as popular here as it is anywhere else in the world.
In general, the financial sector in South Africa is an easy haven for Forex brokers because of the very liberal legal and economical regulations. That’s why many globally recognized Forex brokers have their representative offices in South Africa.
In fact, there are many well-established Forex brokers throughout the country, including many of the major banks in the country who have time-honored connections to Europe and the London trading establishment. The nation benefits from this infrastructure and offers a greater amount of protection against Forex fraud than can be found in most other parts of this region.
The Financial Services Board of South Africa, located in Pretoria, is responsible for the oversight and regulation of all non-bank financial intermediaries in the African nation. The FSB has the authority to impose unlimited fines and penalties on violating parties. It also operates a customer complaints service for ill-treated investors who are able to contact authorities about unethical or potentially illegal activities of financial service companies.
Despite the above, considerable due diligence is still required when selecting a Forex broker. There are always fraudulent people ready to abscond with investors’ money and safety and security are still priorities in any financial undertaking.
A well-known scam occurred in January 2010 when 700 people lost more than R200 million in investments after an investigation into the southern Cape-based Minne Trading investment scheme found it to be operating illegally. The organization had been promising investors returns of between 48 and 65 percent and investigators found that while some investors were receiving these payments, they never realized these payments and were operating at a loss. In practice, this meant that Investor B’s investment was used to pay the return on Investor A’s investment.
Although Johannesburg conducts considerably less financial transactions than other major Forex centers, it is still necessary to check out the credentials of each broker with local authorities and to ascertain that there truly is a local office to support a trader’s needs. As with Forex brokers in any other part of the world, it is always advisable to do comparison shopping of the possible choice of brokers and this can be done easily by going onto one of the many broker review sites available online. These sites offer a wealth of information about each broker as well as a breakdown of their financial credentials as well as their available features such as bonuses, commissions, choice of assets and whether or not they offer a demo account.
When trading with a Forex trader based in South Africa, it is often recommended to choose a Western firm that is licensed and regulated by the FSB. Offshore firms should be avoided whenever possible because should any trouble arise, dealing with a foreign jurisdiction leaves little room for maneuvering.