The forex market stands out as one of the largest financial markets, preferably one which is bigger than the stock markets too! The industry witnesses an average of USD 6 trillion in daily trading volume.
Having millions of active traders in South Africa alone, the industry never fails to attract new talent. But, starting a career in forex trading isn’t easy! With numerous platforms and hundreds of service providers, the process involved in finding the best forex investment platforms in South Africa can be challenging.
While the list can be endless, this blog is here to narrow down your options! So continue reading as we explore the different aspects of finding the best forex trading platform in South Africa.
The South African Financial Market
The South African financial market is over 120 years old, ranging back to 1887. Established as the JSE (Johannesburg Stock Exchange), it is the country’s largest and primary securities exchange and the stock market.
Fast forward to 2022, South Africa has been a consistent performer in the financial markets, topping Africa’s most appealing market for financial investors, the Absa Africa Financial Markets Index. Therefore, the ongoing and frequent evaluation of the regulatory underpinning of the financial markets operating inside the country is one crucial issue that should be underlined.
In the aftermath of the financial crisis, its authorities display diligence with their regulation. For example, the SARB (South African Reserve Bank) and the FSCA (Financial Sector Conduct Authority) issued the 2018 Financial Market Review, which provided a comprehensive market regulation and governance assessment.
The forex traders in the country need to recognize the South African Rand (ZAR) as the country’s national currency and start using it in their trades.
Forex trading is a highly competitive industry, and it is no different in the country. However, over the last two decades, the industry has multiplied as more Africans become aware of the benefits of Forex trading.
Significantly, the Forex market has gone from nearly overlooked to one of the most active markets globally during the previous decade. This is due to the introduction of mobile devices and other technology.
Currently, there are over 1.3 million Forex dealers in Africa. Nigeria and South Africa top the list, accounting for a considerable portion of the total.
Several regulatory rules around trading have been implemented in South Africa to reduce the risks associated with Forex trading. The FSCA, formerly known as the FSB (Financial Services Board), is responsible for enforcing these rules (FSB). The FSCA is in charge of overseeing and managing all financial transactions in the country. It is Africa’s most stringent Forex market regulation.
The FSCA’s regulatory policies are comparable to those of international regulatory authorities. For example, all derivative brokers using OTC must record all trades to organize CFDs. Additionally, forex brokers may resolve their conflicts and controversies via the FSCA.
Now that you have an idea of the legalities surrounding the forex markets in South Africa, you might want to get started with your trading journey. However, it’s easier said than done! There are multiple trading platforms, each with its unique functionality, which might confuse you.
Therefore, let’s look at the different factors to help you choose the best trading platforms in South Africa in the section ahead.
Key Considerations When Choosing a Forex Broker
When looking for the best forex trading platform in South Africa, you must consider several factors. It’s challenging to locate a broker that meets the needs of all traders, from the charge to the features and rules that must be considered.
As a result, here’s a list of things to think about before deciding which one is best for you. Here are some essential aspects to remember:
- Regulatory Oversight
Start by checking if the brokerage you’re considering has a regulatory license and permission in South Africa.
Market regulators safeguard investors against brokerage scams and bad conduct. They also supervise the brokers who have registered with them, ensuring transparency, responsibility on the broker’s part in a dispute between the customer and the broker, and fair trading conditions.
The FSCA (Financial Sector Conduct Authority) in South Africa oversees and regulates the market-related operations of financial institutions operating in the nation. In addition, major market regulators across the world, including the FCA in the ASIC in Australia, CySEC in Cyprus, and United Kingdom, all regulate the market to safeguard the interests of investors.
Some brokers display their offshore regulations and register clients under them. However, it should be noted that this is insufficient to assure adequate capital protection or favorable trading circumstances.
Most of the time, you can discover information about the broker’s rules on their about page which is present in the footer area, or on their signup page. Before investing, always inquire about your broker’s FSP license number.
Most regulators, including the FSCA, include a public search tool to look up different regulated brokers by their names or FSP number.
- Investor protection
This is crucial since it assures that the monies you deposit in the broker’s platform will be protected. An investor’s exposure will be restricted if a brokerage declares insolvency or a similar worst-case situation.
The level of protection provided is frequently pre-determined and limited.
For instance, the investor protection backs up US investors with a $500,000 amount, while the backup pay in Europe is around €20,000. Protection funds run by the state or private insurance companies often provide this protection.
However, when it comes to South Africa, we currently don’t have any investor protection fund backed by the state. But, you might find certain FSCA-regulated brokers who may be able to provide you with some protection.
- Trading & Non-trading Fees
Before creating an account with a broker, examine what trading costs the broker charges and any extra maintenance or hidden expenses.
Most brokers benefit by charging you a predetermined commission or charging each trade dependent on the volume. This is referred to as the spread.
Some brokers may offer a lesser spread, but they might also impose non-trading costs such as inactivity fees, deposit and withdrawal fees, account management fees, and increasing overall fees.
Furthermore, only a few brokers boost their spread during periods of extreme volatility. So, compare the total fees several trading platforms charge and choose the brokerage with the lowest spreads and commissions per lot on your chosen asset without any hidden charges.
- Available markets & products
Before signing up with a broker, check to see if the brokerage offers the instrument or asset class you wish to trade and, if so, at the lowest possible charge.
If you specialize in trading the USD/ZAR currency pair, ensure the broker provides it before opening a Live account. Remember, brokers often offer a page that lists all the trading instruments available and the historical average spread on stocks, cryptos, commodities CFDs, and currency pairings.
You may check if your selected instrument is offered with that broker and what their usual costs are on that page.
- Trading conditions
While it’s almost impossible to check the trading conditions presented by a broker, you can do some checks to make an informed decision.
Most brokers allow users to experience their platform by offering a free demo account where users get to have an experience of the UI. Here, they also had the opportunity to trade with demo money. While the demo accounts differ from the live markets, you should always check for demo accounts present with various brokers or settle with brokers who provide the lowest minimum deposits.
Brokers frequently provide several account types to suit the demands of various investors. So, with the different available account types at the broker, ensure that you compare the available instruments, trading platforms on offer (ZuluTrade, MT4, cTrader, or MT5), and the required minimum deposit.
You should also inquire about your broker’s withdrawal and deposit timings, commissions, typical spreads, available leverage, a technique for transaction execution (immediate or market), and if it is fixed or floating.
Lastly, when searching for reliable online trading platforms in South Africa, ensure that you verify if your broker is an ECN/STP broker, or Dealing Desk (DD), while also finding out the source of their liquidity.
While you now have all the necessary factors required to curate a list of the top forex brokers in South Africa, if you’ve just begun, you might end up in great confusion with the entire process.
Why? Because there are hundreds of trading platforms in the country and curating a list of selective few can be confusing for any beginner. Therefore, to help you better, we have listed down a list of the best trading platforms in South Africa in the section ahead.
List Of Best Trading Platforms In South Africa
Found in 2012 in Zurich, BDSwiss stands out as a reputed forex broker with millions of users in their database. The platform is secured by regulating bodies like CySEC and NFA. What makes this platform one of the appealing investment platforms in South Africa is its simplicity and safety features.
The platform is easy to navigate and comes with many account options for forex traders. If you’re a beginner, you might be interested in their negative balance protection feature, which allows you to trade safely without burning out your funds over a single trade.
In terms of its fee structure, the BDSwiss platform allows users to execute trades at an average spread rate of 1.5 pips for EUR/USD pairs via their Classic account. However, things are different with the Raw Account, where the spreads are very competitive, running on 0.3 pips (including a $5 commission per lot on Forex). Besides, investors can also look to diversify their folios with CFD trading on commodities like gold, indices like NASDAQ, and 20 cryptocurrency CFDs at competitive pricing.
In terms of their fee structure, the minimum deposit with BDSwiss starts at $100 with their Classic Account. However, things are different with the Raw, VIP, & InvestPLUS accounts. The minimum funding option for these accounts ranges from $3,000 to $5,000, making it higher than other brokers. But the platform makes up for it with its lower trading fee over these accounts.
Deposits at BDSwiss are free and won’t cost you any additional charges for any transaction method you choose. But the platform has some charges for non-trading, Inactivity, and fee on withdrawals below limits.
On the flip side, the platform lacks local Internet banking support for South African users, making it difficult to fund or withdraw their accounts. Besides, BDSwiss also won’t offer you ZAR base currency accounts.
Tickmill is one such trading platform that multiple regulators regulate across the globe. Touted as one of the reliable online trading platforms in South Africa, the platform is backed by FCA (UK), FSCA, and CySEC (Cyprus). Established in 2014, the platform is considered safe and reliable for new and advanced users alike.
This Metatrader-only CFD & forex broker provides you with MT4 & Webtrader platforms that can be accessed over multiple devices. Advanced users can also opt for their recently introduced Metatrader 5 platform to ensure seamless strategizing and trading. Users of the Tickmill platform get access to over 62 pairs of forex trading currencies to trade. Additionally, users also have the options to start trading with their other instruments like 14 indices & CFDs, 2 Metal CFDs, 2 Oil CFDs, 4 Bonds, and 3 Crypto CFDs.
Talking of the fee structure, users of the Tickmill platform can access different platforms based on their expertise and affordability. Starting with their Classic Account, users can average their spreads with 1.6 pips for EUR/USD. Besides, they also can reduce their spreads to 0.1 pips with the Pro account for EUR/USD, including a $2 commission for every lot. However, users of the Tickmill platform won’t attract any charges over deposits or withdrawals.
Traders in South Africa can use online bank transfers for funding & withdraw their accounts in local currency (Rand – ZAR). Besides, they also have instant financing options with local bank transfers, online bank transfers, and withdrawals within 24 hours maximum.
African traders don’t have the ZAR base currency account access on the flip side. Therefore, all your funds would be first converted as per the latest exchange rates.
Third, on our list of the best forex trading platform in South Africa, we have the FXTM touted to be a beginner-friendly platform. Found in 2011, it is one of the initial few trading platforms to have been regulated by South Africa’s FSCA, besides being backed by other top-tier regulators throughout the globe.
Users of the platform have access to various trading instruments, including 63 minor, major, & exotic pairs of currency, commodities CFDs, stocks, metals, and indices. While the platform currently lacks offering CFDs on cryptocurrencies, they offer MetaTrader 4 & 5, making it a reliable platform for every type of user. The platform also provides a mobile trading application compatible with both iOS & Android.
Regarding the fee & spread structure for forex trading, the platform offers a competitive spread for several major currencies, including EUR/USD (0 pips including a commission of around 0.4 USD per lot). However, the spread becomes high for their spread-only accounts, averaging at 1.9 pips for the Micro account and 2.1 pips with the Advantage Plus account).
FXTM also allows for a convenient funding option for its users. The options include local bank transfers and deposits in Rand, which attract zero fees. However, the platform charges you a fee of around 1 USD for withdrawals in ZAR. Nevertheless, these withdrawals are generally quick and take less than 24 hours to process.
On the flip side, the platform doesn’t offer a ZAR-based currency account to its South African users.
Next, we have OctaFX, a moderate risk broker that initiated its operations in 2011. The platform has marked over a decade of its operations and currently has a global reach for CFD & forex trading with its Tier-1 regulations by CySEC.
Talking of the platform’s functionality, OctaFX is currently limited as a Metatrader-only forex broker, limiting it to forex traders. However, in terms of functionality, the platform is suitable for both basic and advanced users as they can access both MetaTrader 4 (MT4) and the latest MT5 platform. Besides, users of the platform can also access the OctaFX mobile app for seamless copy & forex trading.
The MetaTrader offers users a slew of trading instruments, including over 35 currency pairs, to diversify their forex trading experience. However, since they’re only limited as a forex broker, the platform currently has no access to Indices, CFDs on Commodity, and cryptos.
OctaFX comes with a transparent structure in terms of fees, offering a variable spread for individual trades. To begin with, the platform offers a typical 0.7 pips spread on EUR/USD over their MT4 & MT5 Trading Accounts. All the accounts provided by the platform are highly competitive compared to the regulated brokers present over other South African brokers. Interestingly, the platform doesn’t charge any extra commission per lot over any account. The only trading fee charged by the platform is its spreads. Additionally, they have no extra payments over deposit or withdrawal.
On the flip side, OctaFX lacks ZAR-based trading accounts limiting the platform to only EUR & USD currency options for the South African traders. Moreover, users don’t have the option for local internet banking or withdrawal & deposits.
Last on our list is the XM Trading platform, a part of XM Group of the Trading Point of Financial Instruments Ltd. The platform currently leads as one of the best trading platforms in South Africa, running operations since 2009. Moreover, the platform enjoys reliable security with its regulations from financial bodies like ASIC and CySEC.
XM Trading currently enjoys its position as the leading broker in its daily trading volume, making it a good platform for investors who want access to easy liquidity. As a market maker broker, the platform offers reliably fast trade execution without any re-quotes or rejections. Their negative balance protection functionality also makes the XM Trading a reliable platform to get started with.
Their fees with their Ultra-Low Account are also low. Furthermore, they have negative balance protection with all their account types. Additionally, users can enjoy a seamless trading experience via the platform’s mobile trading app, accessed over MT4 & MT5 platforms. Plus, various trading tools, including CFDs on indices, metals, currencies, and commodities, allowing users to diversify their folio. Another unique feature of the XM Trading platform is that they offer a ZAR as the base currency of South African trading accounts.
On the flip side, the platform offers a very high typical spread across all its different account types.
Challenges of Trading in South Africa
In recent years, South Africa has faced a budget deficit problem, forcing it to lower its growth predictions in October 2018. This means that trade wars, breakdown of key trade deals, and tariffs might wreak havoc on South Africa’s economic development.
Besides, the Reserve Bank of South Africa seldom intervenes actively in the currency market to stabilize the exchange rate of USD/ZAR, which has seen steep decreases and severe volatility owing to news-related shocks. Moreover, due to South Africa’s budget deficits and twin current accounts, the rand has shown noticeable patterns over time and has generally weakened in recent years.
Therefore, if you’re a forex trader in South Africa, it would be wise to understand the market and its volatility before making your move into active trading. All the best!
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Shrey Jain is a Chartered Accountant who holds a forte in creating informative content on niches like Finance, Blockchain, crypto, and Taxation. He is a contributor on Hackernoon and Publish0x, where the audience has highly appreciated his articles. In addition, his knowledge in the finance field has helped both beginners and experts gain valuable insights into the domains of Blockchain and finance.