What are the best Forex brokers in Kenya & how to find one?
Forex industry is popular and the demand for FX trading is still growing around the world as it represents a great opportunity to make a profit. The African continent is no different from this trend, particularly Kenya, which is one of the fastest developing African countries in many industries. Yet as Kenya is still not amongst the developed countries many people are facing unemployment or are lacking the career opportunities that would benefit them the best. It must be the main reason why more and more people, especially the young community of the country, are turning to the Forex trading. Trading, done in the right way, can be beneficial for everyone.
To start trading the right way and ensure the success of your FX trading career one must choose the right broker. That is a difficult task for the beginner trader, especially considering the environment of the Forex trading in Kenya. For a long time, the industry was lacking a proper regulatory framework that would ensure that the brokerage firms are operating legally and investors’ money is safe. Only in 2017 the financial watchdog of Kenya – Capital Market Authority (CMA) has introduced legislation that would regulate the sector and define the registration requirements for Forex brokers. Despite this, till now the country is only taking its first steps towards the fair and regulated Forex market, with more regulated Forex brokers appearing on the market. While many of the brokers operating in the borders of the country remain unregulated or offshore, it is hard for the citizens of Kenya to find a truly trustworthy broker. If you are searching for a broker by simply googling the top Forex brokers in Kenya, it will not do you any good, as many of the charts and information are biased. There are many things to be taken into consideration. So if you want to start trading successfully be sure to go through the article to find the best FX broker in Kenya.
The regulator of Kenya Forex Industry
Forex Industry in Kenya is under the regulations of the Capital Markets Authority. CMA was established by the Ministry of Finances back in 1989 with the main task to license and supervise all financial institutions that are operating in the borders of the country, including the Forex industry. However, for a very long time, the industry was unregulated and companies were operating without any regulations, as the regulatory framework was absent. The only document, that could be used for the guidance for regulations was the Capital Markets Act which was passed in 1989 and was remaining the same for a very long time, even though the situation on the markets and the players were changing. According to this act, only the Forex brokers, that were regulated by the CMA were allowed to provide the trading services to the residents of Kenya and sign them up as clients. However, until now there were no licensed Forex brokers in Kenya leaving the people no other choice than the offshore or unregulated local brokerages.
New regulations of CMA
However, the situation has changed in 2017, when Kenya’s financial watchdog has announced the changes in the rules for Forex trading in Kenya. According to the new Forex rules, the cash transactions between the customer and online Forex traders will be banned in favour of the independent bank accounts. Also opening direct Forex account overseas for individuals or Kenyan companies will be prohibited in favour of the ledger accounts held by the Forex traders with the license. These are all to make CMA able to monitor the movements of money in Kenya and set the regulatory norms for about 80,800 Kenyans that are trading without the regulatory framework. According to the new regulations, only CMA licensed Forex brokers will be able to trade Forex abroad. The proposed law also outlines the minimum capital limit. As per as it the minimum capital limit for Forex small traders in Kenya should be Sh50 million ($500,000), In addition to it, the broker company should also ensure that Sh40 million or 80 percent of the company’s capital (whichever is higher) is in form of cash and cash equivalents in financial instruments at all times.
Kenyan Forex brokers regulated by the CMA
Till 2018 there was no broker in the country that was licensed by the Capital Markets authority, However, it changed on 18 December 2018 when the CMA granted the license to operate in the online Foreign Exchange trading space to EGM Securities Limited. The first licensed Forex broker in Kenya has also launched the first and only regulatory non-dealing online platform. EGM, that is the subsidiary of Equity Group allows traders to invest in macro opportunities such as Forex, oil, gold, precious metals and commodities. Below you can take a look at the list of licensed Forex brokers in Kenya that are available for the residents of the country.
XM
Starting capital
$5
Licensed by
FCA, CySEC
Extra feature
$30
Gearing up to
888:1
Founded in
2009
Software
MT4, MT5,
AvaTrade
Starting capital
100 USD
Licensed by
CySEC, ASIC, FSCA, FFAJ, FRSA, SSA
Extra feature
Gearing up to
400:1
Founded in
2006
Software
MT4, MT5, WebTrader, custom
IQ Option
Starting capital
$10
Licensed by
CySEC
Extra feature
N/A
Gearing up to
25:1
Founded in
2014
Software
Custom
FXRoad
Starting capital
250 EUR
Licensed by
FSA, Seychelles
Extra feature
N/A
Gearing up to
1:200
Founded in
Unknown
Software
FXRoad web and mobile trader
How to choose the right Forex brokers in Kenya
Every experienced trader knows well that it is always a must to work with the broker that is regulated. Working with unregulated brokers put your investments under the high potential risks. Especially since there are a lot of the brokers that are working without any proper authorization and regulations but keep showcasing their company and services as regulated ones to trick the customers. If you are a trader from Kenya the best case scenario is when the broker is regulated by the regulatory body of your country. This way the broker has their services designed or adapted to the needs of the Kenyan traders. However, it does not limit the traders to work with only the brokers that are regulated by the CMA, since the choice there is very limited. You can confidently trade with the broker that is regulated by the regulatory bodies of the other countries as well. The main point is that the broker should not be completely unregulated.
Although the regulation is crucially important, it is not the only thing that the trader should take into account while choosing the FX brokers in Kenya. Another important part of this process is broker reviews. Reading broker reviews gives you all the information that you might need to know about the broker and its services. You also need to choose the broker depending on what kind of broker it is, as there are several different types. Another thing to be taken into the account for the Kenyan traders is if the broker accepts Mpesa, which software does it offer and what are the commissions. We will go through all these topics to help you make the right choice for your successful trading career.
The FX broker should be regulated
One should always check if the broker is regulated or not. While checking different brokers to decide which one you should start trading with, your choice must be limited to the regulated brokers. There are many Forex brokers in Kenya, but till today only one Forex trading money manager has the license to operate as a Forex trading company. If you decide to work with unregulated brokers in Kenya you should be well aware of all the risks that are attached to it. Many of them try to make as many appealing offerings to the customer as they can to convince them. But usually, the major part of the brokers are a scam and try to fraud the clients.
For you not to be another victim of unregulated broker’s scam we strongly recommend not to put your money investments under the risk and only trade with the regulated ones only. If you do not want to choose the only regulated FX broker in Kenya you can search for the offshore brokers that are regulated by the other country’s regulators. Among them, Britsh regulator (FCA), Cyprus regulator (CySEC) and the Australian regulator (ASIC) are the most trusted ones. The offshore company that is regulated by the country it is based in will not scam you, but if the offshore company is unregulated and fraud getting the money back might be complicated as they are not regulated in your country.
FX broker reviews and how to read them
Forex industry is very large, and if we just take out the unregulated brokerage companies from them, be sure that we have barely scratched the surface. There are many regulated brokers out there from which you need to choose the one that will be the best option for you. The brokers are competing with each other for your account, each day new Forex broker is trying to grab your attention, and at first, you might be overwhelmed to see how many brokers there are and how various offerings they are making to get you. Therefore to make it easier for you many of the websites that are working in the Forex industry are offering broker reviews. While searching for top Forex brokers in world, or in Kenya, you might want to read the reviews first.
The broker reviews include all the information you might need to know about the broker before you decide to work with them, but unfortunately, some of the reviews are positively or negatively biased and are misleading the customer to trade with the fraud brokers or to avoid the brokers that might be really good for them. Thus it is important to have an unbiased review as an informational source. But how to differentiate the objective review from the biased one? First of all, see the general tone of the review, if the broker review is very positive and too good to be true it might mean that it is positively biased, on the other hand, if the review is completely negative – it can be also biased but negatively.
The good, objective review should overview the goods and bads of the broker, therefore it must contain positive and negative information as well. The main idea of the reviews is to help the investor decide whether or not should they go with the particular broker, therefore see what kind of information is given in the review. If the review is filled with the positive information that does not really help your decision-making process it means that the author of the review is just trying to make the broker more likable without talking about the things that really matter for the investor. In any case, it is always a good idea to make a little research about the broker by yourself, visit the website and check if the information given in review matches the information displayed on their website.
Forex brokers with M-Pesa
For the traders in Kenya, it might be crucial to choose those Kenya Forex brokers that accept M-Pesa. There are a lot of brokers that are widely known as a trustworthy company, offering excellent service and experience to its customers. You might as well start with this experienced brokers for your successful trading career. These brokers allow trading to the Kenyan citizens, but are offshore, this is why in this case, you should search for Forex brokers with M-Pesa. It is a mobile phone-based app that offers money transfer, financing, and microfinancing services. M-Pesa allows its customers to fund their trading account to the companies that are not registered in Kanya, without having to go through the banks.
The different types of Kenyan Forex Brokers
There are three main different types of online Forex brokers. Somehow, not many traders give much attention to it, but in reality, what kind of broker are you trading with can have a high effect on your trades. The differences between the three types of Forex brokers is the system they run and how do they execute the trades, it has a significant impact on the quality of their service, the speed of trades, transaction fees and the size of the spread. Therefore while choosing the top Forex brokers Kenya, make sure to understand what kind of brokers they are.
Market Maker
Most of the online brokers that you can deal with are the market makers. They have their own trading desk, meaning that broker makes the market by taking the other side of open trades. While trading, if you lose money, the broker gains money, if you gain the money, the broker still gets some money just to offset the loss. The broker does it through the bid and sell spreads. The main aim is to do the sufficient volume and have enough bets on both ends of the transactions that they can make money with the little risk on either side. When choosing the best online Forex brokers you might want to choose the market maker, as they offer the best spreads and execution time for the average trades since there is no middle man involved and you are dealing directly with the source.
No dealing desk brokers
These FX brokers are the opposite of the market makers, as the name suggests no dealing desk brokers do not own a desk, rather they are searching the best quotes from several different providers. These providers are the market makers or other online Forex brokers, banks and other financial institutes. No dealing desk brokers serve as a middle man between the trader and the financial institutes or FX market maker brokers, they charge the commission or wider the spread, sometimes, both are done. Therefore if you decide to go with no dealing desk broker make sure that you are choosing the best Forex broker in Kenya.
Electronic communication network brokers
These type of broker also serve as a “middleman” but in a different way. Electronic communication desk brokers do not have their own dealing desks as well, instead, they provide with the software which helps connect buyers and sellers. The platform allows market makers to enter their bids and connect with others. Generally, through the software, you can get the tightest spreads and quickest execution. In addition to that, the platform suggests a certain degree of anonymity, you can enter the trades without other people knowing which side of the trade are you on.
Commissions of FX brokers
Another thing you need to consider when searching for the Best Kenyan FX brokers is their commissions. Most of the brokers get their money through the trading commissions, the commission models are not the same for all, for example, it can be fixed spreads, variable spreads or it can be based on a percentage of the spread.
If your FX broker is taking the commissions via the fixed spread, it means that the spread will not fluctuate, as it will be set for each currency pair. If the commission is through the variable spreads, logically it will fluctuate based on market volatility, liquidity, and some other factors. Some of the FX brokers might charge a small commission per trading lot.
FX brokers and software
The software is one of the most important things to be considered while choosing the broker. As the key task for any broker is to offer a trader the support and convenient way to trade, at the major part of it depends on which trading platform are they suggesting to the customers.There are three trading platforms that are majorly adapted by brokers and trader MetaTrader 4, MetaTrader 5 and cTrader. Some of the brokers are offering not only one.
Check which platforms are used by the top Forex brokers in Kenya and consider it while making your decision. Currently, MT4 is used more widely than any other trading platform, it has the largest number of supporting articles custom indicators, trading robots and many more. MT5 is an upgraded version of MT5, till now not compared to MT4 not many brokers are using it, but the number of these brokerages is increasing annually. MT5 does not have that much of the features, but it is only a matter of time. It is expected that MetaTrader 5 will become the man retails Forex trading platform. As for the cTrader – if you want to trade with non-dealing desk online brokers, this platform is for you, it is fast, slick and great to use.
Forex Trading scams in Kenya
When we talk about the importance of the regulations – we really mean it. And before these regulations will be fully imposed on the Forex industry of Kenya, the investors must be very careful to stay away from the fraud brokerages. For a very long time, the FX industry was running without any regulatory framework thus, the country is full of unregulated companies and till they will get the regulations, it is hard to say which company is worthy of investor’s trust and which is not. It is believed that currently there are over 100 illegal forex companies that are operating and yet only one licensed broker in Kenya got its license only recently. Therefore, one can imagine that the country was one of the best places for scammer brokers to establish their business and there were a lot of cases of fraud.
The most well-known and biggest Forex scam in Kenya was the case of the VIP Portal. Back in 2013-2014, the broker was promising the clients to invest the money in Forex trading on behalf of them, stating that they would double their money. Apart from it, the company was promising the investors an additional 5 percent of the money for one person they would bring as a new investor. In the result of VIP Portal fraud over 13,000 individuals had deposited and lost more than $2.9 million from Nairobi alone.
So how do you get the best Forex broker in Kenya?
Despite the fact that Kenya is not a well-developed country and the Forex industry is relatively new, there are a lot of trading opportunities to Kenyan Citizens. Although the regulatory framework is not fully presented to the country’s Forex industry and yet there is only too much to choose fomr when looking at Forex brokers regulated by CMA to choose from, as there is only one online Forex trading broker in Kenya that is licensed by the Capital Markets Authority, it does not mean that the choice for regulated Forex brokers in Kenya is limited. There are many brokerages that offer its service to the citizens of Kenya. If you are thinking of starting trading, make sure to choose the broker that offers you the best possibilities for your trading career. Always ensure that the company is regulated by the regulatory body, go through the reviews, check the type of broker, commissions and platforms they are offering, and choose the best Forex company that Kenya has to offer.
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