Emerging Markets
by Martin on February 19, 2019

Ins and outs of South Africa’s Financial Regulations

Financial regulations might sound boring and bothering, nobody really likes the government’s interventions in a market but at the same time, if the laws are enforced in a right way, everybody enjoys the safety that they bring. It is especially important in Forex trading, where there is already room for enough uncertainty. As South Africa is one of the biggest and most important economic hubs on the continent of Africa, we feel that it is important to take a look at the financial regulations. Moreover, as ESMA is strengthening their regulations and is expanding it, again and again, many Forex traders are searching for a new environment for trading and many of them might want to make a choice in favor of South Africa. In order for you to do your own research, you can see the best Forex brokers in South Africa here and now let’s now take a look at the financial authorities and regulations in South Africa.

The regulatory body of South Africa

The governmental body, which oversees the financial sector in South Africa is FSB – Financial Services Board. It was established in 1991 when the government understood the need for creating an independent body that would supervise and regulate the non-banking financial providers.  Just like regulators in other countries, FSB has one main goal too, to create and keep a safe, friendly environment for local and offshore investors and ensure the safety of the funds and capital. Therefore, the regulatory body is responsible for all the non-banking financial intermediaries, such as Insurers, capital markets, financial service providers, collective investment schemes, retirement funds, credit agents and many more.
The FSB makes sure that all companies that fall under the categories of its competence adhere to the local laws about money laundering and investor fund protection. These companies are supposed to comply with the relevant legislation, and if their actions will be in contradiction of the laws and regulations of FSB, their license will be revoked and legal actions will be taken against them. The FSB committee has full authority to impose unlimited penalties if any of the companies violate the law.

The regulator changes

Just recently past year, on April 1 the Financial Services Board changed its name to the Financial Services Conduct Authority (FSCA) with a new name, the regulatory body also added a large number of additional features. Here are some of the most important changes:

 

  • Now FSCA is responsible for providing and spreading quality education of finance to the customers. The educational process should be managed by procuring some of the best educators in the field, with fear treatment promotions;
  • The FSCA is responsible for the safety and stability of the finances of investors using the non-banking services which were listed above. Meaning that if the customer ends up in a bad situation due to the company’s irresponsibility or fraud, FSCA will take legal actions against them.
  • The FSCA is responsible for spreading information about the changes to companies that are under their regulatory jurisdiction.
  • The FSCA is responsible to oversee the sustainable development of the South African financial market, also the regulatory body needs to ensure that their KPIs are met, companies are efficient and integrated in the whole ordeal.

These changes, of course, will not be enforced at one time, but gradually, giving companies the possibility to adjust to the new laws and regulations and amend their business models in accordance with the changes.

FSCA regulations for FX brokers

Needless to say, Forex Brokers in South Africa are under the FSCA regulations too. Moreover, it has full authority on the Forex market of SA. Every legitimate Forex broker in South Africa will happily display their FSCA license if they don’t then it needs to be avoided. The FSCA has issued a special warning about this topic, therefore be cautious, check and if you find out you are dealing with an unregulated forex broker, immediately report it and promptly withdraw. It is always important to check if the broker has a license or is not directly connected to the regulator, we have already seen many stories when companies were either not displaying their license, or straight out lying about having it.  So make sure you check FX broker’s licenses with FSCA. They have a full database of the brokers they are regulating, or have regulated in the past.

South Africa will be going under many financial changes this year. The new features that now are the responsibility of the regulatory body are to make the financial sector more secure and friendly for local and offshore investors and traders.

By Martin

Martin has been a Trader for 5 years now. He has experience in trading Forex, stocks, and cryptocurrencies. Aside from his trading career, he also worked for a UK news outlet as a web article writer and interviewer for 3 years. His insight on news and brokers have been refining for the past 4 years.

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