Forex Trading in South Africa
Forex trading can be a profitable market in general; However, Forex Trading in South Africa has become something special. This status is determined by unique characteristics that appear only in that particular market. From specific rules and restrictions to huge successes found by some traders, the South African FOREX industry is an interesting development.
After reading this article, you should have a good understanding of the FOREX trading in South Africa, its regulators, names, and therefore what makes it unique.
First, we need to be on the same page when it comes to FOREX trading.
Forex trading is the exchange of currencies from different countries in order to profit from the difference in the value of the coins of each country.
Currencies are traded in pairs, and what dictates the value of a particular coin is the overall economic status of its country of origin.
While the value of a stock or share in a company is determined by how successful the firm is, the price of a currency will vary depending on the economic freedom and wealth of the nation.
Finally, the FOREX market is available through the so-called Foreign Exchange Brokers; these are agencies that offer the necessary platforms and tools to go to market. Alternatively, many brokers are the very markets where traders take positions against the company.
Why Fx Trading Is Popular In South Africa?
Before 2010, South Africans had to go through too many restrictions when it came to moving money across national borders. Capital control has been a big problem that is standard in countries in economic turmoil.
However, after 2010, the government provided more respite to citizens who wanted to legally move their capital ashore. The South African government began giving people restrictions on foreign exchange.
The new laws were for the first time in decades, and the FOREX industry was quickly filled with new and excited traders looking to experience Forex Trading in South Africa for the first time.
Aside from the recent permission to move African currency overseas, the country is also unbiased when it comes to how traders work. While Africa has a regulatory body for FOREX brokers, there are no laws prohibiting traders from using unlicensed agencies.
FOREX regulation in South Africa.
Forex Trading in South Africa can be very liberal, but this does not mean that the government does not care about the welfare of traders. With that said, let’s take a look at how the market is regulated.
The industry is overseen by the Financial Sector Supervisory Authority – or FSCA, formerly known as the FSB – which focuses on preventing financial crime by monitoring financial behavior outside the banking sector.
The FSCA does not directly punish those who work through brokerage companies outside of its approved, but with the help of FSCA approved brokers, it protects the trader from possible fraud.
One of the main benefits of this service is that they offer an online database where investors can find out which brokers are registered, who is applying for the registry, and who has been removed.
Another advantage for registered brokerage firms is that they are allowed to open offices in the country and in local bank accounts.
Previously, this body was called the “Financial Services Board”, created in 1991. Its first mission was to combat money laundering, and it retained its name until April 1. st from the current year when it got its current name.
It is part of the International Organization of Securities Commissions .
The current responsibility of the FSCA is to monitor capital markets through financial service providers (where brokerage firms are suitable) and pension funds.
The Authority has the power to impose orders for compensation and fines on persons who violate their statutes.
Taxation for trading markets like FOREX, cryptocurrencies, and CFDs can be a complex topic for many people. This may seem especially relevant to those interested in forex trading in South Africa, as the sector remains relatively unknown.
The main reason is that many of the accounts are held overseas and profits from speculation are not verifiable by the South African Revenue Service; most traders would rather not go to South African banks.
However, what makes Forex Trading In South Africa taxable is not that the money is or is not within borders, but that the trader lives in the country.
The other side of this coin is that traders are given an annual threshold and only have to pay income taxes if they exceed the specified limit.
FOREX traders should keep track of the costs they incur when trading as they are deductible from taxes; costs may include trading courses, hardware, trading software, and maintenance. Likewise, depreciation of assets is also deducted.
The trader must also register the input tax and make two annual payments for this purpose.
As we mentioned earlier, every citizen is given a limit when it comes to how much they can exchange. There is currently a limit of 4 million Rands in the records that can be used for exchange.
However, while this may seem like a strong restriction, the conversion to USD will put it around 490,000 USD, which means that most individual traders will not face a sudden stop for their trade.
On the other hand, these companies may be hampered by large companies, but workarounds are a capital-dependent option.
People involved in Forex Trading in South Africa can apply for discretionary foreign exchange as well. This benefit could add up to an additional million rand to be cleared by SARS in addition to the original 4 million.
The form is MP 1423 and liability with taxation is a big requirement.
Successful Forex traders in South Africa
Forex trading in South Africa has its own series of success stories where millionaires are young, thanks to their cunning perceptions and the power of the industry.
#1. Sandile Shezi
Shezi is by far the most famous business case in South Africa.
He was persistent in his belief that trade was more important than traditional education, and this led him to invest all his tuition fees in the FOREX market instead of the university.
This decision led him to become the youngest South African millionaire at the age of 23. The aforementioned profits were then invested in setting up a training company for Forex Trading in South Africa to help new traders be as successful as he was.
# 2. Sean Benjamin
Sean Benjamin admits that he is one of the few who can say that they earned a million rand for the first time in 21 years.
He was accepted to study engineering after graduating from Newcastle High School in 2012. However, the tides were not in his favor, and he had to drop out due to lack of funds.
The decision not to give up being someone important led him to start trading on FOREX, and he ended up giving up his job after raising enough funds to open the Benjamin Forex Academy.