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Trading activities across all financial markets in the world has seen a significant increase in recent years. The foreign exchange market (forex) is the largest and most liquid market in the world.
The barrier of entry into the forex market is extremely low and because of the increase in trading opportunities, more forex brokers have emerged. While there are hundreds of forex and CFD brokers to choose from, not all can be trusted.
Many beginner South African traders fall prey to scam brokers who can appear to be legitimate. Every retail trader must ensure that they can verify the regulation and licenses of the broker that they choose to use.
Some of the most important reasons why retail traders in South Africa should only use a well-regulated broker registered with the Financial Sector Conduct Authority (FSCA) are as follows.
Did you know? According to our latest 2021 data research Khwezi Trade was mentioned to be one of the most trustworthy Brokers in South Africa. Khwezi Trade is an authorised financial services provider and OTC derivatives provider.
The FSCA is responsible to ensure that all forex and CFD brokers are compliant with market conduct regulation. The FSCA works to ensure that the efficiency and integrity of all financial markets can be guaranteed.
The FSCA protects consumers and promotes fair treatment. In addition, consumers are provided with the necessary education when they deal with financial institutions.
FSCA-regulated brokers are obliged to follow the rules and regulations set out by the FSCA. This will ensure that they can keep their licensing and authorisation to provide financial products and services to South African traders.
If a broker goes bankrupt the investment of South African traders may be compromised. Regulated brokers are members of compensation schemes that ensure that funds are safe if the broker can no longer meet its financial obligations.
In addition to this, client fund safety also refers to the fact that client funds are not used for operational purposes by the broker, but that only goes towards client-approved trading activities.
The last thing that any South African trader wants to find out is that they invested in a fraudulent or scam broker. This is something that can be avoided when South African traders use FSCA-regulated brokers and heed the warnings issued by the market regulator.
Well-regulated brokers that have valid FSCA regulation and authorisation do not participate in illegal activities. Client funds are kept in segregated accounts with top tier banks and only used in client-approved trades.
FSCA-regulated brokers in South Africa are bound by law to ensure that all trading activities are fair, secure, and transparent. Well-regulated brokers tend to provide their South African investors and traders with regular reports on all activities.
Beginner forex traders do not have the necessary education, skill, or experience to make educated, informed trading decisions, which means that successful traders are not always possible, even with solid trading strategies.
FSCA-regulated forex brokers provide all types of traders with the necessary warnings, education, information, and all other material and tools to help them in a wide range of competitive financial markets. Some warnings can involve those against maximum leverage, derivative instruments, financial instruments, trading costs, trading accounts, and more.
FSCA-regulated forex brokers do not provide financial or investment advice but provide the necessary, transparent warnings that can prevent traders from losing their capital because traders can understand the risks involved.
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