South African FX Immigration Continues, Markets.com Gains FSB License

12 Comments on this post

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1. Tony James said:
   Ron, Thanks for a brilliant article and thanks for mentioning ACM Gold.
   I just wanted to bring something to your knowledge, Getting an FSB License doesnt automatically allow you to start accepting local deposits in South Africa.

   There is a much bigger animal called the Reserve Bank that needs to give you special approval for accepting local deposits. Fortunately for us, ACM Gold currently is the Only FOREX Broker in South Africa that accepts local deposits.
   I understand Both Deltastock and Markets.com are authorized by FSB but they are authorized as offshore companies as you can see from the FSB website.

   Saxo Bank and IG Markets, however do accept deposits locally but that is to trade CFD’s primarily on equities.

   My comments are valid at the time of writing, however circumstances may change.

   September 21st, 2012 at 9:09 am
2. Michael Greenberg said:
   Tony is right

   September 21st, 2012 at 10:02 am
3. Adil Siddiqui said:
   SA is one of the largest markets for single stock futures. CFD’s are offered by banks such as ne bank and Investec plus Standard Bank has taken a white-label from Gain Capital. One of the largest FX and CFD brokers is Global Trader (they got told off by UK’s FSA in 2008). The biggest concern for SA traders in my opinion is, the volatility in the rand, which affects their dollar balances with non-SA brokers. Firms that can accept local deposits are going to take a fair share of the business.

   September 21st, 2012 at 4:35 pm
4. Ron Finberg said:
   @Tony- thx for the update
   While I don’t know what DeltaStock’s plans are, I can verify that as of this time you right and Markets.com also doesn’t accept local deposits. However, from what I have heard from what they are telling people is that it is something they are trying to get done as well.

   September 23rd, 2012 at 9:46 am
5. Dan said:
   Does this mean that all of the brands belonging to SafeCap are party to the same status?

   I would be interested. I work with one of their other brands and this would create a much easier way of trading for m

   September 24th, 2012 at 1:25 pm
6. Jeni Kostova said:
   Just to offer a bit of a local insight to the topic and an alternative solution…

   I am busy organizing the first ever South Africa Forex Expo and in the process have been in extensive contact with FSB regarding how the regulatory environment affects foreign-based brokers who want to (or currently) trade in South Africa.

   FSB says that brokers may trade with South African clients without regulation and are not transgressing any rules, as long as they did not “directly solicit” the account. In other words, if a broker advertises on line, for example, and a South African opens up an account with them, the said broker is free to accept the client, unlike the situation with US-based clients.

   Brokers who wish to “market” in South Africa (whether they have a physical presence in the region or not) should get registered and regulated by them, although the FSB itself is not quite clear on what they consider “marketing” in SA. For example, advertising in a local financial magazine is seen as “marketing” and therefore the offending company may get penalized (although they themselves admit that compliance enforcement is only triggered by complaints in the first place, so unless someone complained to them about the ad, they are not going to do anything about it). Putting a banner ad on the website of the same financial magazine, however, is not seen as marketing to South Africans as it appears on line, although the web site is hosted in SA and the domain is .co.za. Participating in a trade exhibition, running a training seminar or any other function is also not seen as “marketing”, but if the company sends direct invitations to people to attend the said function, they are “marketing”. I know it makes no sense, but regulators are not known to apply common sense to most situations, are they?

   Anyway, arguing with FSB about the dictionary definition of marketing is not going to do any good. Not to mention that most of the forex advertising definitely in SA, but I am assuming globally as well, happens online anyway, which they don’t see as a problem, so it really makes no difference.

   As the article itself points, however, there are other benefits for brokers in being regulated by FSB and albeit having no capital requirements like CySec, the registration process is not easy and quite paper-intensive, not to mention time-consuming.

   So, in this process of taking to FSB, I discovered another option for brokers to get “regulated”, which may be something to look at…
   FSB regulates the provider and not the products offered and a broker may want to be regulated as an “advisor” (being able to offer advise to client), an “intermediary” (being able to sell financial products), or both. FSB confirmed that if a foreign broker enters some sort of partnership with a regulated financial services provider, the provider’s regulation will then extend to the broker. There are over 1,000 financial service providers in SA who have the above regulation and many of them would be more than happy to become IB’s, white labels or some sort of “franchisees” for foreign brokers, if the deal is worth their while. I specifically checked with them and this is true even for straight-forward IB agreements! If I was a broker looking at entering the SA market, I would definitely consider that option before going through the application process.

   And finally, just some feedback on Tony’s comment, regarding the Reserve Bank. I really don’t think it makes such a big difference, as South Africans have a limit of up to ZAR500,000 (I think) which they can take out of the country or generally use as they please without needing a special permission from SARB. I specifically checked with SARB as well to find out if they have any issues with online forex deposits and for as long as individuals stick to their limit, SARB sees it as any other online transaction. Buying CD’s on Kalahari.net or depositing money in a trading account to them is the same thing. And to be honest, I don’t think there are that many South Africans who would invest more than ZAR500K in one year, so SARB really is not a major concern.

   September 25th, 2012 at 7:44 pm
7. Michael Greenberg said:
   excellent and candid comment, thanks for being so open. we’ll see your expo link to few relevant brokers in exchange

   September 26th, 2012 at 5:05 pm
8. Jon said:
   Jeni,

   Is that 500K SAR max…..is that per transaction, or per day, or per month, etc? I know that for anti-money laundering some banks in Thailand will recommend clients sending multiple smaller deposits under $15-20,000 USD rather than 1 larger deposit, and then magically there is no problems or red flags raised.

   September 27th, 2012 at 6:50 am
9. Jeni Kostova said:
   Hi Jon,

   I just checked again with SARB. It is my mistake… the allowance is not ZAR500K but ZAR1Million. That’s approximately 100K in euros.

   The allowance is for all people over the age of 18 and is per calendar year. (Children under the age of 18 have an allowance of ZAR200K.) A person can use the money for travel, online purchases, payments via Moneygram, etc and there is no restriction as to whether it is done as a lump sum or in small amounts.

   Over and above this allowance all South Africans have an “investment allowance” of ZAR4Million (again per calendar year) to invest abroad. In order to use this allowance, however, residents need to produce a tax clearance certificate to SARB.

   I hope that helps….
   Jeni

   September 27th, 2012 at 5:16 pm
10. Jeni Kostova said:
    @ Dan,

    I am not too sure if SafeCap’s FSB license applies to all their brands, as when you punch the number on the FSB site to verify it says that the license is issued to SafeCap and the trading name is Markets.com.

    GoForex, however, which is another one of SafeCap’s brands is now also using the same FSB license on their site, so may be it applies across the board…

    September 27th, 2012 at 6:52 pm
11. Jon said:
    Jeni,

    Are SA residents required to provide some sort of tax id whenever they use moneygram or any other service (besides a bank) to wire money? What about traveling to a land border?

    Are there any restrictions over how much money can be brought into the country? The regulations you state seem to only cover outgoing monies.

    September 30th, 2012 at 10:20 am
12. Jeni Kostova said:
    Hi Jon,

    To send money via Moneygram or any similar service one does need to register, but only the first time he/she uses the provider. Thereafer , the registration is valid and the person can simply wire the amount he/she wants to send, as long as it is within their personal limit. They don’t require tax clearance to register. Just a copy of ID/passport and proof of address (e.g. a utility bill).

    The allowance (ZAR1 million) includes all sorts of transactions – using your credit card on line with an overseas merchant, using your credit card for physical purchases while traveling out of the country, transferring money overseas (be it as a gift, donation, investment or whatever it is you want to send money for), etc. As long as it all adds up to the limit.

    When it comes to physically carrying money through the border, you have to remember that it is illegal for SA residents to carry foreign currency while in the country. What one has to do if they want to take physical foreign currency when traveling is go to a bank or other forex reseller within 7 days before their trip with their ticket and passport and purchase whatever currency they want to take with. When the person comes back, whatever money was not used abroad needs to be converted back within 3 days (I think) into South African Rands. The foreign currency bought that way (and not converted back upon your return) also adds to the personal limit.

    If one wants to use their “investment allowance”, though, which is an additional ZAR4 million, over and above the first ZAR1 million, they do need to get a tax clearance certificate from SARS.

    I have never heard of restrictions on getting money into the country (inbound) but can check with SARB, if you want to know. When I get international deposits, I just get an e-mail from the bank to say I have a forex deposit and need to go to the website. There it asks me to choose what the money is for (they are 3 basic options – sale of goods and services, gift/donation or interest/profit on foreign investment) and then gives me the exchange rate. I can take it at that time or wait (if I want to get a different rate) and then get the transfer into my account. It takes seconds, literally!

    September 30th, 2012 at 11:04 pm