All about Forex Broker Licence in South Africa

Previously known as the Financial Services Board (FSB), the Financial Sector Conduct Authority (FSCA) is the regulatory body of South Africa’s non-banking financial services industry, which includes collective investment schemes, financial advisors and brokers, among others.  It operates under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS).

While it is completely legal for South Africans to trade with Forex brokers who are not regulated by the FSCA, South Africans are in greater comfort knowing that it is South African laws and courts that oversee the broker's day-to-day operations.

As of 1 April 2018 the FSB changed their name to the FSCA which is responsible for the regulation and supervision of financial service providers (FSPs) such as forex brokers, investment funds, and investment managers.

The company that intends to operate as an investment firm in order to conduct Forex business in South Africa must obtain a Category I FSP licence with FSCA.

To act as an intermediary in securities and instruments (shares, money market instruments, bonds, and derivative instruments).

The application for Category I licence requires preparation of excessive paperwork, continuous liaising with FSCA and local presence of the applicant in South Africa in order to pass regulatory exams and attend verification at a local bank.  Furthermore, the proposed activity of the Applicant, the professional and academic background of all appointed individuals will be closely investigated by the regulator.

Every Applicant is required to appoint a Representative in South Africa, at least one Key Individual and a compliance officer; all the persons must be registered with FSCA. At least one Key Individual must be resident in South Africa in order to effectively take part in company management.  Each Key Individual and Representative must pass certain regulatory examinations that are held on regular basis in South Africa or UK.

A licensee must have an account in a local bank to deposit the initial capital and to use for corporate needs.

A licensed company is subject to strict compliance reporting and constant monitoring of its activity by a compliance officer who submits the same to FSCA.

The following steps will be carried out:
  • Gathering of relevant KYC documents for initial verification
  • Registering Key Individuals and Representative(s); attending regulatory exams
  • Establishment of a company/branch in South Africa
  • Preparation of business plan and necessary manuals and procedures, obtaining the insurance
  • Opening a bank account in a local bank, deposit of capital
  • Licence application with FSCA.

    • Company structure and staff:

    • Minimum 1 shareholder (can be legal entities or natural persons)
    • Minimum 1 director (can be only natural persons)
    • A Representative
    • At least 1 (preferably 2) Key Individuals
    • A compliance officer
    • External auditor(s)
      Timeframe: 9 to 12 months Taxation
        • Corporate income tax – 28%
        • No withholding taxes
        • Capital gains tax - 18,6%
          Capital
          The FSP shall maintain current assets which are at least sufficient to meet current liabilities Accounting requirements - Annual submitting of audited financial statements Local office - Not Required Registered office - Required Local employees - Required (Key Individual) Regulatory examinations (for Key Individual(s) and Representative(s)) - Required Professional Indemnity Cover - Required (R5 million Rand (around 350,000 USD))

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