Retail and spot forex trading are growing at an enormous rate all around the world, with demand, particularly spiking in the African countries of Nigeria and South Africa. In fact, demand for both spot forex and retail forex has increased dramatically in recent years in South Africa. According to reports and estimates from https://www.tradeforexinsa.co.za/, South Africa has an ever-growing number of traders, an increasing demand amongst investors, brokers, and a well-regulated finance sector, fast establishing itself as the leader in the forex market landscape.
In fact, according to several reports, the number of active traders in South Africa amount to almost 190,000, with countries like Kenya and Nigeria not lagging far behind with 50000 and 200000 traders respectively.
The Demand for Forex in South Africa Compared to Rest of Africa
The above estimates and reports have also found that the rest of Africa makes up for almost 1.3 million traders, excluding that of South Africa Nigeria and Kenya. South Africa is number one if we consider local retail FX trading demand, as well as global currency swaps in the country. There are varied reasons behind this phenomenon, including South Africa’s strong and regulated financial sector as well as increased local demand from investors.
According to the Global Daily FX Volume Figures for 2019, South Africa accounted for USD 20.3 billion out of the total 6.6 trillion USD volume in global daily forex volume. South Africans also hold the first place when it comes to the size of the deposits with retail forex platforms, which currently stands at $742.04. This makes South African traders very valuable to brokerages worldwide.
Coming back to daily forex trading volume figures, South Africa’s figures reached to about $2.21 billion per day, which includes spot and CFD trading. Compared to South Africa, Nigeria’s daily forex volume was $314 million per day as of February of last year compared to Kenya’s volumes to $192.66 million per day during the same period. All the above figures are taken from the Triennial Central Bank Survey of Foreign Exchange and OTC market, conducted by the Bank of International Settlements.
South Africa’s Strong Regulatory Framework
As mentioned before, one of the reasons for the growth of forex trading in South Africa is its strong regulatory framework, making it a popular destination for both brokers and traders. The Financial Sector Conduct Authority (FSCA) is the authority responsible for licensing forex trading in South Africa. It is one of the oldest and most respected financial regulators in the continent, having over 1000 registered financial entities.
Brokers overwhelmingly prefer South Africa over other nations due to the level of existing regulations it has, coupled with a strong financial sector and growing demand. Many of the world’s leading Forex brokerage houses, such as Hotforex, IG Markets and Plus500 have opened local offices in the country, due to the FSCA’s presence.
South African investors along with investors from the rest of Africa, thus prefer the FSCA over other foreign regulators like ESMA, ASIC and FCA. The FSCA offers products like CFDs on commodities, cryptocurrencies, Spot Forex, and indices. There are no restrictions placed on the leverage as well as marketing of these products. As more and more investors are putting their trust in FSCA, this growing demand is positively influencing the growth in South Africa’s FX sector.