Binary trading is popular all over the world and South Africa is no exception to this rule. Everyone wants to participate in financial markets that, thanks to binary options, became more profitable than ever. Binary trading is considered to be one of the best and most profitable ways of trading in financial markets, but many traders in South Africa have their doubts. One of the most common questions that pops in mind is whether or not binary options trading is regulated in South Africa.
This article will try to answer this question and provide more information about binary options in South Africa.
Are Binary Options Legal in South Africa?
Binary options trading is very popular in South Africa because it is easily accessible and doesn’t require big capital or previous trading experience. Traders will also be happy to know how binary options are completely legal in south Africa, which makes them even more attractive for traders of all kinds.
Binary options trading became very popular in South Africa in the very beginning, almost 10 years ago, but South African government still didn’t manage to completely regulate all aspects of this type of financial trading, so at the moment there is only one binary options broker that is regulated in South Africa.
AnyOption is the only broker regulated in South Africa and has the FSB license.
This means that South African binary traders should rely on international regulators like CySEC, that regulates binary options on the territory of the EU.
Binary Options and Financial Markets Regulation in South Africa
The South African financial market is regulated in a specific way. All aspects of investing and finances, except banking, are regulated by the Financial Services Board (FSB). The FSB was formed in 1990, and it is responsible for regulating not only Johannesburg Stock Exchange but also:
- Capital Markets
- Collective Investment Schemes
- Financial Services Provider
- Re-insurers, short and long-term
- Lloyd’s correspondents
- Other Credit Agents
- Nominee Companies
- Retirement Funds
- Friendly Societies
The FSB is also responsible for implementation and execution of Financial Intelligence Centre Act from 2001, that includes all things related to prevention of money laundering.
In 2007, BESA (Bond Exchange South Africa) entered a joint venture with the third party to deliver binary options trading. BESA’s definition of binary options is as follows:
“A binary option is defined as the right, but not the obligation, to receive a fixed payout at some agreed future time at a pre-specified price of the underlying instrument.”
Binary options are also defined as ‘derivative instruments’ by Securities Services Act of 2004 but are not regulated as they are in the European Union. One of the most interesting aspects of binary options trading in South Africa is that companies in South Africa are not allowed to offer binary trading services to South African traders. This is another reason why South Africans have to trade with offshore brokers.
Binary Options Traders Protection in South Africa
The FSB takes customer protection and security of their funds very seriously. Binary options traders can use one or several contact numbers listed on the FSB website.
Regulated vs. Unregulated Binary Brokers South Africa
Binary options in South Africa highly are mostly traded with an offshore broker. Some of these brokers are regulated and some are not. In order to help traders protect their money and avoid scams it is always a good choice to select a broker that is regulated elsewhere, even if it is not regulated in domicile country.
AnyOption is the binary broker that is regulated by the FSB, and for that reason, the best choice for traders in South Africa.
Traders who want more diversity or to trade with multiple brokers should select binary options broker regulated by other important regulators like CySEC (regulatory body in the European Union) or CFTC (regulatory body in the USA).
Regulated brokers have more obligations towards the trader and have to respect a whole set of rules determined by the regulatory body. This also means that traders are more protected and can be sure that broker won’t disappear over night. Regulated binary options brokers in South Africa deliver what they are promising, have no hidden terms that can put traders in an unfavorable position and are not allowed to use any unprofessional tactics.
On the other hand, unregulated brokers for binary options in South Africa are completely independent and can act as they like. They can withhold withdrawals, add unauthorized bonuses, ignore traders, manage their accounts without approval etc. These are practices that are very dangerous and can cost traders’ their money, time and health.
Binary Options trading with regulated brokers in South Africa will give traders better and, not to mention, safer trading experience as they won’t be influenced by false promises and pushy ‘account managers’ who are only after their money, and don’t put traders’ interest first.