CAPE TOWN – Finance Minister Tito Mboweni kicked off a minor storm and no small measure of confusion when responding to a parliamentary question on online forex trading last week.
At first, Mboweni seemed to directly contradict current Financial Services Conduct Authority (FSCA) regulations by stating that online forex trading was illegal in South Africa and that residents were not allowed to speculate against the rand.
The FSCA is responsible for overseeing the development of the South African financial market and its main goal is to ensure the efficiency and integrity of the whole experience.
Mboweni pointed out that the illegal online forex trading platforms should not be confused with authorised brokers who used trading platforms to manage and execute market positions. The brokers do not trade in actual foreign currency but offer products with exposure to underlying referenced assets, which may include foreign currency.
TradeForexSA, a South African forex trading centre that rates brokers and provides education for beginner traders, said in a statement that while the minister did clarify his statements by saying that illegal forex trading platforms should not be confused with brokers who offered derivative trading, there seemed to be some confusion over how online forex trading worked and what was legal and illegal in South Africa.