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Financial Service Board (FSB) Brokers 2024

FSB South Africa

Brokers regulated by the Financial Service Board (FSB) in South Africa must comply with certain registration procedures and insurance requirements, to ensure fair practices in the non-banking financial market. This guide evaluates the FSB’s structure, responsibilities and how these affect traders.

 

The Financial Service Board (FSB) is now the Financial Sector Conduct Authority (FSCA).

This independent regulatory body oversees brokers in South Africa, ensuring certain operating requirements are met to protect local traders.

See our list of the best FSCA-authorized brokers.

What is the FSB?

Firstly, FSB stands for the Financial Services Board. The regulatory agency is an independent body. From its headquarters in Pretoria, South Africa, the FSB regulates the largest stock exchange in Africa, the Johannesburg Stock Exchange. However, they also launch investigations into a whole host of other general markets, from insurance services and brokers to the latest cryptocurrency, such as Bitcoin.

You may have noticed when you search for a prospective broker, the FSB logo often appears. This is because the agency issues broker licenses for those that meet compliance requirements. Details of that process and its importance can be found below.

Purpose

The primary aim of the FSB group is “To promote and maintain a sound financial investment environment in South Africa”. This entails enforcing regulations to prevent market manipulation, among other functions. This objective is also why the body must conduct checks on licensed brokers and registered companies.

On top of the supervision of their regulated brokers’ list, the board also has other strategic objectives, including:

FSB Brokers

  1. AvaTrade
  2. OANDA US
  3. Deriv.com
  4. Pepperstone
  5. XM

#1 - AvaTrade

Why We Chose AvaTrade

AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for day trading, alongside a comprehensive education center and multilingual customer support.

"AvaTrade offers the full package for short-term traders. There is powerful charting software, reliable execution, transparent fees, and fast account opening with a low minimum deposit."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting
  • Regulator: ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM
  • Platforms: WebTrader, AvaTradeGO, AvaOptions, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30 (Retail) 1:400 (Pro)

Pros

  • WebTrader is well-suited to beginners and features a strong suite of technical analysis tools and market research for day traders
  • The broker offers reliable 24/5 multilingual customer support with fast response times during testing
  • Automated trading is supported through MetaTrader Expert Advisors (EAs), as well as the AvaSocial and DupliTrade tools

Cons

  • There’s an above-average $50 inactivity fee after three months, though this won't impact active day traders
  • Traders from the US are not accepted
  • There is no ECN account with raw spreads
Visit AvaTrade

#2 - OANDA US

Why We Chose OANDA US

OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available for short-term traders, alongside flexible contract sizes and automated trade executions.

"OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."

- DayTrading Review Team
  • Instruments: Forex, Crypto
  • Regulator: NFA, CFTC
  • Platforms: OANDA Trade, MT4, TradingView, AutoChartist
  • Minimum Deposit: $0
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:50

Pros

  • The broker's API facilitates access to 25 years of deep historical data and rates from 200+ currencies
  • The proprietary OANDA web platform continues to deliver a highly competitive charting environment, including 65+ technical indicators powered by TradingView
  • OANDA is a reliable, trustworthy and secure brand with authorization from tier-one regulators including the CFTC

Cons

  • It's a shame that customer support is not available on weekends
  • The range of day trading markets is limited to forex and cryptos only
  • There's only a small range of payment methods available, with no e-wallets supported
Visit OANDA US

#3 - Deriv.com

Why We Chose Deriv.com

Deriv.com is a low cost, multi-asset broker with over 2.5 million global clients. With just a $5 minimum deposit, the firm offers CFDs, multipliers and more recently accumulators, alongside proprietary synthetic products which can't be found elsewhere. Deriv provides both its own in-house charting software and the hugely popular MetaTrader 5.

"Deriv.com will suit day traders looking to make fast-paced trades using CFDs and multipliers with high leverage up to 1:1000. The broker is also the industry leader in synthetic indices, which simulate real market movements and are available around the clock. "

- DayTrading Review Team
  • Instruments: CFDs, Multipliers, Forex, Stocks, Indices, Commodities
  • Regulator: MFSA, LFSA, VFSC, BFSC
  • Platforms: Deriv Trader, MT5
  • Minimum Deposit: $5
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:1000

Pros

  • Deriv continues to offer fast and reliable 24/7 support and the WhatsApp service is particularly convenient
  • There's a good range of fast deposit and withdrawal methods with zero payment fees and low minimum deposits
  • Deriv bolstered its short-term trading opportunities in 2024 with accumulator options on simulated indices featuring up to 5% growth rates

Cons

  • There are limited copy trading tools and analysis features compared to alternatives like IQ Cent
  • The range of 100+ assets trails some competitors such as Quotex which offers 400+
  • There's no loyalty program or rebate scheme for high volume traders
Visit Deriv.com

#4 - Pepperstone

Why We Chose Pepperstone

Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for day traders at all levels.

"Pepperstone stands out as a top choice for day trading, offering razor-sharp spreads, ultra-fast execution, and advanced charting platforms for experienced traders. New traders are also welcomed with no minimum deposit, extensive educational resources, and exceptional 24/7 support."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting
  • Regulator: FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB
  • Platforms: MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade
  • Minimum Deposit: $0
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30 (Retail), 1:500 (Pro)

Pros

  • There’s support for a range of industry-leading charting platforms including MT4, MT5, TradingView, and cTrader, catering to various short-term trading styles, including algo trading.
  • Pepperstone boasts impressive execution speeds, averaging around 30ms, facilitating fast order processing and execution that’s ideal for day trading.
  • Award-winning customer support is available via telephone, email or live chat with response times of <5 minutes during testing.

Cons

  • Pepperstone’s demo accounts are active for only 30 days, which may not be not long enough to familiarize yourself with the different platforms and test trading strategies.
  • Pepperstone does not support cTrader Copy, a popular copy trading feature built into the excellent cTrader platform and available at alternatives like IC Markets.
  • Despite enhancements to its range of markets, crypto offerings are relatively limited compared to other brokers such as eToro, with no option to invest in real coins.
Visit Pepperstone

#5 - XM

Why We Chose XM

XM is a globally recognized forex and CFD broker with 10+ million clients in 190+ countries. Since 2009, this trusted broker has been known for its low fees on 1000+ instruments. XM is regulated by multiple financial bodies, including the ASIC and CySEC.

"XM is one of the best forex and CFD brokers we have tested. The flexible account types will suit a variety of short-term trading styles while the $5 minimum deposit and smooth sign-up process make it easy to start trading."

- DayTrading Review Team
  • Instruments: Forex, Stock CFDs, Turbo Stocks, Indices, Commodities, Precious Metals, Energies, Shares, Crypto, Futures
  • Regulator: ASIC, CySEC, DFSA, FSC, FSCA
  • Platforms: MT4, MT5
  • Minimum Deposit: $5
  • Minimum Trade: 0.01 Lots

Pros

  • Transparent and low fees with spreads from 0.0 pips that will help protect day trading profit margins
  • 1000+ instruments are available, including recently added thematic indices, providing exposure to emerging industries
  • The broker offers premium research including market sentiment, fundamental insights and strategy builders

Cons

  • There is weak regulatory oversight through the global entity
  • PayPal deposits are not supported
  • There's $5 inactivity fee after only 3 months, though this won't affect active traders
Visit XM

History

The FSB came to life in 1991, following the recommendations of the Van Der Host Committee. Their findings called for an independent agency capable of regulating the non-banking financial services industry.

FSB offices and departments have since expanded along with their mandate. For example, in September of 2004, the Financial Advisory and Intermediary Services Act (FAIS) gave the FSB extra powers to monitor market conduct in the banking industry.

The Financial Intelligence Centre Act in 2001 then gave the FSB head office the additional responsibility of tackling money laundering. Other expansions have led to an increase in the numbers of compliance officers and reporting requirements.

Overall, from their home address in Pretoria, the FSB has become a reputable body, bringing stability to the industry. It is unsurprising then that their scope has extended, allowing it to better protect consumers of financial products through regulations.

Structure

As the official website details, the FSB is made up of various committees. However, it is the board, made up of key individuals, that supervises operations. It is also the board members that appoint the Executive Officer, who leads the FSB on a day-to-day basis. The Executive Officer is also the Registrar of Non-banking Financial Institutions.

The four Deputy Executive Officers oversee the:

The regulatory agency receives all funding from license fees and other costs levied on the industry. Those funds are used to pay for everything from staff training to annual reports. In addition, the body funds both the ‘Office of the FAIS Ombud’ and the ‘Office of the PFA’. However, both offices are independent of the FSB and tackle the complaints of financial consumers.

Powers & Responsibilities

FSB responsibilities include:

Within those responsibilities is ensuring compliance with current legislation and regulations. This can include requirements around:

The FSB also has an enforcement committee. That committee has enforcement powers to tackle breaches of regulations through unlimited penalties and compensation orders.

The database of registered forex brokers and other financial providers is extensive. As a result, all orders carry significant weight. In fact, an FSB order has the same enforcement validity as a judgement from the Supreme Court of South Africa.

Additional powers include the verification of license categories for financial institutions. Other responsibilities include analysing the markets for potential risks. Hence the FSB will release short-term insurance and risk reports.

It’s also worth noting the body has some discretion around regulations. It can hand out exemptions and has actually come under fire in the past for showing leniency towards certain companies.

Customer Complaints

With so many documents and guidance notes for companies to comply with, financial providers often fall short. As a result, there is often a large number of disgruntled firms. So on top of a customer complaints service, there is an appeals board for those who disagree with FSB regulations and decisions.

The board is independent of the FSB and approved nominees come directly from the Minister of Finance. You also cannot join the board if you are an active member of the financial industry.

The aim is that all of the above powers and responsibilities help ensure the functionality of financial entities, thereby protecting investors.

Criticisms of the FSB

Despite the benefits of the FSB, the agency also faces criticism. In particular, the body frequently features in the news following questions about corruption. For example, the Office of the Public Prosecutor is looking into claims of extortion, fraud, bullying, intimidation and mismanagement by the head of the FSB, Dude Tshidi.

In 2017, Julius Malema, president of the Economic Freedom Fighters (EFF), accused Tshidi of “gross misconduct, abuse of power and perjury”. Malema then went further to say, “We have seen substantial documented evidence indicating that for years he has been responsible for gross misconduct, material abuse of the powers of the FSB, perjury, withholding information and ongoing efforts to cover up wrongdoing, intimidation of members and corporate institutions, and breaches of his fiduciary duties”.

These complaints originate from a relationship between lawyer Anthony Mostert and Tshidi regarding 10 pension funds. It has been said Tshidi made Mostert curator of all 10 funds, who then brought in his law firm to advise in a blatant conflict of interest. Furthermore, it is claimed Mostert then charged inflated curatorship contingency fees.

Despite press releases from the FSB to refute these claims, these enquiries remain a serious test for the regulatory agency. It also highlights that the FSB still has a long way to go to cement its position as a reputable, impartial body, such as the UK’s FCA.

Recent Performance

Quarterly reports show the FSB are active in carrying out enforcement actions. Within the first three months of 2018, the agency handed out R350,000 in administrative penalties. In the last quarter of 2017, the body gave out nearly R1.5 million in fines.

Large fines have helped ensure brokers and other institutions rigorously stick to application processes and regulations. If the FSB continues to hold institutions to account, consumer confidence and protection will only increase.

Note you can view recent regulatory actions by heading to their official website. You can also find their email address and telephone number in their Contact Us section. Representatives should be able to help you with licence checks, give information on application progress, plus a whole load more.

Final Thoughts on the FSB

Despite a relatively short lifespan, the FSB has grown into an effective, active regulatory agency. Having said that, the company still has some way to go to overcome accusations of corruption and mismanagement.

Before you sign up and login to your trading account, you must check for regulatory oversight. Conducting an online broker search and browsing reviews are easier now than ever before. In fact, this is one of the most important steps you can take to keep your investments relatively secure.