The Types of Forex Brokers in South Africa explained. We have also rated and reviewed the best types of Forex Brokers available on the South African Market to date. From ECN, STP, NDD to Dealing Desk (Market Maker) Forex Brokers.
In this in-depth write-up you will learn:
- ✅ What are the main Broker Types in South Africa.
- ✅ What is the difference between a Dealing Desk and NDD Broker?
- ✅ What are the key features of a Market Maker Broker?
- ✅ What are STP and ECN Broker Types?
- ✅ How many types of Forex Brokers are there overall?
- ✅ How do I choose a Forex Broker?
- ✅ Types of Forex brokers and their functions
- ✅ What is the best Forex Broker in South Africa?
- ✅ Which South African Forex Broker is best for beginners?
- ✅ How many types of Forex Brokers are there in South Africa?
and much, MUCH more!
Forex Broker – A Definition
A Forex Broker is a financial services company that provides Forex traders access to a platform for buying and selling foreign currencies.
Types of Forex Brokers in South Africa (2023)
| ? Broker | ✅ Type | ? Min. Deposit (USD) | ? Min. Deposit (ZAR) | ? Open an Account |
| ? Pepperstone | NDD (No Dealing Desk) | $0 USD | R0 ZAR | ? Click Here |
| ? AvaTrade | Dealing Desk (Market Maker) | $100 USD | R1871 ZAR | ? Click Here |
| ? IG Group | ECN (Electronic Communications Network) | $0 USD | R0 ZAR | ? Click Here |
| ? Alpari | STP (Straight Through Processing) | $5 USD | R100 ZAR | ? Click Here |
The 4 Types of Forex Brokers in South Africa (2023)
Top Types of Forex Brokers in South Africa – Explained.
Before you take the jump and register a live account with a Forex broker, there is one final piece of information you will need to have at your disposal.
South African traders can get access to the foreign exchange market via one of two primary kinds of forex brokers, namely those with a non-dealing desk (NDD) and those with a Dealing Desk (also known as a market maker) as well as choosing from ECN and STP offerings.
Here is an Overview of each Leading Broker and its Broker Type.
No-Dealing Desk (NDD) Brokers
A No Dealing Desk Broker describes a trading platform offered by a forex broker that provides unfiltered access to interbank market exchange rates. Other key factors include:
- ✅ NDD brokers allow customers to trade directly with the interbank rates.
- ✅ Direct access to interbank rates may help traders in some cases but hurt them in others.
- ✅ Trading with an NDD broker assures the trader that their broker has no conflict of interest with their trades.
Brokers that do not maintain a physical inventory of goods for sale or purchase are known as “no dealing desk brokers.” In addition to not making a market for their customers, they also will not accept the other side of your deal.
Considering that the market already exists through other market makers, all that needs to be done is for sellers and buyers to find one other as fast and effectively as feasible. Electronic Communication Network (ECN) brokers and Straight-Through-Processing (STP) brokers are two subsets of the no-dealing desk broker category.
Market participants can place orders to purchase and sell with each other using an ECN broker’s platform, which then matches the demands.
However, STP brokers play a more active role since they are the ones matching orders from a wide variety of traders, banks, hedge funds, prime brokers, etc.
Finally, some brokers use a combination of the ECN and STP methods, known as the ECN + STP model.
Main NDD Brokers in South Africa include:
Pepperstone
Overall, Pepperstone is the best NDD forex broker in South Africa. Pepperstone offers its services in over 65 countries. Pepperstone makes access available to four major trading platforms, including MetaTrader 4 and 5. Pepperstone combines fast execution speeds, raw spreads, and low commissions.
Pepperstone Overview
| ? Broker | ? Pepperstone |
| ? Min Deposit | $0 USD |
| ✒️ Regulation | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB |
| ☪️ Islamic Account | ☑️ Yes |
| ? Demo Account | ☑️ Yes |
| ? Base Currencies | 9 |
| ? Forex Pairs | 60+ |
| ? Share CFDs | 60+ |
| ? Index CFDs | 16 |
| ? Open an Account | ? Click Here |
Pepperstone Pros and Cons
| ✅ Pepperstone Pros | ❎ Pepperstone Cons |
| Segregates client funds | Limited range of instruments |
Dealing Desk (Market Maker) Brokers
Market makers are typically large investment firms or financial institutions that create liquidity in the market. Other key factors include:
- ✅ The term market maker refers to an individual participant or member firm of an exchange that buys and sells securities for its own account.
- ✅ Market makers provide the market with liquidity and depth and profit from the difference in the bid-ask spread.
- ✅ Brokerage houses are the most common type of market makers.
Brokers who work at “dealing desks” are sometimes referred to as “market makers” since they are responsible for establishing new client-facing markets.
Simply put, a market maker will “create” a market by executing the opposing side of your transaction anytime you issue a buy or sell order.
Once you place an order, they begin to make a profit. They will also purchase from you when the time comes.
In this situation, your losses are your broker’s gains, which gives the appearance of a conflict of interest.
Since brokers can see their customers’ stop-loss and take-profit levels, some of them would intentionally cause the price to surge to trigger their customers’ stop-loss orders, a behavior known as “stop-hunting.”
Main Market Maker Brokers in South Africa include:
AvaTrade
Overall, AvaTrade is the Best Market Maker Forex Broker in South Africa. Furthermore, AvaTrade is one of the most popular Market Maker and STP brokers in the world. AvaTrade offers access to a wide range of automated trading platforms and EA compatibility coupled with Competitive spreads and leverage.
AvaTrade Overview
| ? Broker | ? AvaTrade |
| ? FSCA regulated | ☑️ Yes |
| ?Bonus | ✅ Yes |
| ?Trust Score | 94% |
| ?Live support | 24/5 |
| ? MetaTrader 4 (MT4) | ☑️ Yes |
| ? MetaTrader 5 (MT5) | ✅ Yes |
| ?Trading Islamic Account | ☑️ Yes |
| ?CFDs – Total Offered | 681 |
| ? Spreads | 0,9 pips |
| ? Withdrawal fee amount | Zero |
| ? Trading fees class | Very Low |
| ✔️ Scalping Allowed | ☑️ Yes |
| ? Open a account | ? Click Here |
AvaTrade Pros and Cons
| ✅ Avatrade Pros | ❎ Avatrade Cons |
| Used by 400,000+ traders | Doesn’t offer VPS |
| Well-Established | Not FCA Regulated |
ECN (Electronic Communications Network) Brokers
The term ECN broker refers to a financial intermediary that makes use of electronic communications networks (ECNs) to give clients direct access to other participants in equity and currency markets. Other Key Factors of ECN Brokers include:
- ✅ ECN brokers facilitate transactions that occur on electronic communication networks (ECNs).
- ✅ ECN brokers will help clients to directly access stock or currency markets on ECNs, to which said clients would otherwise not have access.
- ✅ ECN systems are more expensive as compared to traditional exchanges.
The use of an ECN Broker will allow investors a way to trade outside traditional trading hours by providing. This is done by providing them with a mechanism for wider flexibility and availability. This will also allow investors to avoid the wider spreads that are common when using a traditional broker. This in turn provides overall lower commissions and fees.
ECN brokers are non-dealing desk brokers and they match participants in a trade electronically and pass the orders to liquidity providers.
Main ECN Brokers in South Africa include:
IG
Overall, IG is the best ECN forex broker in South Africa. IG Serves more than 200,000 worldwide traders and provides South Africans access to the Volatility 75 index which can be traded as a CFD instrument. IG offers personalized trading solutions to South Africans and offers a safe and well-regulated trading environment.
IG Overview
| ? Broker | ✅ IG Group |
| ? Trading Fee Class | Average |
| ? Inactivity Fee | ✔️ Yes |
| ? Minimum Deposit | $0 USD |
| ? Base currencies | 6 |
| ✅ Demo Accounts | ✔️ Yes |
| ? Products Offered | ETF, Forex, Options |
| ? Open an Account | ? Click Here |
IG Pros and Cons
| ✅ Pros | ❎ Cons |
| Excellent Web-Trading Platform | High Forex and Stock CFD Fees |
| Excellent Educational Tools | Limited Product Portfolio |
| Great Deposit and Withdrawal options | Slow Customer Support |
| ? Open an Account | ? Click Here |
STP (Straight Through Processing) Brokers
A Straight Through Processing or STP broker is a forex brokerage firm that will provide wholesale forex services orders to institutional traders. Other key factors of STP Brokers include:
- ✅ An STP broker will pass all or part of a client’s trades up to liquidity providers of an STP broker.
- ✅ STP brokers have access to a diversified spread and size offering. This allows customers to make more than one position.
- ✅ STP brokers may trade against their customers
Furthermore, An STP broker offers both variable and fixed spreads to make trades.
Main STP Brokers in South Africa include:
Alpari
Overall, Alpari is the Best STP broker in South Africa. Alpari offers its services to more than 2 million traders across over 150 countries. Alpari offers some of the tightest spreads to South African traders and a range of trading options on CFDs and forex instruments.
Alpari Overview
| ? Broker | ? Alpari |
| ? Regulation | Financial Services Commission |
| ? Islamic Account (Swap Free) | ☑️ Yes |
| ? Demo Account | ✅ Yes |
| ? Institutional Accounts | No |
| ? Managed Accounts | ☑️ Yes |
| ? Maximum Leverage | 1:1000 |
| ? Minimum Deposit | $100 USD |
| ? Open an account | ? Click Here ? |
Alpari Pros and Cons
| ✅ Alpari Pros | ❎ Alpari Cons |
| Transparent | Limited Research Tools |
How to Choose a Forex Broker in South Africa
Traders in South Africa may face unique challenges due to differences in the trading environment and regulatory oversight, even though worldwide brokers welcome customers from most nations.
Traders in South Africa looking for a Forex broker should think about the following factors:
- ✅ Regulation and Investor Protection
- ✅ The Range of Markets Offered
- ✅ Trading Conditions and Fees
- ✅ Trading Platforms on Offer
- ✅ Education and Research
- ✅ Ease of Deposit and Withdrawal
- ✅ Customer Support
Regulation and Investor Protection
- ✅ Foreign exchange brokers are subject to oversight by regulators to ensure they are operating within the law and in a moral manner.
There are certain authorities, including ASIC, FSCA, FCA, and CySEC, that do a better job than others of keeping brokers honest.
South Africans should feel secure investing with an FSCA-certified broker since the FSCA is improving the way that it oversees forex brokers operating in South Africa.
South African traders must remember that investors whose accounts are registered through international or offshore brokers that have offshore regulations are not safeguarded by the FSCA.
This can leave these investors and traders vulnerable to the dangers of broker insolvency, fraud, and unfavorable trading circumstances (such as no negative balance protection).
The Range of Markets Offered
- ✅ The range of CFD trading instruments offered by the broker’s platform is another important consideration.
Metals, commodities, indices, and more are now often traded as CFDs. Make sure you know whether the instrument you plan to trade the most is offered via your broker.
The available instruments and contract details (lot size, normal spreads, lowest spreads, etc.) for each instrument are often listed in one place on a forex broker’s website.
Trading Conditions and Fees
- ✅ When it comes to foreign exchange (FX), a reputable broker will provide narrow spreads and reasonable minimum deposits to attract new customers.
Trading execution must be instantaneous and need little human oversight. The spreads offered by Forex brokers, together with their execution policies and a complete list of CFDs accessible to South African traders, should be made public.
The trading environment and the availability of negative balance protection might vary based on a trader’s country of residency.
Trading Platforms on Offer
- ✅ Each broker will provide their own proprietary trading platform or support for a widely used third-party platform like MetaTrader 4, MetaTrader 5, or cTrader, with some brokers offering all three and more.
Most Forex traders have a preferred trading platform, so it is helpful if their broker offers more than one option. Due to differences in platform availability by country of residency, this study details those platforms accessible to users in South Africa.
Education and Research
- ✅ Brokers should provide new traders with comprehensive and well-organized trading training in addition to a practice trading account.
To help their clients maximize their trading potential and get a thorough understanding of the market, brokers should give in-depth market assessments.
Most education and resources will always be presented in English, but very few South African brokers provide it in the local languages of Afrikaans, Zulu, or Xhosa.
Ease of Deposit and Withdrawal
- ✅ A broker’s deposit and withdrawal processes should be quick and painless.
Most brokers will openly display their withdrawal and deposit times and procedures on their websites. Before committing to a specific approach, you should always evaluate the broker’s deposit and withdrawal options and processes.
Customer Support
- ✅ The quality of the customer service offered by any forex broker is a major consideration.
Weekday Live Chat availability, a South African phone number, and email responses timed at under one hour are all hallmarks of a reliable broker. However, South African traders will also find that not every broker provides constant availability of customer service.
Conclusion
Now it is your turn to participate:
Which Forex Broker Type from this list do you intend to test out?
What was the determining factor in your decision to engage with a certain broker?
Was it because of the unfiltered access or the liquidity and depth of the market provided?
Regardless, please share your thoughts in the comments below.
You might also like: AvaTrade Review
You might also like: Pepperstone Review
You might also like: IG Review
You might also like: Alpari Review
Frequently Asked Questions
Is Forex available in South Africa?
Yes, forex is available in South Africa. Trading in foreign exchange (Forex) in South Africa is governed by the Financial Sector Conduct Authority (FSCA).
How much money will I need to start trading forex in South Africa?
You can start with a trading account funded with 70 ZAR ($5), or less. However, to trade, you will need to apply high leverage ratios, which could put your funds at risk.
Most brokers require deposits between 1,500 and 4,000 ZAR to ensure that you can meet margin requirements without high leverage.
How much do forex traders make a day in South Africa?
Professional South African traders are reported to make between 15,000 ZAR to 75,000 ZAR monthly, or 400 ZAR per day.
How can I trade forex in South Africa?
You need to evaluate your trading needs and requirements and determine what type of trader you are. Once you have this information, you can look for a South African broker that offers what you need. Once you have selected a broker, you can register a demo account to test out the broker’s platform and explore what they offer. Once you have decided on your broker, you can make a deposit, download the trading platform, and start trading.
How do I know which type of forex broker is right for me?
Once you know what your needs and objectives are, you can determine whether a No-Dealing Desk (STP and ECN) or a Dealing Desk (Market Maker) broker is suited to your unique situation. You should weigh the pros and cons of each type of broker to see which is more suitable.
Featured SA Shares Writer and Forex Analyst.
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