Regulation

	Fully regulated

	The financial services industry in South Africa is regulated in terms of the FAIS Act. That is the “Financial Advisory and Intermediary Services” Act. Since 30 September 2004 all advisors and intermediaries of financial services in South Africa have to be licensed by the Financial Services Board (FSB) in order to provide their services or products to the South African public. Consequently From 1 October 2004 it is a criminal offence to offer any forex investment products, advice or services if the entity offering such products or services is not licensed as a Financial Services Provider with the South African Financial Services Board. A licensed Financial Services Provider is obliged to keep record of its authorised representatives. No unauthorised representative will be allowed to interact with the public regarding advice or marketing of services or intermediating or dealing on behalf of clients.

	Forex Code of Conduct

	The Forex Investment Industry has, as a specialized niche in the financial services industry, some very peculiar characteristics. In terms of the FAIS Act, Section 15, which provides for sub codes of conduct in addition to the General Code of Conduct applicable to all financial service providers the FIA has worked closely together with the legislator to draw up a Code of Conduct specific to the forex investment industry. As a result the CODE OF CONDUCT FOR AUTHORISED FINANCIAL SERVICES PROVIDERS, AND THEIR REPRESENTATIVES, INVOLVED IN FOREX INVESTMENT BUSINESS, 2004, was published in the Government Gazette on March 30^th 2004. This Code definitively arranges the way forex business must be operated in order to stay within the ambits of the FAIS Act. The Forex Code of Conduct can be accessed by clicking here.

	Regulatory structure

	The FAIS Act provides for all entities providing advice or intermediating in the financial services industry to be licensed as Financial Services Providers (FSP) by the FSB. Every FSP must take full responsibility for the actions of its authorised representatives. The FSP must keep an up-to-date list of authorised representatives on the FSB database of authorised representatives. The FAIS Act provides for representative industry bodies to take part in the regulation of the industry as so-called Recognized Representative Bodies. The Forex Investment Association is the official Recognized Representative Body for the forex investment industry in South Africa.

	Licensing process

	Unlike most other sectors of the financial services industries which had all sorts of regulatory regimes, nothing existed in that regard in the forex investment industry before the FIA became the first self-regulatory body offering a regulatory framework. FSPs in the forex investment industry advise on or intermediate on products defined in the FAIS Act as “foreign currency denominated deposits” and in the forex specific code as “forex investments” defined as “an investment in a financial product referred to in paragraph (e) of the definition of “financial product” in section 1(1) of the Act, in foreign exchange trading based on price fluctuations in the foreign exchange market but excluding transaction in foreign exchange conducted under Exchange Control laws by authorised dealers and their bureaux de change or commercial agencies.” Prospective FSPs in the forex investment industry must apply for registration and licensing with the Financial Services Board.