Forex brokers must register

The FSB has announced that codes of conduct to regulate dealings in foreign currency in terms of the Financial Advisory and Intermediary Services (FAIS) Act, 2002 will be published next week.

The FSB's FAIS manager of supervision, Wendy Hattingh, said the minister of finance last week gazetted regulations that paved the way for the registration of  forex currency brokers.

“They may now apply for the required licence in terms of the FAIS Act, either directly to the FSB or to the Forex Investment Association.”

The codes of conduct will regulate the conduct of authorised financial services providers (FSPs) and their representatives involved in forex investment business.

'These codes of conduct apply to FSPs involved in certain foreign currency denominated investment instruments relating to forex trading, more specifically currency spot trading.

However, it does not include transactions in foreign exchange conducted under exchange control laws by authorised dealers and their bureaux de change, or commercial agencies,' Hattingh said.

Note:

Spot currency trading involves investing money on behalf of a client with a foreign clearing firm or foreign exchange service provider, and then trading on it after clearing such funds in terms of the relevant provisions of the exchange control laws

FSPs dealing in foreign currency spot trading have never before been regulated. In terms of the FAIS Act, however, all FSPs need to have a licence to render financial services by 30 September 2004.

It was deemed necessary to include this activity in pursuit of consumer protection after the relaxation of exchange control regulations. Because of the nature of this activity, a specific code of conduct for this type of intermediary was drafted. Hatting said this was done after consultation with the Forex Investment Association and other role players.

Financial services providers who wish to be licensed by 30 September should note that applications must reach the FSB by 31 July. The application form and information regarding approved recognised bodies are available on the FSB website, www.fsb.co.za.