Financial regulation often gets cast as a drag on innovation—something bureaucratic, slow, and hostile to risk-taking. But the best regulators don’t just block fraud. They shape markets. They protect participants without choking growth. And in the case of countries like Kenya and South Africa, they’re showing that it’s entirely possible to build financial resilience and promote investment, even with limited resources and emerging market pressures.
While the headlines tend to focus on financial scandals, the quieter story is how some developing countries have gotten regulation right—especially when it comes to online trading, retail forex, and digital asset oversight.
The CMA in Kenya: Smart Regulation With Teeth
Kenya’s Capital Markets Authority (CMA) has taken a pragmatic but firm approach. It understands the reality: retail forex trading is here to stay, and banning it would just push users to offshore platforms with zero protection. Instead, the CMA has licensed local non-dealing forex brokers, introduced mandatory disclosures, and pushed for transparency around risk. They’ve struck a middle ground—regulate what exists, protect where possible, and grow trust through structure.
They’re also leading in public education. Kenyan traders now see risk warnings in local languages, are offered materials tailored to their trading habits, and have recourse when things go wrong. This might sound basic, but for a young financial market, it’s rare—and it’s working.
South Africa’s FSCA: Holding the Line on Compliance
South Africa’s Financial Sector Conduct Authority (FSCA) has long been viewed as one of the most sophisticated regulators on the continent. It enforces strict licensing requirements for forex and derivatives brokers, investigates misconduct, and has worked with global partners to crack down on cross-border fraud.
Crucially, the FSCA has not allowed hype to override caution. While crypto platforms and high-leverage brokers flood social media with promises, the FSCA has held firm: unlicensed operators are named, shamed, and in some cases, prosecuted. This sends a clear message—operate within the rules, or get out.
Quote from William Berg Regulatory Expert at Forex.ke
“The CMA and FSCA have shown what’s possible when a regulator takes the retail market seriously. They’ve protected traders without shutting down the industry, and they’ve proven that smart regulation can grow trust, not just enforce rules.”
Why These Models Matter
The lesson here isn’t just about Kenya or South Africa. It’s that effective financial regulation doesn’t need billion-dollar budgets or endless red tape. It needs clarity, consistency, and a willingness to engage with real market behavior. Both the CMA and FSCA have done this by:
- Acknowledging what traders are already doing
- Licensing the middle layer of brokers and intermediaries
- Enforcing basic risk disclosures and transparency
- Working with, not just against, platforms and educators
The Rest of the World Should Pay Attention
Many regulators in more developed markets still treat retail trading like a fringe activity. Others try to crush it entirely—only to watch offshore platforms scoop up all the volume. But Kenya and South Africa have taken a different route: regulate, don’t suffocate.
If you’re a trader in a developing economy, these frameworks show that you don’t have to choose between protection and participation. And if you’re a regulator watching from the sidelines, they prove something even more valuable: good policy builds good markets. Not the other way around.
This article was last updated on: July 17, 2025