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  • Younger, tech-savvy South African investors are joining trading platforms en masse.
  • In the long run the new trend is making it easier, cheaper and quicker to trade internationally. 
  • We take a look at some of the most popular trading options among retail traders.
  • For more stories visit Business Insider.

The GameStop-saga is ushering in a new generation of South African retail traders using social media, online platforms and mobile apps to trade on global markets. 

Younger, tech-savvy investors are joining trading platforms en masse. Credit Suisse reports that since the start of 2020, retail trading as a share of global market activity has nearly doubled to over 30%. 

READ | Could a Reddit war come to the JSE?

In South Africa, the cut-price trading platform, EasyEquities has seen a steady increase of 1,000 to 2,000 new users per day, says Carel Nolte, chief marketing officer of Purple Group, which owns the platform.

READ | SA’s Reddit army includes a group of teenagers who have seen eye-popping returns

South Africa’s local version of the now famous r/WallStreetBets discussion forum is called r/JSE_Bets. It is an online community connecting many South African retail investors, including those who participated in the GameStop movement.

These are some of the participants favoured trading platforms. 

EasyEquities (EE) 

The EE app is a popular entry-point for South African newcomers. Registration is fairly simple and allows users to invest in the South African, US and Australian stock markets. A subsidiary of JSE listed Purple Group Ltd, its educational and comparative tools make for easy trades on global markets. 

With zero monthly brokerage fees and a simple interface, new investors also benefit from the strong support systems. 

Redditors have commented that they like the platform’s "community feel", where users receive support from other users and the company.

“We actively listen to our users’ investment needs, and add new features and enhancements almost weekly, based on the feedback we receive,” says Nolte. 

eToro 

A global asset brokerage company, eToro allows users to invest in cryptocurrencies, stocks, ETFs, currencies, indices and commodities around the world.

It is also an easy-to-use platform, with a great benefit being the "$100,000" practice account new users can use to learn the ropes of international trading. 

With over 17 million users, eToro is arguably the world’s leading social trading platform, and its educational support systems makes it easy for new users to learn how to invest and trade responsibly. eToro motivates newcomers to use the practice account extensively before trading real stock, so as to familiarise yourself with the world of international markets and using the platform. 

Judging from the r/JSE_Bets threads, eToro seemingly was the go-to platform for South Africans in the Gamestop-movement.

Registration on eToro can be long-winded and takes over 24 hours for approval. You have to submit your ID, a bank statement, proof of address, and official letter from your employer confirming your employment and address.

According to one trader, the best option is to set it up alongside your PayPal account, for which they will ask for a screenshot of your PayPal profile (your eToro email address must match your PayPal email address). 

GT247 

Also owned by Purple Group, the GT247 platform has been around for more than two decades.

Its mobile app has a 4,5-star rating on the Google Play Store and lets users learn the ropes of international investment and trading through demo accounts.

There are no minimum first deposit amounts or monthly platform fees.

IG 

The UK based IG platforms offers users a comprehensive package of trading and research tools, financial education offerings, and an extensive list of tradeable products.

South African investors can trade both on the local market and many other financial markets via IG. 

TD Ameritrade 

With no minimum investment amount, a straightforward registration process and a functional platform, TD Ameritrade’s one hurdle for South Africans is the requirement of a US bank account. 

While it has no minimum cash deposit requirement, if you want to do options or margin trading, you need to have at least $2,000 (R30,000) in your account. The platform is adequate with all the functionalities and analysis information an international investor would require. If you qualify, you can open a USA bank account as well at zero cost. 

Swissquote 

Swissquote is for the more experienced and adventurous trader.

SQ provides both brokerage and banking services, and while there is no minimum deposit amount, their minimum transaction fees can add up, in comparison to EE or eToro. There are also monthly fees which depend on your level of investment. South Africans are one of a handful of nationalities who can open SwissQuote trading accounts, and requires a copy of your ID & passport and proof of residency. 

Foreign bank accounts and tax implications

While the financial world is opening up to retail investors through these and other platforms, they often require foreign bank accounts and residency permits. 

While options exist for South Africans to open such accounts, new traders should be aware of the tax implications. 

If you plan on trading on, American stock markets, for example, you will be required to complete a W-8BEN form from the Internal Revenue Service (IRS), which is compulsory for any foreign person who claims an income from a US-source such as stock trading or investments. Similarly, you may need to set up an American will, and, keep in mind the US’s hefty estate taxes.

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