Forex trading has been popular among traders who wish to make profits from short trades and those who want to make long-term investments. Even the geographical barriers do not cause any downfall in its popularity. And so is this case in the southeastern Asian country, Malaysia. The country’s residents are well aware of forex trading and are actively trading forex in the capital market.Â
The financial regulatory body of Malaysia is the Securities Commission of Malaysia (SCM). It was instituted in 1993 and ever since has issued many guidelines that have made trading in Malaysia more convenient and safe for traders and brokers. For example, the SCM advises its brokers to acquire the CMSL (Capital Markets Services License) to give them more advantages in the market. It has also published some guidelines on trading CFDs (Contracts for Difference), which came into effect in 2018. Â
Note: Even with the protective guidelines, one must be aware that the high level of leverage involved in trading CFDs becomes security with higher risks involved. Therefore, the trader must be well aware of the risks involved and be confident enough before trading CFDs. Â
The Best Forex Broker in Malaysia
Forex trading is legal in Malaysia and requires the brokers to be registered under a regulated institution. Therefore, being a registered broker having a CMSL is an additional benefit for trading in Malaysia. Considering all the facts, the following is the list of all the forex brokers regulated internationally and can help the traders in forex trading in Malaysia.
List of regulated trading forex brokers in Malaysia:
- Hotforex
- Instaforex
- Saxo Bank
- XTB
- IG
- Interactive Brokers
- FOREX.com
- XM Group
- AvaTrade
Registered forex brokers in Malaysia can be compared on many grounds, such as the regulatory body, customer support, and the resources they can provide a trader with. Based on these factors, a trader can choose a broker that will suit their portfolio.Â
How to do forex trading in Malaysia?
To start forex trading in Malaysia you need to find a regulated forex broker, install a free trading app and learn basic trading rules using a demo virtual account. It is important to start reading books related to technical and fundamental analysis.
Like a forex exchange in any other country, foreign exchange in Malaysia is also regulated by specific laws and rules. These laws automatically apply to those who trade forex in Malaysia. Therefore, every trader should ask their broker about these laws and comply with these regulations.Â
Three of the primary laws that look after the forex trading in Malaysia are:
- The Securities Commission Act, 1993: Originally introduced in 1993, this Act was amended in 2017. Under this Act, the SCM obtained the power to give licenses to the institutions and businesses dealing in securities and work as a regulatory body for trading in the country.Â
- The Exchange Control Act, 1953: One of the oldest acts introduced in Malaysia is the Exchange Control Act. It was proposed in 1953 to regulate forex trading by both residents and non-residents of Malaysia. The Act states that non-residents are free to invest in the assets of the country. Moreover, there are no limitations to transfer the profits or any other proceeds to another country. Â
- The Money Exchange Act, 1998: As the name suggests, this Act is associated with the laws and regulations related to any business involved in the exchange of currency. The Money Exchange Act states that any company, institution, or individual who, under the ECA (Exchange Control Act, 1953), is licensed to exchange forex, must also be licensed under the MCA (Money Exchange Act, 1998.
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It is not superficial to say that a regulated broker can be trusted more easily than unregulated brokers. This is because the Securities Commission of Malaysia is the body that regulates these brokers, and an easy way to make sure if the broker is regulated by the SCM or not is to check for the registered number that can be easily checked from the disclosure text that can be seen at the end of the homepage of Malaysia brokers.
It can also be confirmed from the official website of the SCM, where one can verify the status of regulated forex brokers in Malaysia.Â
Apart from the SCM, the Central bank of Malaysia, Bank Negara Malaysia, is also responsible for regulating the country’s forex dealers and other monetary services. It has also introduced some guidelines that regulate the trade and ownership of cryptocurrency in the country and states that the companies dealing with digital currency must comply with these guidelines.Â
Conclusion
The SCM and the Central Bank of Malaysia are two bodies regulating the country’s financial market and the brokers. The Bank Negara Malaysia made it compulsory that forex can only be traded through regulated banks. With the growing popularity of Forex trading in Malaysia, more and more brokers are advised to acquire the CMSL to provide traders with a trustworthy platform. Looking at the regulations controlling the market and growing demand for forex among the residents of Malaysia, the Malaysian securities market has a flourishing future.Â
