Malaysia’s FX trading market – what do you need to know?

The forex trading market is booming globally, as a result of the rapid economic growth in emerging markets. Nations across Eastern Europe, Asia, and Africa are experiencing fast and sustainable growth driven by foreign investments and the soaring rates of international visitors. As a result, the general population graduates from low to middle income in a very short period of time. Therefore, households and individuals in such nations have bigger savings that they want to invest in something viable. That is the prime reason why Forex trading has witnessed unprecedented upward growth in such countries.

Trading Forex in MalaysiaMalaysia is not an exception. A south-western Asian country is gradually becoming a major economic and financial hub in the region. The country’s capital city of Kuala Lumpur is attracting investments, businesses, freelancers, and young talent from all around the world. The forex market is one of the fastest-growing sectors in the country with the number of forex brokers in Malaysia on a steep increase. However, it still remains rather modest in comparison to developed ones in the United Kingdom, the United States, or other nations. Furthermore, a major stumbling block for Malaysia to become a big Forex power is the regional competition. Countries like Singapore, India, Australia, and others around it are highly developed and competitive Forex markets.

Despite difficulties and obstacles, Malaysia has managed to become a successful and attractive Forex market. Not long ago, Forex trading would have been simply illegal in this deeply conservative country. However, today, the Forex market is supported by the government and businesses. The country’s official Forex regulator is the Securities Commission Malaysia (SCM) which is in charge of all financial regulations across the country. It is a well-trusted authority and its license is always highly demanded. Although Malaysian clients can be accepted by any country-regulated brokers, it is still preferable to have relations with the SCM regulated forex brokers when in Malaysia.

Malaysian Forex BrokersThe list

Despite Malaysia’s forex market being rather young, there are still many brokers offering service to customers. The number of Forex firms is on a steep rise and so is the number of scammers and dishonest companies. If not researched well, the relations with a suspicious firm might result in colossal financial losses. Therefore, reading a lot from a trusted source is of utmost importance before taking any steps.

We have put together some of the best Forex brokers from Malaysia. The information that we provide is comprehensive and covers all essential areas a potential client should explore before taking any further steps. As the number of top Malaysia forex trading brokers soars, doing the research properly certainly has become absolutely crucial.

XM

XM review – One of the best Forex brokers on the market

Minimum deposit

$5

Licences

ASiC

Maximum leverage

1:30

Platforms

MT4, MT5

Oinvest

Review of Oinvest FX broker – can it be trusted?

Minimum deposit

$250

Licences

FSC

Maximum leverage

1:500

Platforms

MT4, WebTrader

IQ Option

IQ Option FX broker review – should you use it?

Minimum deposit

$10

Licences

CySEC, FSA

Maximum leverage

1:30

Platforms

Web

SCM in detail – what are Malaysia forex brokers?

SCM regulated forex brokers

As mentioned before in the article, the Malaysian Forex market is just starting to evolve. After decades of poverty, uncertainty, and political turmoil, the country is finally approaching a more stable state. The government is trying to attract foreign investments while society is becoming more and more open towards new concepts. Therefore, the forex market has managed to evolve over the past few years. The capital city of Kuala Lumpur is now a major financial hub in south-east Asia. It has become a true competitor to Singapore, Shanghai, and even Sydney. Many European and US investors are eager to invest in Malaysia and this process is gradually starting to pay off. The general population is earning more, resulting in bigger amounts of savings that could be invested in different assets.

The economic development is what truly fostered the process of establishing a firm base for the Malaysia Forex brokers regulation. As of now, a soaring number of brokerage firms are opening up, some of them even from other countries. The market is becoming more and more saturated with forex firms but the number of scammers and dishonest firms is also increasing proportionally. Therefore, the Malaysian government took adequate measures to prevent illegal activities across the nation.

First of all, the government acknowledged the risks of allowing unregulated trade across the country. This would leave many people vulnerable and alone to dishonest firms. Secondly, uncontrolled trade would be counterproductive for the nation amid the high risk of tax evasion. To cope with the challenges, the government decided to regulate the Forex market, later resulting in the delegation of the said task to the already-existing Securities Commission Malaysia. Today, the SCM is in charge of monitoring, regulating, and controlling forex brokers in Malaysia, along with a range of other financial institutions.

The Securities Commission of Malaysia was founded in 1993, initially regulating traditional means of financial operations. For more than a couple of decades, the authority was under a shadow since the operations it handled were smaller in scale. Other major financial institutions and their regulation remain the responsibility of the national bank and other governmental bodies. However, in 2018, everything changed as the SCM was delegated the task to monitor, register, license, and regulate forex firms.

In 2018, the SCM issued precise guidelines for Contracts for Difference (CFD) providing firms, including forex brokerages, falling under the Capital Markets Services Act of 2007. The change became effective on July 1st, 2018, starting the legal history of the Malaysia forex brokers regulation. From that point on, the authority has managed to evolve and become more effective in monitoring, licensing, and regulating the market. As a result, the SCM now is now of the most well-respected and high authority regulatory agencies in the region. Firms from neighboring countries are eager to get SCM licenses in efforts to appear more legit on the market.

Forex trading brokers for Malaysians

From the very beginning of its creation, the SCM has been a government-affiliated body. It was created and keeps operating under the Malaysian government. However, this does not essentially mean that the government has any actual influence and authority over the regulator. In fact, it is quite the contrary. The SCM is one of those regulators that have accumulated lots of trust through the government. The backing of the national authorities means that regulators have more power to control, monitor, and enforce certain measures. Therefore, markets with government-affiliated regulators tend to be more secure and free from illegal activities or entities. The SCM is exactly the case as Malaysia forex brokers have to follow strict rules and regulations set by the authority at all times. A good example of a similar regulator can be found in India and its authority. The Securities and Exchange Board of India is completely dependent on the state. It was created on behalf of India’s government, which keeps being heavily involved in the business of SEBI. However, it was exactly with the help of the government that it made the country a secure place for Indian Forex traders.

Despite similarities, the SCM does not experience heavy involvement of the government in its affairs. Rather, the government just keeps monitoring the body in efforts to curb illegal activities. Therefore, one should not be afraid of a potential governmental power involvement in the Forex market across Malaysia. With its creation in 1993, the government granted the SCM the power of enforcing certain measures and investigating into particular Malaysia regulated forex brokers if needed. Completely independent regulators often do not have as many abilities and powers within the country. Therefore, when choosing an SCM-regulated brokerage, you can be certain that the risks of getting involved in something illegal are extremely low.

One other important factor worth noting is the regulator’s financial situation. Despite being affiliated with the Malaysian government, the SCM still does not receive any funding from the taxpayer money. Rather, it remains to be a completely self-funded authority that gets the money needed to operate from its clients. This is another crucial factor in the SCM since financial independence means that the risks of governmental corruption are practically absent.

So how does the SCM help its clients? What are the benefits of having a Malaysian trading license? At the end of the day, the benefits are what make hundreds of forex brokers in Malaysia, eager to get desired licenses. Good licenses bring a high reputation, trust, and a bigger pool of potential clients to brokerage firms. Moreover, firms then get to operate in a safer, more secure environment where illegal activities and unhealthy competition will be punished by the regulator. Therefore, every honest and genuine firm wants to operate under the name of a well-respected regulator.

The SCM has all powers at its disposal to effectively monitor and control the market. Its responsibilities and duties begin when the regulator registers and licenses brokerage firms. This is not an easy process as the SCM has a list of requirements any firm should meet in order to be considered for registration. Therefore, firms from all around the world prepare for this process for months. The SCM has the right to audit the firm during the registration process, evaluating whether the company is genuine or not. The regulator might ask the Malaysia forex brokers to present certain documents and information before getting a license. Besides checking whether the firm is honest or not, the SCM also has a high bar for the financial situation a firm must have to acquire a license. The requirements in this regard are quite individualized, determined depending on a particular firm. The financial entrance bar is essential to ensure that the firm is stable and can provide high-quality services to its clients.

Forex trading brokers for Malaysians

After acquiring the license, the SCM starts the indefinite process of continuous monitoring of a firm. The regulator organizes regular audits in order to prevent any illegal activities within firms. It asks companies to submit quarterly and monthly financial reports of different types. They are then evaluated and the date is stored. As a result of the comprehensive monitoring of its clients, the SCM has a complete database of relevant financial information about the Malaysia regulated forex brokers. It uses this information to observe financial patterns and compare the new date to the old if needed. As mentioned above, the power of the SCM to start an investigation is of utmost importance. Thanks to the affiliation with the Malaysian government, the country’s forex regulator has the right to commence investigative actions against suspected firms should there be the need for it. Over the course of the investigation, the SCM has access to even some of the most secure financial information from firms. This guarantees that every entity operating under the regulator’s license acts genuinely, without any violations of the law.

The last point is very important as Malaysia remains a very strict nation that does not tolerate illegal activities. The country is becoming more and more open to new ideas but dishonest firms are not welcome at all. The SCM has the power to take the case onto another level thanks to the connections with the government. As a result, SCM-regulated forex brokers in Malaysia that pursue illegal activities could even face jail time or extremely high fines. Moreover, the regulator also has the right to simply suspend the license. This is one of the core mechanisms of the SCM that asks its clients to uphold to the standards if they want to maintain the registration. Otherwise, the regulator keeps its right to suspend the license indefinitely.

Moreover, the SCM supports the change in how Forex trading is perceived by Malaysians. Despite notable progress over the past decade, there are still many obstacles Forex brokerages come across when operating in Malaysia. In big cities like Kuala Lumpur or Seberang Perai, the attitudes towards traders are quite liberal. However, some local governments of regions across Malaysia continue supporting conservative ideas that sometimes outlaw forex trading altogether. The SCM tries its best to support local initiatives trying to spread knowledge about Forex trading and Malaysia forex brokers regulation.

Today, the number of firms registered by the Securities Commission of Malaysia keeps growing. There are hundreds of firms regulated by the SCM but obviously, not all of them are related to the forex market. The rough estimate of the total number of SCM-regulated brokerage firms stands at around 40, however, due to the rapid developments within the Malaysian market, this number is constantly changing.

Malaysian registered Forex brokersHow to find Malaysia registered brokers

Finding a good broker is extremely important but not as easy. After deciding what you are looking for, finding a proper broker that fits your needs could be a challenge. Many people think that just looking up for best Malaysia brokers on the internet is enough. Yes, that will show many firms with suspicious reputations. However, one can never trust those. Despite many developments in the Malaysian market, it keeps having a high number of unauthorized, illegal entities that often are dishonest. Such firms use the name of the SCM to promote their services while actually not having the license. Trusting firms that lie can lead to major financial issues as such dishonest brokerages usually scam customers. Therefore, making sure that the license is real carries extreme importance.

Moreover, many firms that even have license pictures or specific information published on the website can not be trusted. As mentioned earlier in the article, the SCM as the country’s main regulator affiliated with the government has the right to suspend the license. This usually happens when the firm no longer meets the requirements set by the regulator or when the firm violates any of the core values or rules. The SCM is a very strict regulator when it comes to dealing with forex trading brokers for Malaysians that violate rules. It actively monitors and audits firms that fall under its jurisdiction along with those beyond it. Therefore, the number of forex brokerage firms in Malaysia that lose their SCM licenses keeps rising. This, on one hand, shows how effective the regulator is. On the other hand, this comes at a high risk of formerly licensed firms using the name of the SCM to attract clients even after losing the license. This is exactly why checking the information about the license directly with the regulator is crucial. Fortunately, the SCM has a very well-organized and accessible communication platform. They use the website, an email, and a hotline to communicate with clients and those seeking certain information about the regulator and its operations within Malaysia.

The regulator has a very comprehensive and easy to navigate website with the address ‘sc.com.my.’ The website is full of relevant information about SCM’s regulation, licensing procedure, powers, and guidelines on certain topics. Therefore, the website is surely a great source of information for anyone interested. To check the license of a firm, one should go to the ‘registered firms’ page on the website. It is a database with all SCM listed forex brokers and other companies. Every entity registered by the regulator should be listed there. Yet, if you are unable to find the firm you were looking for, follow the steps described below.

Sometimes, there is a glitch or a mistake on every website. This is something that we can not prevent. Databases are a great tool to make the provision of information more convenient and efficient. However, they can sometimes let us down. For this very reason, the SCM also offers other ways to acquire certain information. The regulator operates a hotline that is available during workhours Malaysia time. However, for some, calling a Malaysian number during Kuala Lumpur’s working hours can not be viable. For those, the regulator also offers a very responsive email service. Usually, they respond within one business day. The question can be regarding practically anything from finding out what are the legit forex companies in Malaysia to researching certain guidelines. The fact that one can ask any question to the hotline or an email operator surely adds to the convenience.

Last but not least, many people come across the problem when the firm they are interested in is registered with a completely different name. This happens surprisingly often due to different reasons. Therefore, if you are unable to receive information about the firm from any of the sources listed above, make sure to get in touch with the firm itself. They should be able to provide you with the relevant information about their name used for the licensing with a particular regulator. Oftentimes, firms use the names of their subsidiaries or mother companies. There is nothing wrong with this but clients can certainly get quite confused by such situations.

How does SCM prevent FX scams in Malaysia?

Malaysian licensed Forex brokers

As mentioned quite a few times throughout the article, Malaysia remains a developing market. This particularly becomes evident with the forex environment around the country. One can come across very decent, SCM regulated forex brokers on one hand while receiving scam emails frequently on the other. Therefore, under such circumstances, effective protection from scams is incredibly important. Fortunately, the SCM has enough power and eligibility to effectively monitor and regulate the entire market in Malaysia.

First off, the SCM fulfills its direct duties in order to prevent any scams by firms licensed by the regulator. However, the authority does not stop there. It has immense power granted by the national government which it uses to control firms that are left behind its jurisdiction. Such are companies that are not licensed by the SCM but still keep operating on the Malaysian market. According to the national legislation and the Capital Markets Services 2007 act, all forex brokers in Malaysia should be legally registered by the relevant authority in order to operate in Malaysia. Scammers usually bypass the law and pursue illegal activities. The SCM tracks those firms down and initiates legal actions against them. Yet, what the regulator does within its jurisdiction is undoubtedly an effective work. Experience and powers that the SCM has are what make the Malaysian market one of the leaders in the region. In years to come, the SCM is expected to become even better at the fight against scams.

What is the 2nd best option?

Regardless of how perfect the SCM is, there might always bee the need for another option. Malaysia remains to be an utterly restrictive and rather conservative nation. Its traditions and views over some topics are deep-rooted in the nation’s culture and identity. Therefore, removing these from the people and country is difficult and a long process. More importantly, the SCM might not be a perfect fit for everyone. It offers great protection and is effective against illegal activities or dishonest Malaysia forex brokers. However, others might prefer a more open market rather than an overly restricted one.

In this case, there are options to consider. Every country has a financial regulator, responsible for licensing, monitoring, and supporting forex brokerage firms. The closest alternative to the SCM is hidden not far from Malaysia. The Securities and Exchange Board of India, also known as SEBI, is one of the most famous and trusted regulators in Asia. It regulates hundreds of companies and has a firm reputation for being fair, genuine, and modern. It offers great protection with the liquidation guarantees. Importantly, just like the SCM, the Indian regulator is also supported by the government. This makes it a perfect substitute for those new Malaysia forex brokers, that care about the connection between the regulators and the government.

Should this not be the right choice for you, worry not! Financial Conduct Authority (FCA) is an independent regulator of the United Kingdom. Britain is one of the largest forex markets globally. The environment is welcoming and accepting of brokers from all over the world. The historical affiliation of the two countries and their continuous economic ties also ensure similarities between the two regulators. Therefore, if the SCM is simply not the right option for you, do not worry as there is a wide spectrum of choices available!