Malaysia is an emerging economy that is attracting a lot of investors many of whom are forex trading investors. However, it has not been easy for forex traders given the tough restrictions that have been in place over the recent past years by the Central Bank of Malaysia (Bank Negara Malaysia).
But due to a growing interest by Malaysians in forex trading, there have been laws, regulations, regulating bodies and commissions that have been set in place so as to ensure that the participants of the foreign exchange trading are regulated.
Therefore, retail forex traders operating from Malaysia operating fully legally as long as they are using the services of a forex broker that is registered, licensed and regulated by the laws and regulations put in place in Malaysia.
Forex brokers that we have reviewed that operate legally in Malaysia
Law and regulation in Malaysia concerning forex trading
The main laws and regulations set in place to facilitate forex and related activities are the Exchange Control Act of 1953, Securities Commission Act of 1993 and the Money changing Act of 1998.
- The Exchange Control Act of 1953
This is the act that gives the guidelines of how Malaysians deal with foreign exchange related commodities like gold, securities, and currencies and also gives the restrictions connected to them.
In addition, it also regulates the import, export, and transfer of commodities or properties.
- The Securities Commission Act of 1993
This act gives powers to the Securities Commission Malaysia, to license and regulate businesses dealing in securities.
- The Money Changing Act of 1998
The Money Changing Act of 1998 is mainly concerned with the licensing and regulation of any money-changing business by the responsible commission. This is the act that outlines the regulations that forex brokers who wish to operate in Malaysia should strictly abide by. It is this act that also outlines that the Foreign Exchange trade is not regulated directly by Bank Negara Malaya. The central bank, BNM, regulates the Malaysian Ringgit and also issue licenses to money-changing businesses without regulating the trade itself.
Institutions, bodies, Agencies, and commissions regulating Forex trading in Malaysia
The main regulating bodies and commissions that deal with foreign exchange businesses are Bank Negara Malaysia, Malaysian Investment Development Authority (MIDA), Bursa Malaysia, Securities Commission of Malaysia, Finance Accreditation Agency (FAA) and Shariah Advisory Council (SAC).
- Bank Negara Malaysia
Bank Negara Malaysia is the Central bank of Malaysia and it controls all matters concerning the Malaysian currency and also advises the government on the financial stand of the economy. It is actively involved in all foreign exchange trading related activities in Malaysia.
- Malaysian Investment Development Authority (MIDA)
The Malaysian Investment Development Authority (MIDA) outlines how money-changing businesses should conduct themselves in Malaysia including retail forex traders. The MIDA has clearly expounded on issues of investing in foreign assets, borrowing in ringgit, borrowing in foreign currency and opening foreign currency accounts.
- Securities Commission of Malaysia
This commission was formed in conjunction with the Securities Commission Act of 1993 and it is answerable to the minister of finance. It is the body that regulates businesses that deal with securities in Malaysia.
Its functions are:
- Supervision of exchanges, clearance of houses and central depositories.
- Registration of prospectuses of corporations other than unlisted recreational clubs.
- Approving corporate bond issues.
- Regulation of all matters relating to securities and futures contracts.
- Regulation of the mergers and acquisitions of companies.
- Finance Accreditation Agency(FAA)
This agency was established by the Securities Commission and Central Bank Malaysia in 2013 as an international independent quality assurance and accreditation body for the financial services industry.
- Shariah Advisory Council (SAC)
The mandate of the Shariah Advisory Council is to ensure that the implementation of the Islamic Capital Market complies with the Shariah principles since a majority of Malaysians are Muslims. It also advises the Securities Commission Malaysia on all matters that are related to the overall development of the Islamic Capital Market and also functions as a reference center for all Islamic Capital Market issues.
- Bursa Malaysia
This is an exchange holding company in Kuala Lumpur.