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Forex brokers regulations and licenses

Forex Brokers Regulation
If you are still a newbie in the foreign exchange business, it is essential to be cautious in every decision you make, most notably in choosing the right Forex broker for your trading plans and goals.

Unlike stocks, trading in the foreign exchange market does not have a particular place or center that can be monitored and organized. That is why Forex is the go-to destination for international scam artists who want to defraud their gullible clients.

Therefore, before making a decision and registering on a broker
s website, always make sure that your Forex broker is properly regulated for safe and secure trading experience.

What is Forex Regulation?

Foreign exchange regulation is a set of financial rules administered to all financial corporations and companies as well as traders who operate in the currency market. The regulations are laid down to make sure that all parties involved in this global and decentralized market work fairly and ethically.

As the biggest financial market with a daily turnover above $5 trillion, Forex works on an international scope with no particular center. Because in the Forex market, unlike the stock exchange, various participants of different financial levels operate, including banks, commercial companies, Forex brokers, as well as corporate and retail traders.

Therefore, a special governmental organization or independent institution is formed to supervise and control the market activities within a set framework. This special institution is known as a Forex regulator or Forex regulatory body. These regulators are responsible for keeping all forex participants in check to make certain that they abide by the regulations and conduct fair business practices.

International Forex Regulatory Bodies & Regulated Forex brokers

1. FCA

The Financial Conduct Authority of the UK is one of the most prominent regulatory bodies in the Forex business. Even though the FCA enforces strict rules and policies, it is still considered quite open and friendly to Forex offshore operators.
Moreover, the FCA is an independent public institution, which guarantees a fund program as high as 50,000 GBP as insurance for traders and investors in the case of financial disputes.

The FCA
s main objective is to protect consumers, safeguard and enhance the integrity of the UK financial system, and ensure effective competition between consumers in the Forex business.
FCA Regulation
XM Malaysia
XM Malaysia
XM FCA License #: 705428
Other Regulations: CySEC, IFSC, ASIC

Headquartered: Cyprus

FXTM Malaysia
ForexTime Malaysia
FXTM FCA License #: 777911
Other Regulations: IFSC, FCA

Headquartered: Cyprus

Tickmill Malaysia
Tickmill Malaysia
Tickmill FCA License #: 717270
Other Regulations: CySEC, FSA

Headquartered: Cyprus

HYCM Malaysia
HYCM Malaysia
HYCM FCA License #: 186171
Other Regulations: CySEC, CIMA

Headquartered: Cyprus

HotForex Malaysia
HotForex Malaysia
HotForex FCA License #: 600473
Other Regulations: CySEC, FSA

Headquartered: Cyprus

Aetos Malaysia
Aetos Malaysia
AETOS FCA License #: 592778
Other Regulations: ASIC

Headquartered: Australia

2. CySEC

As the world
s top destination for Forex brokerage business, Cyprus has an independent regulatory agency called the Cyprus Securities and Exchange Commission (CySEC), which operates under the European MiFID regulations.

MiFID or Markets in Financial Instruments Directive has been enforced to provide free entrance services to its members within the European Union countries. Brokers that have acquired a license from a MiFID
s regulatory agency member will be able to operate their business in MiFIDs other member countries.

The CySEC is a respected regulatory agency that attracts numerous foreign Forex brokers and companies due to its slightly lighter regulations and minimal capital requirements. Many financial companies choose to obtain a license and join CySEC
s jurisdiction to operate within the European market. The capital protection offered by the CySEC is the maximum of 100,000 USD within the European Union zone.
CySEC Regulation
XM Malaysia
XM Malaysia
XM CySEC License #: 120/10
Other Regulations: FCA, IFSC, ASIC

Headquartered: Cyprus

FXTM Malaysia
ForexTime Malaysia
FXTM CySEC License #: 185/12
Other Regulations: IFSC, FCA

Headquartered: Cyprus

FBS Malaysia
FBS Malaysia
FBS CySEC License #: 331/17
Other Regulations: IFSC

Headquartered: Russia

Tickmill Malaysia
Tickmill Malaysia
Tickmill CySEC License #: 278/15
Other Regulations: FCA, FSA

Headquartered: Cyprus

HotForex Malaysia
HotForex Malaysia
HotForex CySEC License #: 183/12
Other Regulations: FCA, FSA

Headquartered: Cyprus

HYCM Malaysia
HYCM Malaysia
HYCM CySEC License #: 259/14
Other Regulations: FCA, DFSA

Headquartered: Cyprus

4. IFSC

Belize is a country located in Central America that upholds strict privacy laws and zero tax structure for overseas income, making the country one of the safest and most secure places for investment. That is why Belize
s International Financial Service Commission (IFSC) is famous among Forex brokerage companies.

The IFSC is responsible for supervising companies and individuals operating in Belize
s financial sector and ensures that they conduct business according to the Belize governments rules and guidelines.
IFSC Regulation
XM Malaysia
XM Malaysia
XM IFSC License #: IFSC/60/354/TS/19
Other Regulations: CySEC, IFSC, ASIC

Headquartered: Cyprus

RoboForex Malaysia
RoboForex Malaysia
RoboForex IFSC License #: IFSC/60/271/TS
Other Regulations: CySEC, FSA

Headquartered: Cyprus

FBS Malaysia
FBS Malaysia
FBS IFSC License #: IFSC/60/230/TS/18
Other Regulations: CySEC

Headquartered: Russia

3. ASIC

The Australian Securities and Investments Commission (ASIC) is Australia
s independent government agency that supervises and regulates Australian financial markets. They license and control all parties involved in Australian financial markets, and make sure that they comply with their legal obligation for fair and transparent market operations.
ASIC Regulation
XM Malaysia
XM Malaysia
XM ASIC License #: 443670
Other Regulations: CySEC, IFSC, FCA

Headquartered: Cyprus

Aetos Malaysia
Aetos Malaysia
AETOS ASIC License #
Other Regulations: FCA

Headquartered: Australia

How are Forex Brokers Regulated?

As a new trader, you have to understand completely how Forex brokers are regulated. This way, you will be better equipped with sufficient knowledge before working with a certain forex broker.

Furthermore, Forex brokers that want to operate in a particular country must be registered by the country
s respective regulatory institution. As each regulator has different specific rules and requirements, the basic principles of those regulations can be summarized as follows:

1. Valid License

Before registering on a broker
s website, you have to make sure that your Forex broker operates under an active and valid license acquired from the regulatory agency in the relevant jurisdiction. Regulated Forex Brokers will display the regulatory agencys name on their websites and are registered on the agencys active list.

2. Segregated Accounts

Your regulated Forex broker is required to keep its clients
funds in segregated bank accounts, completely separate from the companys operational funds. Therefore, in case something unfortunate happens, the brokers creditor will not be able to access your financial account and use your money to settle the brokers debt.

3. Regular Reviews and Audits

All regulated Forex brokers are bound to periodic inspections and audits to make sure they have complied with the regulation. The audit frequency varies depending on the regulatory body.

4. Sufficient Capital Requirement

To be able to operate as a regulated Forex broker actively, a brokerage company needs to have a sufficient amount of capital, based on the regulator
s requirement. For example, the IFSC requires its members to have a minimum of 100,000 USD as operating capital, whereas this requirement for the members of the FCA is a minimum of 1 million GBP.

5. Risks Disclosure

Check your preferred broker
s website and find out if they display an early warning regarding the high risks involved in the Forex business. A regulated Forex broker is required to display a risk disclosure to warn their future clients that trading in the Forex market involves a certain level of risks.

Importance and Advantages of licensed Forex Brokers

The Forex market is the most appealing business in the financial world that offers a huge amount of revenues almost as big as the risks involved. When you pick a Forex broker, it means that you are choosing a business partner that you need to trust with not only your personal information but also your capital and investments.

Choosing a well-respected Forex broker that is regulated by one or more regulatory agencies will not only provide a safer and more secure trading experience but also gives you various following advantages:

1. Trading Protection

The Foreign exchange market is highly prone to financial frauds. Unregulated brokers are often scammers who rob traders out of their money and leave them in huge debts.

Trading with a regulated Forex broker will definitely protect your assets against these types of financial frauds. Regulated brokers are constantly monitored by the regulatory agency, and if you ever find yourself in a bind, you can bring your complaints against them to a higher authority.

2. Insurance and Compensation

Even if your regulated broker turns out to be unstable and goes bankrupt, they are still obligated to provide appropriate compensation to their clients. The amount of compensation depends on their regulatory agency.

3. Fund Security and Transparency

As previously mentioned, regulated Forex brokers must keep their clients
money in different bank accounts separate from the companys funds, and additionally, they have to be regularly reviewed and audited.

Therefore, you can be sure that your investment will not be mixed with the broker
s capital, and your broker can always process your withdrawal requests. Besides, youd be more confident in your trading operations knowing that your brokers activities will continually be reviewed by the regulator so no trading manipulations can occur.

It is always best to confirm whether your Forex broker is regulated before registering and opening a live account. You can start by finding the regulator
s name on the brokers website or ask the customer support if you cant find one. Then, you can double-check with the regulators list on their website to make sure that the license is still valid and active.

In conclusion, it is highly recommended for you to work only with regulated Forex brokers because Forex regulations supervise and bind brokerage companies, so they do not go around scamming their clients.
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