Does Malaysia Permit Forex Trading?

Forex trading is a good way to earn money if you are familiar with how currency values fluctuate based upon local and international political and economic events. However, you do need to know whether this activity is legal in the country you reside in.

As far as Malaysia is concerned, it is certainly legal to do forex trading here, but only as long as you do so through a registered financial institution and follow certain stipulations. The Malaysian government has licensed a number of financial institutions to offer forex trading services, and this leaves traders with sufficient options to choose from.

It is often pointed out that the rule in question applies only to physical currencies and that online trading does not meet this criteria since one trades in digital or hypothetical currencies when one uses the internet. However, supporters of forex trading say that this statement indicates a narrow and rigid interpretation of the rule.
Incidentally, Malaysia also permits its residents to invest abroad. Therefore, experts also opine that people can actually opt for retail forex trading via an offshore brokerage because this is akin to making a foreign investment.

It has to be admitted that there isn’t a great deal of clarity about the legality of the forex trading industry in Malaysia. There are calls to control it because many lawmakers are of the opinion that this business can adversely impact the value of the country’s currency. What they do not take into account is that most forex trading will happen between pairs of the bigger currencies and not necessarily the Ringitt. In fact, forex trading generally has very little to do with smaller currencies and it will certainly not cause any fluctuations in its value.

Overall, the country’s central bank, Bank Negara Malaysia, is clearly following a wait and watch policy towards online forex trading. While there are indeed laws that that can be used in case the authorities have to crack down on certain types of activities, these are rarely invoked. That being said, there is very little likelihood that the regulator will crack down on online forex trading as long as the industry is managed well and traders follow the rules.

The Malaysian government frowns upon forex trading using other people’s funds and also the solicitation of money for trading. Since these are clearly illegal activities, people found doing so are sure to face serious punishments. Interestingly, most people aren’t even aware of the different laws that regulate forex trading.

The lack of clarity from the government can actually lead to serious problems if a person breaks the law inadvertently. You’ll agree that it’s really hard to be punished for a crime that you did not realise you had committed. The Bank Negara Malaysia website does feature a section on forex trading but very few people know about it. It’s a good idea to go through the section in question to find out all the answers to your questions.

The safest thing to do is therefore to stick to registered institutions and also to use an Islamic banking account to do so. It is also a good idea to avoid drawing attention to your forex trading activities and also to say within the law scrupulously, because if you do something to upset the authorities then they will throw the law book at you. As long as you stay on the right side of the law you will have a good opportunity to earn a lucrative income from forex trading. Furthermore, be sure to exercise the usual cautions when trading so that you do not lose money instead of earning it.