When the global regulatory outlook was published for 2020, New York knocking London off the top spot and retaking the crown as the world’s leading financial center rightly grabbed the headlines. However, rising above Amsterdam, Munich, and Doha to 39th place in the Global Financial Centres Index was Kuala Lumpur, Malaysia’s capital city. The emergence of Malaysia as an economic power gained momentum at the end of the 20th century, and Malaysia has become the 3rd largest economy in Southeast Asia and the 35th largest economy in the world.
Once a floating exchange rate was introduced by the Central Bank of Malaysia (Bank Negara Malaysia) in 2005, and some aspects of capital controls were relaxed, Malaysia became the world’s largest Islamic banking and financial center. In addition, the rise of forex trading in Malaysia aided a fast-growing middle class and an increasingly upwardly mobile Malaysian population.
The evolution of trading forex in Malaysia has not been without its challenges. Being an Islamic country abiding by Sharia Law, which forbids the trading of physical trading for profit. The Malaysian government deemed that retail Forex Trading, including online forex trading, involves only theoretical trading currency and is halal.
To trade legally, retail forex traders in Malaysia must use the services of a broker that is licensed and registered with the Securities Commission Malaysia. In addition, the forex brokers in Malaysia are required to offer special Islamic law accounts to ensure Sharia compliance.
The increased popularity of forex trading in Malaysia has brought about improved trading options. Regulated forex brokers in Malaysia now provide funding through Malaysian banks to make deposits and withdrawals convenient for Malaysian traders who may experience payment and banking difficulties. In addition, more and more forex brokers are offering dedicated customer service in the Malaysian language via Email, live chat, and phone.
For local and international traders (Malaysian markets are open to foreign investors), trading forex with a Malaysian broker offers many advantages. There are reasons why Malaysia has become such a financial hub in an area that faces many regulatory challenges. Forex brokers in Malaysia can compete with forex brokers elsewhere by maintaining a high quality of services, offerings, and reliability.
Low Barrier of Entry
Compared to traditional investments, such as stocks, forex trading does not require much upfront capital to get started. Some “mini” or “micro” forex accounts allow you to open an account with as little as $1 as well as provide free demo accounts. With such a low cost entry-level, forex trading in Malaysia is open to just about everyone,
Low Transaction Costs
Transaction costs can be as low as 0.1% in normal market conditions. Therefore, when you compare the price of trading through a forex broker against the cost of alternative investments, the cost of forex trading comes out favorably. Also, considering the meager cost of entry for forex trading in Malaysia, low transaction costs ensure high levels of activity are not stifled or discouraged by high transaction costs.
Islamic Forex Trading Accounts
This is a crucial advantage of trading forex in Malaysia. However, a grey area, the increasing acceptance, and legality of Malaysian forex trading make Islamic forex trading the recommended route. Also known as Swap-free accounts, these special accounts enable traders to remain compliant with the principles of Sharia law. This means no interest is charged or owed, and you cannot earn or lose money on overnight positions.
Leverage
Malaysian brokers offer leverages that range anywhere from 1:50 to 1:1000. Not being bound by increasing European restrictions, Malaysian forex brokers offer some of the highest leverages found anywhere in the world. Leverage needs to be managed correctly, and as with most forex brokers, you’ll find the usual stop loss and take profit tools to help with money management.
Customer Service
Often undervalued but can make or break a person’s experience at a forex broker. Over the last few years, customer service has improved considerably. A growing number of forex brokers have provided a website in Malay and offer 24/7 customer service in the native language. Customer support is usually provided via email, phone, live chat, skype, and even over social media. The quality levels of customer service amongst Malaysian forex brokers are high and improving all the time.
Flexibility
Forex markets provide traders with a lot of flexibility. There’s no restriction on the amount of money that can be traded, there’s little regulation of markets, and markets operate on a 24/7 basis. As a result, people enjoy choosing when they can trade and the freedom of trade offered to be. The flexibility extends to account options with forex brokers in Malaysia providing several different accounts. Traders can choose from Micro, Cent, ECN; Zero spread Accounts, Fixed & Floating Spreads, and more.
Multiple Trading Options
Forex markets, in general now, offer a wide variety of trading options. There are hundreds of different currency pairs to trade in, and traders can choose to enter spot or futures trades in a variety of other assets from the same platform, including indices, CFDs, Metals, Energies, Stocks.
Safety and Security
From secure websites to highly regulated markets, forex trading in Malaysia offer a safe trading experience. The greyness of the Malaysian forex market is turner, less grey, and whiter with each passing year as current and previous governments encourage further growth in this increasingly lucrative market without compromising security.
Forex Trading in Malaysia
Although technically a grey area in legality, using a regulated and licensed Forex broker and maintaining an Islamic Account should ensure a hassle-free trading experience in Malaysia.
The advance of technology, the increase in wealth, and the more relaxed attitude towards regulation have enabled Malaysia to become a trading hub; with increasingly more sophisticated regulated forex brokers reacting to the growing demand both domestically and internationally, we could well be seeing Kuala Lumpur challenging the likes of London and New York as a global financial center within our lifetimes.
Encouragingly, forex brokers in Malaysia are continually improving standards and services. By combining low entry costs, low transaction fees, and high leverage, the appeal of forex trading has been broadened widely with more and more people from all walks of life trading the financial markets.
