Which is the Best Broker in Malaysia?
The best broker in Malaysia is Octa. Octa (formerly OctaFX) has some of the lowest trading costs available in Malaysia, with spreads starting at 0.6 pips on the EUR/USD and a minimum deposit of just 25 USD. All accounts are Sharia-compliant by default, with no swaps ever charged on overnight positions. The Octa website is fully translated into Bahasa Melayu and traders can benefit from 24/7 customer service in English and Bahasa Melayu. Octa clients can trade Forex, commodities, metals, stocks, and indices and have a choice of trading platforms and bonus competitions to get involved in. Finally, the new OctaTrader platform and mobile app is one of the easiest platforms for beginners to use.
Which Broker has the best Forex Trading Platforms?
Pepperstone offers MT4, MT5, cTrader and TradingView, all four of the most popular platforms in the world. For traders who are unsure about which platform to use, Pepperstone demo accounts are available for each platform so traders can get a feel for them before deciding. Both of Pepperstone’s low-cost trading accounts are available on all four platforms, featuring some of the fastest trading execution available. Islamic accounts are also available on all four platforms but are restricted to the Standard Account.
Is Forex trading legal in Malaysia?
Yes, forex trading is legal in Malaysia, and it has two regulatory authorities that oversee Forex trading in the country. These are the Securities Commission Malaysia (SCM) and the Labuan Financial Services Authority (LFSA). The Securities Commission Malaysia (SCM) is a subsidiary of Bank Negara Malaysia (BNM – Malaysia’s central bank) and regulates the securities market. SCM issued new guidelines on Contract for Difference (CFDs) in April 2018, which covers brokers offering Forex and other derivative products:
- Forex brokers must submit transaction records, financial status, profit and loss reports and other regulatory documents to SCM.
- Brokers must conduct due diligence on their customers. They must know a client’s financial status and evaluate their investment experience.
- Brokers must ensure that all clients fully understand the risks of trading Forex and other CFDs.
- Brokers must highlight the risks of trading leveraged products on their websites.
- Brokers must have a minimum paid-up capital of not less than MYR10 million (approximately 2.4 million USD) and a minimum net capital of not less than MYR500,000 (approximately 120,000 USD).
- Brokers must be registered in Malaysia, both for tax purposes and corporate governance, and hold a business account at a Malaysian bank.
However, the introduction of these guidelines has had little effect on the Forex trading environment in Malaysia, and most of the 120+ brokers in the country still operate without a licence from the SCM.
Just because the SCM does not enforce regulations does not mean that Malaysian traders should trade with unregulated brokers. Brokers regulated by ASIC, CySEC, MAS or the FCA are much more secure than brokers with no regulation at all.
Labuan Financial Services Authority (LFSA)
The Labuan Financial Services Authority (LFSA) is the regulator of the Labuan International Business and Finance Centre (IBFC). The Labuan IBFC is a free trade zone established by the Malaysian government in 1990 on the island of Labuan. The Labuan Financial Services Authority’s main role is to issue licenses and supervise all licensed institutions in Labuan.
Unusually, the LFSA license is for Straight Through Processing (STP) brokers only. In other words, brokers with an LFSA license are not allowed to be the counterparty of any order. Most Forex brokers are market makers and act as the counterparty to trades, so there have been few Malaysian or international brokers interested in acquiring a licence. The one exception is Tickmill, a British STP broker, who acquired a licence from the LFSA in 2019.
Why is Regulation Important?
Regulation is essential for protecting your money and ensuring a fair and transparent trading experience.
When trading Forex, you want to be confident that your broker is operating legally and ethically and that your funds are being handled safely. Regulated Forex brokers must adhere to strict standards set by regulatory bodies, which include requirements for capital adequacy, segregation of client funds, and ongoing reporting and compliance. This means that your funds are protected, and your trading experience is fair.
Unregulated brokers are not forced to hold to the same standards. This can lead to a higher risk of fraud or unethical practices, which can result in financial losses for traders. Choosing a regulated Forex broker gives you peace of mind and security, knowing that your investments are protected and your trading experience is fair.
How are Forex Brokers Regulated in Malaysia?
In Malaysia, Forex brokers must be regulated by the Securities Commission of Malaysia (SCM), the regulatory body for non-banking financial services in the country.
Because most Forex brokers are unlicenced, they must operate outside of the traditional financial system. Banks tend to block or return transfers made to and from Forex brokers, and most Malaysians rely on digital payment providers. The overall financial environment in Malaysia is poorly controlled, and brokers and investors in Malaysia pay little attention to the government’s financial regulatory policies.
The SCM considers forex brokers that are not regulated directly in Malaysia to be potential scams, and has createda list of unregulated brokersto protect traders – though it’s important to note that not all brokers listed here are scams.
Scam Brokers and Reporting Regulatory Violations
If you are unsure about the reliability of your Forex broker, you can check our list of brokers to avoid. We recommend you partner with one of our tested brokers, and should you be concerned with a specific broker’s regulatory oversight, please contact SCM directly. You can always find out if a broker is regulated by the SCM here.
We also have a report a scam broker form which we use to gather information so that we get the word out. Your personal details will not be shared externally.
Do I Need a Broker to Trade Forex?
Yes, you will need a broker to trade Forex. Connecting traders to the Forex market is an expensive and technically complex business. Most Forex brokers form a bridge between the global Forex market and Forex traders; these are called market makers. Market makers buy up large trading positions from the Forex market, which they sell to traders in smaller trade sizes.
Other brokers act as a go-between, taking orders from traders and sending them straight to the global Forex market. These are called ECN brokers or DMA brokers. Both types of Forex brokers require a lot of money to set up and need teams of highly qualified technicians to maintain their trading platforms.
How do Forex Brokers Make Money?
Market markers only make money from the spread – the difference between the buying and selling price of the currency pair. These brokers will be the counterparty to any trade, so they make money when clients lose trades.
ECNs have tight spreads but make money from commissions, which are charged whenever a trade is opened or closed. This type of broker makes money whether a client wins or loses.
Which Forex Brokers are Best for Beginner Traders?
The best brokers for beginners are well-regulated and have no minimum deposit requirement, ensuring security and a low cost of entry. Also important are low fees and negative balance protection, as these both help to lower risk. Responsive and knowledgeable customer support is essential. Customer service should be available 24/5 via email, live chat, and telephone, though 24/7 is better. Last but not least, beginners should look for a broker with a high-quality education section; this should feature articles, video tutorials, frequent webinars, advanced trading strategies, and chart analysis.
For more detail and to see which brokers we recommend for new traders, check out our dedicated page on the best brokers for beginners.
Which Forex Brokers have the Best Demo Accounts?
The brokers with the best demo accounts understand that beginners should not be forced into trading real money and that experienced traders should be able to test strategies as long as they want to. So the best demo accounts are not time-limited and replicate real market conditions as closely as possible. Beginners looking for a demo account will want a broker with good education, so they can learn about Forex trading as they practice.
For more detail and to see which brokers we recommend for demo trading, check out our dedicated page on the best demo accounts.
Which Trading Platforms do the Best Forex Brokers Offer?
The best Forex brokers generally offer Metatrader 4 (MT4), MetaTrader 5 (MT5), and cTrader. These are third-party trading platforms which you can install on your computer. They are fully customisable and have advanced charting tools, research tools, and options for automated trading or copy trading. Some brokers also have their own trading platforms, which are usually accessed via a browser or on your mobile phone. For more details on trading platforms and how they work, check out our guide on trading platforms.
Forex Risk Disclaimer
Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products. Forex and CFD transactions involve high risk due to the following factors: Leverage, market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection. Traders should not deposit any money that is not considered disposable income. Regardless of how much research you have done or how confident you are in your trade, there is always a substantial risk of loss. (Learn more about these risks from the UK’s regulator, the FCA, or the Australian regulator, ASIC).
Our Rating & Review Methodology
Our State of the Market Report and Directory of CFD Brokers to Avoid are the result of extensive research on over 180 Forex brokers. These resources help traders find the best Forex brokers – and steer them away from the worst ones.These resources have been compiled using over 200 data points on each broker and over 3000 hours of research. Our team conducts all research independently: Testing brokers, gathering information from broker representatives and sifting through legal documents.Learn more about how we rank brokers.
Editorial Team
Chris Cammack
Head of Content
Chris joined the company in 2019 after ten years experience in research, editorial and design for political and financial publications. His background has given him a deep knowledge of international financial markets and the geopolitics that affects them. Chris has a keen eye for editing and a voracious appetite for financial and political current affairs. He ensures that our content across all sites meets the standards of quality and transparency that our readers expect.
Alison Heyerdahl
Senior Financial Writer
Alison joined the team as a writer in 2021. She has a medical degree with a focus on physiotherapy and a bachelor’s in psychology. However, her interest in forex trading and her love for writing led her to switch careers, and she now has over eight years experience in research and content development. She has tested and reviewed 100+ brokers and has a great understanding of the Forex trading world.
Ida Hermansen
Financial Writer
Ida joined our team as a financial writer in 2023. She has a degree in Digital Marketing and a background in content writing and SEO. In addition to her marketing and writing skills, Ida also has an interest in cryptocurrencies and blockchain networks. Her interest in crypto trading led to a wider fascination with Forex technical analysis and price movement. She continues to develop her skills and knowledge in Forex trading and keeps a close eye on which Forex brokers offer the best trading environments for new traders.
Vanessa Marcos
Financial Writer
Vanessa joined the team in 2023. Born and raised in southern Portugal, she has a BA in Journalism and a Master’s in Literary Theory, both from Lisbon University. Since 2011, she has worked in social media, copywriting, content management, ghost-writing, and SEO. Vanessa loves to write, and although she is a generalist in digital marketing, she always draws on her creativity in her work. She is constantly researching new subjects and finds the analytical depth of Forex trading fascinating.
