Thinking about trading forex in Malaysia? If so, you probably have quite a few questions about the legality of FX in this country. Is it legal to trade forex in Malaysia?
Yes, forex trading is legal in Malaysia, so long as you are obeying your country’s laws. It is also possible for forex trading to be halal, not haram, so long as you open the right type of account. To help you do that, we are diving deep into the topic in this post.
What Agency Regulates Forex Trading in Malaysia?
Multiple authorities are involved with regulating forex trading in Malaysia. These include:
- Bank Negara Malaysia: This is the Malaysian central bank, which has existed since 1959.
- Malaysian Investment Development Authority (MIDA): This government agency used to be called the Malaysian Industrial Development Authority.
- Securities Commission of Malaysia: This body, often just called the “SC,” is involved in regulating contracts for securities and futures.
- Finance Accreditation Agency (FAA): This agency has only been around since 2012, but it also plays an important role in regulating trading in the country.
- Shariah Advisory Council (SAC): Malaysia is officially a Muslim country, thus the SAC is involved in regulating trading as well.
If you are looking for official answers to any of your questions about forex trading in Malaysia, these are the agencies to consult with.
Is It Legal to Trade Forex in Malaysia?
Yes, it is legal to trade forex in Malaysia, but the government does place some restrictions on your activities.
Bank Negara Malaysia says, “Under the Exchange Control Act 1953 (ECA), it is an offense for a person in Malaysia to buy or sell foreign currency or do any act which involves, is in association with, or is preparatory to, buying or selling of foreign currency with any person, other than an authorized dealer. It is also an offense for a person to aid or abet another person to buy or sell foreign currency with any person unless the person is an authorized dealer.”
So, you need an authorized dealer if you want to trade forex in Malaysia.
Thankfully, Bank Negara Malaysia makes it fast and easy to find authorized dealers and institutions. You can just check their website.
What About Syariah Law? Is Forex Halal or Haram?
Given that Malaysia is an Islamic country, you are likely wondering whether you need to follow Syariah law while trading.
To be clear, you can trade forex and conform to Syariah law; you just need to make sure you open a proper Islamic trading account.
Before we explain what that means, let’s quickly clarify to whom this applies.
Herald Malaysia Online explains, “Muslims in Malaysia are governed by Islamic personal and family law, which has been in existence since the 15th century. Islamic laws have been administered, not only by the Syari-ah Courts, but also the Civil Courts.”
The post continues, “However, by Article 121 (1A) of the Constitution of Malaysia, today, exclusive jurisdiction has been given to the Syariah Courts in the administration of Islamic laws. The Syariah laws in Malaysia do not apply to non-Muslims.”
That means that if you are a Muslim trader in Malaysia, yes, you definitely need an Islamic account. Hypothetically, as a non-Muslim, it is up to you what you want to do.
What is an Islamic trading account? Well, under Syariah law, you are not allowed to gamble, and you are not permitted to earn riba (interest).
With a regular account, you might earn interest when you have positions open overnight. With an Islamic account, you do not, which keeps your activities halal.
As to the “gambling” aspect, it is really up to you to make sure you are doing everything you can to mitigate your risks. This is what makes forex more like “investing” than “gambling,” helping you to stay halal.
What to Know About Forex Trading and Taxes in Malaysia
To keep your forex trading activities legal in Malaysia, you need to make sure you are paying your taxes. The agency responsible for tax collection in Malaysia is the Inland Revenue Board of Malaysia.
Paying taxes on forex income can be complicated, so it is wise to consult with a tax professional in Malaysia who specializes in working with investors like you. Also, keep in mind that the tax implications for an Islamic account vs. a regular account may differ.
Get Started Trading Forex in Malaysia with a No Deposit Bonus
Now you have answers to your questions about the legality of forex trading in Malaysia. To repeat what we have said, yes, it is legal to trade forex in Malaysia, so long as you are abiding with the laws.
If you are ready to begin trading, an easy way to get started is by claiming a no deposit bonus forex promotion in Malaysia. Take a look at our top recommended Malaysia forex brokers to claim your bonus and start trading now.