The Labuan Monetary Companies Authority (LFSA) is proscribing domestically regulated foreign exchange and contracts for variations (CFDs) brokers to providing solely currency-related devices, similar to spot FX and CFDs on FX. This implies these brokers will now not have the ability to provide non-currency-related devices like CFDs on shares, ETFs, and commodities.
New Guidelines for Cash Brokers
The adjustments come because the regulator, which oversees monetary companies corporations in Malaysia, tightens the licensing guidelines for all domestically regulated cash brokers, the default authorisation for FX and CFDs brokers.
Beneath the newly introduced guidelines final week, the paid-up capital for all domestically authorised cash brokers will likely be doubled to MYR 1.5 million (about $349,000). Though corporations could have two years to adjust to the brand new guidelines, the regulator expects them to extend their paid-up capital by at the very least 50 % of the present quantity inside one yr.
Moreover, the brand new guidelines will restrict the leverage of cryptocurrency CFDs to 1:1.
Regulating Refined Merchandise
“Key challenges have to be addressed, just like the regulation of subtle merchandise and the necessity to oversee market stability and investor safety within the Labuan IBFC,” mentioned the Director Common of Labuan FSA, Nik Mohamed Din Nik Musa.
The licensing restrictions adopted Malaysia’s crackdown on a number of monetary scams, together with a foreign exchange funding rip-off that defrauded 400 victims of about MYR 100 million (round $23.25 million). One other on-line playing operator generated income of round MYR 14.05 billion from greater than 10,000 folks and laundered MYR 371 million into Malaysia.
Apparently, Malaysia’s LFSA has additionally added the names of a number of well-regulated CFD brokers to its routine warning record over time. LFSA is likely one of the few regulators in Southeast Asia that correctly regulates CFD brokers.
This text was written by Arnab Shome at www.financemagnates.com.
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