BAPPEBTI Forex Brokers & Regulations for Indonesia

BAPPEBTI is an Indonesian regulatory agency that roughly translates to the Commodities and Futures Trading Regulatory Agency. Launched in 2005, the BAPPEBTI is the sole agency responsible for regulating different types of financial entities operating in the Indonesian financial markets. The BAPPEBTI comes directly under the supervision of the Ministry of Finance and is run by an administrative board of members represented by industry experts nominated by the Indonesian Government. Indonesia is a large country regarding population, and the country is quite famous for its Islamic beliefs. Indonesians are highly regarded for their dedication towards opening up to opportunities, which has resulted in the widespread popularity of Forex trading in the country. Forex brokers in Indonesia were quick to capitalize on the popularity by offering numerous Forex trading products and services from both local as well as international platforms. Conventional BAPPEBTI regulated brokers primarily dealt in commodities and futures trading, and very few brokers offered access to Forex trading products. The lack of any serious competition within the Indonesian economy led to several global Forex brokers establishing a significant presence in Indonesia. Up until 2012, Indonesia witnessed a massive surge in the number of Forex brokers that offered services exclusively for the Indonesian market, which not only exposed Indonesian investors to the lucrative nature of the FX markets but also resulted in an extensive number of broker scams and financial malpractices. A substantial majority of Indonesian Forex traders lost a lot of money due to unfair dealings, which led to the Indonesian Government coming down hard on the Forex trading industry by outright banning a large number of Forex brokers as well as its allied platforms.

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Years Of Uncertainty For Forex Brokers In Indonesia

bappebti logoThe unavailability of BAPPEBTI Forex brokers allowed several overseas brokers to take advantage of a relatively young market that had one of the largest working populations in the world. The Indonesian business infrastructure is not as open or economically viable as some of the other major superpowers, which made it hard for any companies to set up their brokerage in the country. Indonesia is also known for its high taxation policies along with serious red tape on bureaucracy while setting up a company, which added to the woes faced by businesses that wished to set up camp in the nation. Therefore, Forex brokers found it easy to offer their services to Indonesian traders through an online platform and were relatively safe from Government intrusion due to the lack of any regulatory guidelines governing the operation of Forex brokers in Indonesia. However, 2013 saw a significant change in the financial landscape of Indonesia, where the Government abruptly initiated a movement that concentrated on eradicating the rising number of broker scams and financial malpractices that resulted in millions of dollars in losses for its citizens. The Indonesian Government started providing detailed information about existing broker scams and complaints lodged against broker companies through its TRUST+ website to enable their citizens to become aware of the fraudulent practices occurring in the Forex industry. The country also instructed its cyber security departments to block the websites of all overseas brokers that were perceived to have indulged in financial scams against Indonesians. The Indonesian Government also put a ban on all Forex services such as signal service providers and fund managers that were known to indulge in financial malpractices. The resultant aftermath of the bans resulted in several homegrown BAPPEBTI regulated brokers to take advantage of the situation by offering custom-tailored Forex brokerage services to Indonesian traders. Although BAPPEBTI Forex brokers were able to get regulated by the country’s internal regulatory system, several Forex traders felt that the service provided by these brokers were not comparable to the services offered by overseas Forex brokers. Forex brokers in Indonesia were simply unable to match the sophistication and quality of services that were usually provided by global brokers, which resulted in controversies and public outcries by industry experts. Due to the lack of access to high-quality local Forex brokers, the Indonesian Government decided to open up its country to overseas brokers on the condition that they set up a brokerage in the country by following the terms and conditions set forward by the relevant authorities. Nevertheless, the country has also seemed to remove its bans on international Forex brokers, and traders are free to choose any broker of their choice, provided they are careful about selecting a regulated broker.

BAPPEBTI’s Conditions On Forex Trading

BAPPEBTI does not enforce any trading conditions on its trading conditions; instead, Indonesia is primarily a Muslim country that follows several religious beliefs. Forex trading is not considered to be illegal, but several trading conditions may not be compatible with the Islamic rules of trading. Therefore, Forex broker offer specially designed Sharia compliant trading accounts for Indonesian Forex traders that follow all the rules of safe and accepted trading conditions imposed by the Sharia law. The Bank of Indonesia does not provide any assistance to traders to deal with financial scams, as the regulatory framework of the country is still in its primitive stages. The Government authorities are considering adding several reforms to the existing BAPPEBTI framework to include Forex broker regulation into its list of responsibilities. The BAPPEBTI does a fairly good job of regulating and licensing all financial entities that deal in the commodities and futures market of the Indonesian economy; therefore, it should only be a matter of time before Indonesian authorities can install a regulatory framework that can take care of Forex broker regulation.

International Forex Brokers In Indonesia

Even after the widespread controversy surrounding the 2013 involvement of the Bank of Indonesia on banning international Forex brokers, several mainstream companies are still not open to the idea of setting up a dedicated brokerage in Indonesia. Several factors affect a company’s decision to stay out of the country. For instance, Indonesia does not have any solid set of guidelines that are required to be followed by financial companies, which prevent companies from enjoying a stable business environment. Indonesian business setup guidelines and the cost of doing business is considered to be large, and brokers will not be able to recover their invested capital through retail traders. Indonesia also taxes its businesses heavily, which may be one of the reasons why Forex brokers are staying away from Indonesia. However, there are a few brokers that have an excellent presence in the country, which has helped the country to enjoy a great position on the global financial map. Regardless of the authorities’ opinion on the present financial trading markets, traders should be extra cautious while dealing with non-regulated brokers. It is ultimately beneficial for every trader to choose a regulated Forex broker that can guarantee the safety of their trading funds while offering an excellent trading environment for successful trading.