IBFC Forex Brokers and Trading in Malaysia

The IBFC (Labuan International Business and Financial Center) is a special economic zone that was solely developed by the Malaysian Government to offer an attractive investment opportunity to entrepreneurs and large organizations for setting up a business in the country. Global investors credit the IBFC as one of the biggest free trade zones of the Asian continent that grant access to some of the largest economies in Asia for continued business development. Labuan is an island owned by the Malaysian Government that has several benefits that enable companies to invest in the region without the costs involved in setting up a business in mainland Malaysia. Labuan is also favorable among investors due to its lower tax structure and proximity to other budding economic superpowers, which make the IBFC a key financial center in the heart of Asia. Although Labuan is considered to an excellent investment opportunity for offshore companies, the country faces stiff competition from its immediate neighbors, mainly Singapore and Hong Kong, which are considered to the major financial hubs of Asia. The IBFC currently hosts more than 7000 firms, including financial firms and other businesses, making it one of the fastest-growing free trade zones in the world. Forex trading in Malaysia is not considered a legal investment option unless the trading accounts are Sharia compliant. Malaysia has a predominantly Muslim population that are required to follow the traditional beliefs and customs, which force several traders in Malaysia to approach the FX trading industry with severe caution. Malaysia was one of the small group of countries that had considered Forex trading to be illegal for a certain amount of time until the Forex trading industry slowly adapted the needs of Islamic traders. The Labuan IBFC, on the other hand, serves as a more liberal business environment that allows Forex brokers in Malaysia to receive a valid regulatory license to cater to a global group of traders and investors. Forex brokers situated in the free trade zone enjoy several privileges and advantages that tremendously improve the trading conditions for FX traders without worrying about the legality of Forex trading in the country.

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The Regulatory Agency That Regulates IBFC Forex Brokers

ibfc logoIBFC is an independent economic zone that comes under the direct regulation of the Labuan Financial Services Authority. IBFC regulated Forex brokers are regulated and licensed by the LFSA according to global regulatory standards and require the same minimal capital requirements as well as operational compliance as adopted by the most reliable and trusted regulatory agencies in the world. Apart from the strict regulatory framework, the IBFC, and the LFSA jointly provides a highly cost-effective business environment that allows companies to operate at far more affordable costs when compared to other jurisdictions. The LFSA is an efficient organization that works towards regulating firms and ensuring that they adhere to the guidelines imposed by the IBFC and the LFSA on Forex brokers. The LFSA has one of the fastest turn-around times regarding setting up a brokerage, which allows companies to incorporate a brokerage in Malaysia within two months. LFSA offers IBFC regulated brokers an opportunity to work with some of the top banks in the world for keeping their client funds in segregated accounts, which helps in enhancing trader trust and investor confidence. LFSA has put the highest priority on ensuring that all Forex brokers in Malaysia only follow the Straight Through Processing Forex brokerage model that prevents any broker from taking counterparty trades against its clients. STP works by connecting a trader directly to a liquidity provider, which essentially removes any conflict of interest between a broker and its client. STP protocols are highly preferred due to the safety offered by the markets while connecting a trader to the market, as STP brokers make money from the spreads and commissions, and does not make any money on a client’s losing position. Malaysia is one of the very few countries that insist their Forex brokers to offer the STP model as standard to their customers.

Are Forex Brokers In Malaysia Trusted?

IBFC Forex brokers started receiving global recognition since 2008 when the Malaysian Government started actively promoting the IBFC as an attractive offshore investment destination. Ever since the introduction of LFSA as the primary regulatory organization for Forex brokers, several mainstream FX brokers started setting up a Forex brokerage in Malaysia for targeting the Asian continent. The lower operational costs along with a significantly lower tax structure certainly helped companies to shift their base of Asian operations to Malaysia for better visibility. However, local Malaysian Forex brokers may not be considered to be as reliable and trusted as established mainstream Forex brokers, especially since there are a few drawbacks of the newly introduced Financial Services Authority. Malaysia is relatively new to the Forex trading market and has not yet been able to achieve the operational efficiency of some of the more recognized regulatory organizations across the globe. As a result, IBFC Forex brokers have to clear the hurdle of competing with more accomplished brokers from Japan, Singapore, and Hong Kong, while approaching potential retail traders as well as institutional investors.

Choosing The Best IBFC Regulated Brokers For FX Trading

The popularity of the IBFC among modern Forex brokers has enabled several leading brokers to offer exclusive services to Asian traders through their establishments in Malaysia. Some mainstream Forex brokers choose to base their operations out of the main financial centers and cities of prominence, which allows them to cater to a particular geographic location without making any compromises on the services rendered to their clients. Some traders prefer to choose brokers that are regulated by multiple regulatory authorities, which is an excellent indicator of the trust and authenticity of the concerned broker. Brokers also realize the fact that traders tend to prefer regulated brokers over non-regulated brokers irrespective of the promises offered regarding bonuses or rewards. As a Forex trader, your top priority should be to choose a safe and reliable broker, instead of concentrating on how much a broker offers as an incentive for signing up. Most scam brokers promise their traders remarkable bonuses and rewards that might sound too good to be true. In a majority of cases, these over the top promises are rarely accompanied by any serious commitment towards the welfare of their clients, which prevents the traders from enjoying a consistent trading environment. If you are choosing a Forex broker in Malaysia, make sure that you make your choice from reliable IBFC regulated brokers that have an excellent reputation in the industry. If a broker has multiple offices in the world and is regulated by the top regulatory agencies, you can be assured of the reliability of the services without worrying about the safety of your trading capital.