Whilst CFD trading in Malaysia is legal, it is very tightly regulated. Although many of the regulatory guidelines in place relate to brokers, there are several you need to be aware of as a trader as well.
In our guide we will explain the trading regulations in detail and explore the impact they may have on your ability to trade CFDs in Malaysia. We’ll also go through what you can expect from a broker and how to find the CFD broker that is most suited to your needs.
Our guide to online CFD trading in Malaysia is quite an eye-opener, as it focuses on a country that has gone from having no CFD trading regulation in place to being one of the strictest in a remarkably short space of time. That fact alone makes this guide essential reading for all Malaysians with an interest in CFD trading, but it is equally sure to provide value for readers from other countries too.
As well as matters directly related to CFD trading in Malaysia, there’s plenty of other information that has global relevance. So, whether you’re already engaged with CFD trading in Germany, or looking for the best CFD broker in Kenya, you’ll certainly find value in reading this guide.
It is entirely legal to trade CFDs in Malaysia, but in response to extensive losses reported by Malaysian traders, the SCM issued a new set of regulations in 2018, which are specific to online CFD trading in Malaysia.
All brokers who offer CFDs are licensed and regulated by the Securities Commission Malaysia (SCM) which reports directly to the Minister of Finance and has full control over all matters related to the Malaysian economy. The regulations in place mean that the CFD broker list for Malaysia is very short, so your choices are somewhat limited.
Some of the regulations imposed on CFD brokers by the SCM have an impact on traders by default. These are the guidelines that are most likely to have an affect on your CFD trading experience:
Whilst many traders might feel that such extreme measures are prohibitive, when you consider that there are far more rules and requirements in place for a broker to achieve licensing, they may not seem quite so bad.
All CFD brokers in Malaysia must undergo an unbelievably extensive assessment process, which is imposed by the SCM even before a licence application will be considered. In turn, traders can rest assured that any licensed Malaysian broker is 100% trustworthy and legitimate.
As there are only a limited number of legitimate CFD brokers in Malaysia, you might think that this is irrelevant. However, appearances can be deceptive, so even if a broker seems legit, you should always confirm that is the case by checking that the broker is listed on the SCM website.
On any occasion where you are entrusting your money to a third-party, it pays to make sure that it is in safe hands. Always make sure that the right security protocols are in place including verified web page encryption indicated by an https:// URL and a minimum of 128-bit SSL encryption for all private data or financial transmissions.
It always pays to get a feel for how a broker treats its clients. One way to assess this is to explore some CFD forums and user review sites like Trustpilot. By reading the comments posted by traders and how the broker responds to feedback of all types, you can easily gauge the level of service you might receive yourself.
Surprisingly, few traders take the time to thoroughly explore the terms and conditions set out by a CFD broker. But when you consider that the T&Cs form a binding contract between broker and trader, perhaps it makes it much clearer why this task is essential.
Few people consider the importance of customer support in advance and then complain when they have a problem later. It’s always worth checking in advance the hours and days that your broker provides live support, as well as establishing the quickest way to reach out should you encounter any difficulties.
For any broker that we review, we always provide an overview of the brokers website. Here, we are looking for a well laid out site with intuitive menu options primarily. We also test how quickly web pages load and ensure that all links on the site are fully-functional. Although we sometimes mention aesthetics, it is more a matter of personal taste rather than functionality.
We encounter brokers with just one platform and some who have several different platforms to choose from. In either case, our reviews include assessing the suitability of the platform for CFD trading and also mention what type of trader it is most suited to. We also look at the options for customisation and the potential for adding extra features such as automated trading bots.
When we look at the assets a broker is offering, we look more at the quality than the quantity. A long list of mediocre assets has far less value to a CFD trader than a shorter list of top-quality options. The reasoning behind this is that the best assets have the most liquidity, which in turn reduces the point spread and therefore the fees incurred per trade.
We give customer support a high level of importance in our reviews. Knowing that a broker is available to help in the event of a problem brings peace of mind to traders. During our reviews we discover what methods of contact the broker provides, plus the hours and days support is provided. We then go on to test those methods at different times of the day to establish response times and the quality of the responses we receive.
We must mention this subject again. It is absolutely crucial for Malaysian residents to only engage with online CFD trading in Malaysia with a broker that is licensed by the Securities Commission Malaysia (SCM). Although it is not currently against the law to trade with offshore brokers, this is a matter currently under consideration by Malaysian authorities.
Brokers are only permitted to offer CFDs for stocks and indices. There are also further guidelines applied to which stocks or indices can be offered by a broker to Malaysian clients. For you, this means some thorough research into availability and selecting a broker offering the assets that are of most interest to you.
CFD trading from a mobile device has become much more prevalent in recent years. Just to give you an example, almost 50% of CFD trading in New Zealand is done using a smartphone or tablet device. If the ability to trade on the go holds importance for you, then the best CFD platform in Malaysia will be the one who can give you that option.
In keeping with the tough regulations in place for CFD trading in Malaysia, other types of trading are somewhat limited as well.
It is illegal for brokers to offer forex or binary options to Malaysian residents and all of the leading global brokers who offer them are blacklisted by the Securities Commission of Malaysia. In addition, the SC has repeatedly issued warnings against trading with offshore CFD brokers and has considered making it a criminal offence to do so.
The only other form of trading available to Malaysians is stock investment. Investing in this sense means that you gain ownership of the stock itself. You will be entitled to an annual dividend if the company makes a profit and may be entitled to vote on company policies.
There is just one stock exchange, the Bursa Malaysia. Stock investors are actively encouraged to buy Malaysian stock which benefits the country’s economy. Although some stockbrokers also have access to global exchanges, there are constraints in place. As an example, you can only invest in one US stock and you must buy a minimum of one lot, which is equivalent to 100 shares.
Owning stock is a world apart from trading CFDs. It requires a far more substantial financial input and must be considered as a long-term commitment. To gain access to stocks, you will need a stockbroker who is a member of Bursa Malaysia to act on your behalf and the fees you’ll pay for the service are another consideration.
As you will have seen from this guide, finding the best CFD broker in Malaysia is relatively simple in some ways, due to there only being a limited number of licensed brokers to select from. You will also have observed that the strict regulations applied to licensed CFD brokers mean that you will be trading in one of the safest environments in the world.
However, those same regulations do place constraints on the trading assets available to you. Finding the best online trading platform is likely to present Malaysians with far more challenges than those seeking the best CFD broker in Spain, for example. However, the fact that CFD trading in Malaysia is much safer than for many other countries does offset the limitations.
Residents of Malaysia are faced with exceptionally tight regulations when it comes to any trading activities, including CFDs. If you want to find out exactly how CFD trading in Malaysia is regulated and whether you can legally trade CFDs, please head over and read our in-depth guide to get a full and accurate picture.
Due to the extensive regulatory controls applicable to online CFD trading in Malaysia, you are likely to find that your choices are more limited. In our guide to finding the best CFD broker in Malaysia, we’ve taken an in-depth look at all of the trading options available to Malaysian residents. It’s essential reading, why not head over and take a look now?
There are a number of very good reasons why it would not be a good choice. Before you make any rash decisions, be sure to read our in-depth guide to CFD trading in Malaysia. Our guide explores all of the regulations applied to CFD trading in your country and then you’ll see exactly that going offshore is not the best idea.
Trading financial products carries a high risk to your capital, especially trading leverage products such as CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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