Malaysia central bank states Forex is illegal

im a new bird in forex. really don know what to do after i saw this news. Help Needed........

Hahaha this is funny. I think the basic reason why the Bank do that is because 95% of trader lost their money in forex (most of them are the newbies, un-knowledgeable lusting money chasers, and un-pros), just like 95% of new businessmen fail on their first few attempts to run business and lose money. So they forbid forex to protect citizen from losing money.

Respecting the Islamic Law of Malaysia, may be the Bank also think that forex is like gambling because so many people lose money, so they try to forbid that as the religion does.

Well imo, to some extent, everything related to business can be called as gambling. You can start a small restaurant and apply any business knowledge you have to make it run, but there is no guarantee people will come and buy and come again. It's a gamble, luck rules

I personally doubt anyone can be a good businessmen without making peace with the idea of gambling.

If you are trading with a virtual shithole marketmaker yes then you are not buying currencies. If you are trading with a proper broker/marketplace you are buying/selling individual currencies. If you buy EURUSD you will be buying Euros and Selling US Dollars at the same time. That's why real brokers statements look cryptic for most newbies at the beginning since they show you each transaction and not directly the overall position like MT4/5 marketmakers.

Yesterday, BNM came out with the following statement:

As part of continuous efforts by Bank Negara Malaysia to enhance competitiveness in the economy and to develop the domestic financial markets, Bank Negara Malaysia wishes to announce the following liberalisation measures, with effect from 31 January 2012:

1. To further spur the domestic foreign exchange market through greater product innovation, licensed onshore banks are permitted to trade foreign currency against another foreign currency with a resident.
2. To further deepen the domestic interest rate derivatives market, a licensed onshore bank is allowed to offer ringgit-denominated interest rate derivatives to a non-bank non-resident.
3. Towards enhancing the asset liability management of residents, flexibility is permitted for a resident to convert their existing ringgit or foreign currency debt obligation into a debt obligation of another foreign currency.

The link to the above statement is here.

The item of interest to retail traders in M'sia is bolded in red above. In the FAQ that followed, there's no mention of "margin trading", which is the predominant way of "investing" for retail traders worldwide.

The FAQs further imply that a resident cannot "trade" "foreign currency" with anyone other than a licensed onshore Bank, with special emphasis around the word "trade" and the phrase "foreign currency".

But... under Recommendation 2.2.5 of BNM's recently released Financial Sector Blueprint, there is a suggestion to permit "institutional funds and retail investors to trade in foreign currencies, including margin trading, as a new investment class and avenue, subject to suitable safeguards."

A few things to note: ECM 9 has not been superceded AFAIK. And "foreign currency" can mean different things in different jurisdictions.

Taking into account ALL of my posts and responses in this thread, the Malaysian "investor" or "retail trader" (or whatever the heck else he wishes to call himself) is advised to do his own due diligence as to whether what he's doing is legal or not.

You can start by reading the ENTIRE THREAD in chronological order from start to finish so you have an idea what's at stake. DO NOT REPLY TO ANY POST UNTIL AFTER YOU HAVE FINISHED READING THE WHOLE THREAD because chances are your concern has already been addressed.

Standard disclaimer: Trading for other people without a license and/or soliciting deposits without a license is, of course, ILLEGAL under Malaysian Law. I will not waste my time debating this particular legal issue as I actually agree with the law, and nothing anyone can say can change my mind about that.

http://biz.thestar.com.my/news/story...2&sec=business

What is your thought?

1. What are YOUR thoughts? Since you brought it up.

2. To me, it's just a bunch of over-paid institutionals stating the obvious... as if BNM is not cognizant of the issues at play.

3. My current sentiment on the matter is more accurately reflected in my last post in this thread.

Just saw this posted on breakingnews.com


Malaysia's highest Islamic body has issued an edict forbidding FX trading by Muslim individuals, saying it violates Islamic law



Thoughts?

1. I'm going to assume you're asking this question to everyone in general (with no mischievious intent) and not just Muslims in particular.

2. My thoughts: Anyone here, who now believes their trading is against their faith and/or against their domestic laws, should perhaps consider leaving this industry to people whose collective conscience is already clear.

3. Can we now pleeeease keep politics and religion out of this discussion?

As far as I understand it, the religious body is trying to convince BNM to band retail trading for muslims.

Not that it applies to me. But i do hope they don't succed. Coz it will open the floodgates to allow BNM to start banning retail trading.

"Any comments guys?"

Communists.

Similar to Dodd-Frank. (Obama ?)

it should pure trading, sharing n discussion w/out touching politic, religion, gender.

(surprisingly I have not come across this story in The Star)

I found this pretty current story (dated 5 June 2012) from the Borneo Post website:

Man jailed, fined RM55,000 for illegal forex trading.

For some background, there's this story dated 23 Sept 2011 from another East Malaysian newspaper (again I can't seem to find any reference in a West Malaysian paper):

Foreign currency buy: Man to enter defence

Now, I don't pretend to know what this Adrian Lee guy ACTUALLY did. But it does not help that he was (reportedly) dealing with a dodgy outfit called Goldex Equities Limited (mis-spelt Golden Equities in the 2011 story). The reader is encouraged to Google this himself.

The crime is called "illegally buying foreign currency from a person outside Malaysia". Supposedly he did this seven years ago.

"The offence was framed under Section 4(2) of the Exchange Control Act 1953 (Act 17) punishable under Fifth Schedule, Part II, paragraph 7(2A) of the same Act, which provides for a fine of not exceeding RM1 million or a maximum jail of five years or both, upon conviction."

The above Law reads: "Except with the permission of the Controller, no person resident in the scheduled territories, other than an authorized dealer, shall, in Malaysia, do any act which involves, is in association with, or is preparatory to, buying or borrowing any gold or foreign currency from, or selling or lending any gold or foreign currency to, any person outside Malaysia. "

Hmm.. This could've played out any which way.

For instance, knowing myself how anal legal jargon can be, it may seem he was attempting to buy "currency" (in my interpretation, actual physical cash) with ringgit from unauthorised dealer (in this case, Goldex).

Or, maybe he himself was an agent of Goldex and executing trades illegally onshore.

If he bought the foreign currency with ringgit (i.e. paid with ringgit to a Goldex agent's MYR account onshore), then I suppose he deserved to get caught.

If he maintained his margin account onshore, then he definitely deserved to get caught.

My take is that this is just a simple case of people who are either misguided or too lazy to go thru proper channels to "invest" in forex markets legally.

All in all, this has been an interesting test case, complete with scapegoat. I'm just wondering why I haven't seen this story in West Malaysian mainstream media. Or am I mistaken?

I totally agree that forex trading or any form of speculation should be illegal anywhere.
At leat the old soviet regime had 1 thing right:
speculation = five years jail in Siberia.
(With the silver liner that the culprit at least did not lose any money for five year (

From here,

1) Ram submitted that Lee did not earn from a Forex Trading except his salary for working less than nine months in the employ of a company

2) The trial commenced on July 12, 2010 and the prosecution had closed its case on June 14 this year after calling 25 witnesses to testify against Lee

I think he is agent.

Illegal forex deal: Director is fined

http://www.miricommunity.net/styles/...ost_target.gifby rabbit75 » Thu Oct 15, 2009 9:01 am
http://www.dailyexpress.com.my/news.cfm?NewsID=47334
Kota Kinabalu: A company director was fined RM2,000 or three months' jail by the Magistrate's Court here Tuesday for illegal involvement in a foreign exchange (forex) deal with a foreign firm three years ago.

Local Jeffary Mudi, 35, of Asset Forrich Sdn Bhd (AFSB), admitted before Magistrate Azreena Aziz to committing the offence between Jan. 10 and May 20, 2005 at Lot A1202-7-11, 12th floor, Wisma Merdeka, here. The company was also ordered to pay RM2,000 fine for the same offence.

Mudi admitted to having been involved in the forex deal, without the permission from the Foreign Exchange Controller, with a New Zealand firm, Goldex Equities Limited, whose registered address was Level 2, Windsor Court, 128-136, Parnell Road, Auckland.

Mudi and the company had committed an offence under Section 4(2) of the Foreign Exchange Control Act 1953 (Act 17) read with para 9(b), Section 2, fifth Scheduled of the same Act, which is punishable under para 7(2), Section 2, Fifth Scheduled of the same Act.

The charge carries a maximum of RM10,000 fine or up to three years' jail, or both, on conviction.

Prosecuting officers Anthony Kularaj Kulasingam and Jasmina Mohd Mokthar appeared for Bank Negara Malaysia (BNM) while Mudi was unrepresented.

Kulasingam told the court that a team of BNM investigation officers raided the AFSB premises on May 20, 2004 after receiving information about the company conducting foreign currency business illegally.

The team seized documents and related office tools when the company failed to produce any permission or authorisation for the business from the Forex Controller.

Kulasingam said the trading licence issued by City Hall showed the company conducted "business managing services, computer software and hardware suppliers" and that Mudi was the company's director.

Investigations revealed that AFSB had been appointed by Goldex Equities Limited (GEL) as an agent and had been authorised to, among others, attract investors into the business.

It was also to conduct training and briefing to new employers and the investors regarding the business to enable them to carry out trading at the AFSB premises.

AFSB was also to provide business equipment such as computer, computer software and other online equipment at its premises so that the investors conduct trading through GEL website.

It was also allowed by GEL to provide administrative facility such as opening a trading account, depositing money in GEL agent's account, issuing user ID and password as well as GEL official receipt.

Kulasingam further told the court that investors could carry out trading in several foreign currencies such as Swiss France, Japanese Yen, Euro Dollar and Great Britain Pound offered by GEL.

Further investigations had proved that the seized documents and office equipment including computer had connection with purchasing and selling foreign currency activity.

The court was told that search at the Foreign Exchange Administrative Department, BNM found that AFSB had not obtained any authority or permission to conduct such activity from the controller, Governor of Bank Negara Malaysia...


this is another story, think it's the same coz Goldex not listed as authorised by BNM..... in malaysia, being IB will be a problem if not authorised...

This was the final nail in the coffin, methinks:

First things first, I'm not an IB; I don't believe in that business model. But I'm not gonna knock someone from trying to make money that way either, as long as their interests do not conflict with mine.

What I AM against is when IBs (some, not all) solicit money from (what I call) gullible country yokels. When these guys inevitably lose their money and run crying to BNM, they draw too much attention to legitimate investors who just want to make money quietly and without fuss.

My advice to Malaysians who think they want to get involved in forex:

 

1. Think again.
2. If you still want to trade forex, do your own due diligence. Know the law of the land you live in. Convince yourself that what you're doing is legal. If you can't do this or you don't even understand the law in the first place, don't trade. Ignorance is not an excuse.
3. If you still want to trade forex, don't listen to anyone but yourself. If you can't make your own decisions and take your own risks, you shouldn't be trading in any financial markets.
4. If you still want to trade forex, deal direct with a reputable broker. FF's brokers page is a good starting point, but it doesn't mean you stop doing your research.

To my less-than-knowledgeable investor countrymen: I beg you please... don't trade forex and spoil it for the rest of us.

Hi I like to check on setting up seminar on currency trading using TA. it is still possible ?

ANYTHING is possible.

You're not being specific.

Setting up a seminar WHERE? in Malaysia?

How do you plan on publicizing it?

Who is your intended audience? Malaysians? Singaporeans?

BNM came out with this Financial Consumer Alert, which had this "list of companies and websites which are neither authorised nor approved under the relevant laws and regulations administered by BNM." (I've uploaded this list here).

I'm not surprised to see some of the names on that list. They definitely deserved their dodgy status.

There's a section in the Alert called "How to detect an illegal scheme", but if you're too lazy to take responsibility for your own trading/investing decisions, then DON'T READ IT. It'll be just a waste of your useful time.

I'm just gonna add this excerpt from the alert:

Among the illegal financial activities that could be reported to BNM are:

1. Illegal Deposit Taking
2. Illegal Foreign Exchange Trading Scheme
3. Illegal Money Services Business Activities
4. Improper Market Conduct or Practices by BNM's licensee
5. Misuse of BNM and Senior Officers' Names and Positions
6. Other Illegal Financial Activities expressly mentioned in the relevant law and regulations administered by BNM

The phrases I highlighted in bold red are the parts relevant in this thread's discussion. These are words and phrases I've pointed to or implied on numerous occasions to underline the concept that if my fellow Malaysians are too lazy to find out and understand what they cannot (and what they CAN) do under law, Malaysians should not get involved in forex.

Thanks for all the hard work!