Binary Options Trading in Malaysia and Top Brokers

Malaysian Traders Guide

Malaysia has rightfully gained its place as one of the Top-10 holiday destinations in the world. No doubt this is partly on account of the sheer diversity of the country, which offers an eclectic mix of vibrant modern cities and faultlessly clean beaches; all contained within what is considered one of the most tourist-friendly places in the world.

Citizens of modern Malaysia, enjoy a very comfortable standard of living, with a decent level of disposable income; undoubtedly one of the reasons that day trading has become a much more common pastime there. Binary options have become a particular favourite amongst younger Malaysians, because they represent a fast-paced way to trade and because it is readily accessible from mobile devices.

Our guides are aimed to assist both newcomers and those who wish to add binaries to an existing portfolio. We aim to give an overview of the situation for your country, as well as guidance on choosing a suitable, legitimate broker and providing reviews of the brokers we consider you may want to shortlist.

In this article, you will learn:

About Malaysian licensing and regulation The brokers which are most suitable for Malaysians How you can trade using your mobile device

Traders in Malaysia

While quietly becoming one of the wealthiest countries in the Asia-Pacific region and the world, Malaysia has allowed its citizens’ freedom to trade in any financial product, with little or no restriction. This relaxed attitude to trading makes it easy to see why binary options have seen a big Malaysian growth spurt over the last few years. Although you have this freedom, you should use it wisely. So-called ‘golden’ opportunities are rarely that and to avoid disappointment, choose a broker armed with knowledge.

Mobile Trading

One of the reasons binary options are so prevalent in Malaysia is their speed and simplicity. They are an ideal trading tool for fast-paced modern life and with no need for extensive research to get started. What is more, the majority of brokers offer outstanding mobile device services as well. These usually come in the form of a mobile-optimised website, or a downloadable App, occasionally both are available. A modern device and reliable Wi-Fi connection are essential to reap the benefits.

Free Demo Platforms

Demo platforms are essential to new traders and can have their uses even if you are already an experienced one. A ‘free’ opportunity should be precisely that, no payment required, no time constraint and no pressure on you to start investing real money. Any broker that does not meet those standards should not be deemed worthy of your patronage.

Good Payouts

Brokers will usually advertise a payout percentage and you may see figures that vary between 75% and occasionally as high as 95%. The higher numbers are often ‘best case scenario’ data, otherwise known as ‘headlines’. What you need to know is that you are not always going to receive the same payout percentage and you will need to do some homework based on different figures to see the accurate picture.

Customer Support

It is particularly crucial if you are new to this type of trading to select a broker who can offer adequate support to its clients. Support does not necessarily mean someone available to answer a phone 24/7 (although that is important too), it is more about detailed FAQs, extensive help guides and a full-function demo platform, which you can access without committing financially.

Broker Fees And Tax

Broker fees are variable, but all CySEC regulated operators are required to make any fees you may encounter clear before you sign up with them and commence trading. There will be either a per-trade fixed fee or a commission-based cost to take into account. You may also need to consider if the broker levies charges for other services including withdrawals and conversion to the Malaysian currency (MYR).

Assuming that you are not a professional trader, your Income Tax liability is assessed on a sliding scale. The amount you pay will vary from 0% to 28% depending on the total income over a 12-month period. Any profit you make from trading in binary options will count as a part of that and must be declared.

It is therefore crucial that you maintain a comprehensive record of all trading transactions, regardless of whether you made a profit or loss. There are substantial financial penalties for tax avoidance including a fine of 20,000 MYR and 300% of the undeclared tax owing.

Malaysian Licencing

The highest financial authority in the country is Bank Negara, which keeps a close eye on commercial activities and the country’s economy. It does not explicitly regulate binary options, although it does have certain constraints of which traders need to be aware. Bank Negara also makes recommendations to those considering this form of trading. These are the main things you need to be mindful of:

The maximum transaction amount you can make, without obtaining Bank Negara’s permission is 10,000 ringgit (MYR) All profits from binary options trading must be declared as income Only CySec licensed brokers are recommended for Malaysian citizens

CySEC (The Cyprus Securities and Exchange Commission) was the first authority to recognise binary options as a valid financial product and to regulate them from 2008. You should also be aware that some devious brokers mention this on their website, but are not legitimately CySEC licensed. Any that are correctly licensed will display a logo and a unique 5-digit code, which is verifiable on the CySEC website.

One of the reasons binary options are so prevalent in Malaysia is their speed and simplicity.

How we Recommend Brokers

Sometimes the task of selecting suitable brokers for a particular country can be tough, but for Malaysian residents, it is more straightforward. While you are legally allowed to trade with any offshore broker of your choice, the top financial authority in your country offers sound advice, so that is where we will begin. Our team of expert reviewers will seek out the best licensed binary options brokers and assess them on many different factors. Two great brokers to help you get started with binary trading are Olymp Trade and IQ Option, both offer a feature-rich experience.

Number one on the list is confirmation of licensing, which is easy for CySEC as the licence number must be displayed on the broker’s website and verified via CySEC’s licensing site. At the same time as this, we also ensure that the broker has not incurred penalties for unethical practices, or received warnings for misconduct. Security comes next and CySEC brokers are required to provide a safe website and have a minimum of 128-Bit encryption in place for sensitive or financial transactions.

Now we get to the parts that may interest you more, firstly assets and payouts. We like to see our recommended brokers offering a diversity of asset types for you to trade and to display a realistic payout percentage. We expect full transparency where fees are concerned, so you will not get any nasty surprises and a generally ‘friendly’ feel to the broker. By that we mean, how approachable they are and how much assistance they offer for you to achieve success, after all a successful trader will be back to trade again.

Frequently Asked Questions

Is binary trading in Malaysia legal and safe?

Yes, all forms of trading are legal in Malaysia, including binary options. We recommend that you use a broker which operates under CySEC regulations and displays valid licensing information to ensure your online safety.

Do I need to pay fees and taxes on my trading profits?

The fees you pay will vary from broker to broker; always check the T&Cs carefully. Any profit you may achieve from trading binary options will count as income and is taxable on a sliding-scale basis.

Can I test brokers before trading with real money?

The majority of CySEC brokers all offer a free demo trading platform. A few may impose time limits on the trial period, so choose wisely, especially if you are still learning.

Is it easy to make deposits and withdrawals?

You will find many widely-accepted methods of payment available to you including credit/debit card and bank transfer, as well as popular e-wallets like PayPal and Skrill. You should note that Malaysia forbids transactions in and out of the country using cryptocurrency.

Can I trade using my mobile or tablet device?

You will find it easy to connect with brokers that provide robust mobile-device services. The option may be in the form of an optimised website, or an App which you will need to download. Most require an up-to-date device/OS and a will need a reliable Internet connection.

Jacob has been an author for us since our launch in 2020. He has over forty years’ experience in the financial sector and has held a variety of positions within financial services corporations and venture capitalist organisations.

Binary Options Trading in Malaysia

A relatively small country in South East Asia with a population of around 30 million people, Malaysia is well known around the world as a prime holiday destination. It is also famous for its World’s tallest twin towers, the Petronas Towers. But Malaysia has much more to offer to the world than just a holiday destination. As one of the world’s largest producer’s of palm oil and a leader in numerous industries, Malaysia has been considered one of the economic tigers of South East Asia. This rapidly emerging economy is also well known within the financial sector as a pioneering center for Islamic financing. In terms of Islamic bonds issuances, Malaysia is the undisputed leader of the “Sukuk” market. Malaysian issued Islamic bonds currently account for more than 60% of the global Islamic bonds issuances. In this respect, Malaysia is considered to be a major player in the global financial markets especially in the area of sharia compliant instruments.

Through the Malaysian government’s economic transformation plans, the Malaysian’s financial markets have been growing in depth and width. While it is still not the global leader in the area of Islamic banking in terms of assets, a title held by Saudi Arabia, its significant holdings of Islamic finance assets has resulted in Malaysia being ranked as the top 2 countries in the world holding sharia compliant financial assets. In fact, the efforts of the Malaysian government have helped the country’s financial markets to grow into a well monitored and mature trading environment.

Although the Malaysian financial markets are tightly monitored, it is not to the extent of curtailing market innovations. This is one of the key reasons why binaries trading in Malaysia have become extremely popular and is not deemed illegal. The only restriction which the central bank has, Bank Negara, is to require that it be informed of any transfer of funds to another country that is in excess of the amount of 10,000 Malaysian ringgit.

Best Broker for Malaysia

Malaysia itself does not have any domestically based binary brokers. As such the next best thing for Malaysian binary options traders is to sign up for a trading account with brokers that are reputable and CySEC regulated.

Review

Review

Regulations

In Malaysia, the Central Bank, Bank Negara and the Securities Commission of Malaysia are the two financial regulatory bodies that are in charge of regulating and licensing financial services providers in the country. The main task of the Securities Commission (SC) includes the following:

• Approving corporate bond issues
• Encouraging self regulation and proper conduct of licensed individuals and market institutions
• Licensing and supervision of all licensed individuals
• Regulating matters regarding futures contracts and securities
• Regulating Takeovers and Mergers
• Regulating unit trust schemes
• Supervision of the stock exchange, central depositories and clearing houses

At the end of the day, the Securities Commission’s task is the protection of investors in the financial markets. Apart from its regulatory functions, the Securities Commission is obligated legally to encourage development of the financial markets in Malaysia.

At the apex of the financial regulatory authorities in Malaysia is the Bank Negara, the central bank of Malaysia. Its main functions are:

• Acting as the Government’s Advisor and Banker
• Controlling the Foreign Exchange Reserves
• Ensuring all Financial Institutions within Malaysia adheres to the Malaysian Financial regulations
• Monitoring the Ringgit Exchange rate ensuring that it is in line with the economy’s fundamentals
• Overseeing Malaysia’s Forex Market

So asides from the various functions mentioned above, the Malaysian financial regulatory authorities do not in any way prevent Malaysian citizens or residents from trading forex or binary options online. Restrictions if any are mainly targeted towards operations within the borders of the country. For example, it is illegal for any individuals to participate in the financial industry or accept any deposits without any prior approval and documentation from Bank Negara.

While it is not illegal for anyone to engage in binary options trading in Malaysia, binary options traders in Malaysia have to take note of the fact that for any remittance above 10,000 ringgit, Bank Negara needs to be informed. Bank Negara started to impose this restriction in the light of the Asian Financial crisis in 1997 when the ringgit came under attack from currency speculators. As a result of the crisis, the ringgit lost half of its value. Today to maintain control of the situation, Bank Negara placed the capital control restrictions to track and monitor inflow and outflow of the ringgit.

Deposit Methods Available In Malaysia

Being a country with a well developed economy, the financial system in Malaysia is sound and supports numerous International payment transfer options. In addition, the country is host to more than 2 million migrant workers who send remittances back to their home countries on a regular basis.

As a prime holiday destination and shopping paradise, Malaysian businesses and banks accept all international credit cards. In addition ewallets such as Skrill MoneyBookers, NETELLER and Paypal are widely accepted. Other widely available methods of fund transfer include Western Union, MoneyGram, IME Remit are also popular choices of fund transfer methods in Malaysia.

• Is it legal to trade binaries in Malaysia?

Yes. Malaysia does not impose any restrictions on this kind of trading.

• Are binaries regulated in Malaysia?

No. Binary options trading is not regulated in Malaysia as there is no legal framework to regulate it. In addition, most brokers are based offshore and as such do not fall under the jurisdiction of the Malaysian financial regulatory authorities.

• How to trade binaries in Malaysia?

To trade binaries in Malaysia, you need to first sign up with a broker for a trading account. As there are no Malaysian binary options broker that are based in the country, binary options traders in Malaysia are recommended to only deal with reputable and CySEC regulated brokers.

Binary Options trading in Malaysia

Malaysia is a next door neighbour to Singapore, Asia’s largest financial hub. However, the conduct of financial market affairs in Malaysia does not mirror what is available across the border. Regulation of the binary options market is not clear-cut, and traders in Malaysia need to understand what the situation really is in terms of where they can trade binary options.

The regulation of all aspects of Malaysia’s financial markets is not vested with one agency or body. Overall control of the markets rests with the Malaysian Central Bank known as the Bank Negara Malaysia. However, regulation of the various financial markets rests with various bodies, which include the Securities Commission and the Financial Markets Financial Association of Malaysia (FMAM).

Malaysia bore the brunt of speculative attacks on the Malaysian Ringgit during the 1997 Asian currency crisis.

As such, the Bank Negara Malaysia has assumed a hands-on approach on how the financial markets and transactional flows within these markets are performed. This has implications on how money is remitted across borders by Malaysian binary options traders.

With regards to licensing, a form of confusion existed in terms of classification of binary options. The existent laws prior to 2007 provided for regulation of the following products:

1. Exchange-traded derivative products
2. Specially structured products, which were basically derivative products structured as securities and offered by banks.
3. OTC derivative products, which were not captured under any of the provisions of the existing financial regulatory laws.

This was an inadvertently created situation. At the time these laws were initially passed in Malaysia in 1993, there was nothing like retail binary options. The internet was still under development, and majority of the world’s trading activity were closed off within borders. Retail cross-border trading activity was non-existent.

With the development of new technology and creation of new investment products, it became clear that the existing laws could not accommodate the rapid evolution that had taken place in the world of financial trading. Malaysia was forced to revisit its investment laws to attempt to keep pace with modern trends.

As positive change was the amendment of the Capital Markets and Securities Act of 2007 to change the definition of OTC derivatives and bring them under regulatory control.

Currency Pairs & Spread

The Malaysian Ringgit is not featured on most binary options platforms. However, currency pairs like the Singaporean Dollar and other Asian currencies are featured. It is easier for Malaysian binary options traders to trade commodities, currencies and stocks from companies located in South East Asia, as there is likely to be more familiarity with these assets than assets from Europe or the Americas.

Trading Platforms

Most platforms used by Malaysian binary options traders are those of offshore brokers, which are mostly of the turnkey variety. Therefore, platforms designed by SpotOption, Tech Financials, O-Systems, Tradologic and Hello Binary, are the commonest platforms that will be used by Malaysian traders.

Bonuses

Malaysian traders who trade with binary options brokers located in Seychelles, Belize, Mauritius, Vanuatu and St.Vincent & Grenadines, will be offered trading bonuses. Bonuses will not be offered by CySEC-regulated brokers as these have been banned by CySEC.

Deposit and Withdrawal Options

Malaysian law requires that foreign remittances above $10,000 be submitted for approval by the Bank Negara Malaysia. This puts some control on what transaction methods can be used by Malaysian binary options traders.

1. Cards: Cards issued by MasterCard and VISA are the accepted card brands for top Malaysian binary options brokers in offshore locations.
2. Bank wire: Transfer of funds, subject to the imposed $10,000 approval and limitation from the Bank Negara Malaysia, can be performed.
3. Malaysia has a preponderance of digital wallets that can be used to transact on binary platforms. These include international wallets such as Skrill, Neteller, OKPay and Perfect Money. Local digital wallets include MyanPay, YuuPay, Automate Pay and Digital Currency Exchange.

Legality & Regulations

Up until 2020, the only recognized OTC derivatives exchange in Malaysia was the local Kuala Lumpur Commodities Exchange, where trade of futures of crude palm oil was carried out. The development of new financial products in the global financial markets and the explosion of technology which enabled online trading of various kinds of derivative products all over the world led the Malaysian government to re-design the laws permitting OTC derivative trading in Malaysia. The new law, which was an amendment of the existing Capital Markets and Services Act of 2007, proposed to bring OTC derivatives fully under the regulatory oversight of the Securities Commission.

This requirement now mandates all Malaysian companies offering OTC derivatives (including binary options) to acquire a license to be able to keep offering these products to Malaysian citizens

Presently, no company has registered with the Securities Commission to obtain a binary options license. A few primarily offshore companies have however, opened shop in Malaysia to offer forex trading services. Some of these companies (e.g. Hirose UK) have binary options applications servicing other markets. It is therefore expected that they may decide to offer binary options to the local populace, once they have tested the waters of the local market for profitability.

What are the most frequently asked questions about Malaysia binary options brokers and the market in general?

• Are binary options legal in the Malaysia?

Answer: The trading of binary options is legal in Malaysia, provided trading is conducted with binary options brokers who have obtained an OTC derivatives license.

• Who regulates the financial markets (including binary options) in Malaysia?

Answer: The Securities Commission regulates the OTC derivatives market in Malaysia, but the Bank Negara Malaysia provides overall regulation of the financial markets and payment systems in Malaysia.

• As a citizen/resident of Malaysia, am I allowed to trade binary options with offshore brokers?

Answer: There are no laws enforcing the prohibition of trading of binary options with offshore brokers, probably because no companies have taken up licensing with the Securities Commission. How long this would remain the case remains to be seen.

• What is the official designation of binary options brokers in Malaysia?

Answer: Binary options brokers in Malaysia are deemed to be OTC derivative issuers, and are required to be licensed if operating within Malaysia.

• Are there any Malay or Mandarin language binary options brokers available?

Answer: Some of the brokers listed below offer binary options in Malay, Tamil and Mandarin to accommodate the local populace.

Best Binary Options Brokers in Malaysia

There are no binary options brokers with a physical presence in Malaysia. All trading is therefore done with offshore brokers. Here is a list of binary options brokers which will not only provide Malay and Mandarin language options, but also give Malaysian traders several options for depositing and withdrawing funds fast. The top binary options brokers are as follows:

Conclusion

The binary options market in Malaysia is still dominated by the marketing presence of offshore brokers. The designation of binary options as OTC derivatives is a step in the right direction and will promote development of the local content in the brokerage business. However, this may take some time as Malaysian traders adjust to the new reality and await the entrance of more companies with binary options products suited to the local environment.

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