What a Labuan money broker does
Labuan IBFC is Malaysia's international business and financial centre in Labuan. Firms there are licensed and supervised by the Labuan Financial Services Authority, or Labuan FSA.
Labuan FSA's guidelines describe money broking as arranging transactions between buyers and sellers in the money or foreign exchange markets, as an intermediary, in return for a brokerage fee.
In plain terms, a money broker brings two sides of a deal together. It earns a fee or commission. It is meant to act as a go-between, not as the other side of the trade.
Labuan FSA notes that many Labuan money brokers now offer digital platforms for currency trading.
What the licence allows, and what it does not
Labuan FSA issued revised guidelines for money brokers in September 2024. It said the update strengthens eligibility rules, anti-money laundering checks, audit and reporting, client disclosure and risk management.
Under the guidelines, a licensed money broker may not take positions for its own account, speculate or carry out proprietary trading.
Financial products outside the money and foreign exchange markets are not permitted under this licence. The guidelines name CFDs on underlying assets outside the money market as an example.
The licence can also cover facilitating trades in digital assets, as long as those assets do not have the features of securities.
The licence is intended for institutional investors and high-net-worth individuals. Labuan FSA's FAQ says retail clients should make up less than half of a broker's portfolio.
The guidelines cap leverage at 100:1 for general trading and 1:1 for digital assets. A licensee must hold capital of RM1 million, or RM1.5 million if it also handles digital assets.
Labuan FSA's money broking page adds that money brokers may transact only in foreign currency, use ringgit only for administrative and statutory expenses, and may not deal with residents other than authorised dealers under the Exchange Control Act 1953.
How to check a Labuan money broker
Start with the Financial Institutions Directory at labuanfsa.gov.my/financial-institutions-directory. Choose the "Money Brokers" list and search for the firm's exact name.
Labuan FSA also publishes a list of money brokers whose licences were surrendered or revoked. You can find it on its money broking page.
Next, look at Labuan FSA's list of unauthorised entities and websites. It includes warnings about firms that misuse the regulator's name or copy the details of a licensed firm. Labuan FSA says this list is not exhaustive, so a missing name does not prove a firm is licensed.
Check that the website, company name and address match the directory entry. Small differences in a name or web address are worth a closer look.
SmartChecker shows register records and reviews for the companies it lists, so you can compare what a firm says about itself with what the official registers show.
Common questions
Can a Labuan money broker trade against its own clients? Labuan FSA's guidelines say a money broker may not take positions for its own account or carry out proprietary trading.
Can a Labuan money broker offer CFDs on shares or commodities? The guidelines say products outside the money and foreign exchange markets are not permitted under this licence, including CFDs on underlying assets outside the money market.
Who is the licence meant for? Labuan FSA says it is intended for institutional investors and high-net-worth individuals, with retail clients making up less than half of the portfolio.
Does a firm missing from the unauthorised list mean it is licensed? No. Labuan FSA says that list is not exhaustive. Check the Financial Institutions Directory instead.