Is OctaFX a fraudulent platform? Unraveling the truth about OctaFX in Malaysia 

Trading made clear OctaFX becomes Octa launches global campaign 2
.27 Sep 2023
author avatar image Chad Smith

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OctaFX, among several other brokers, has been included in the Financial Consumer Alert List (FCA) by Bank Negara Malaysia (BNM). Discover the significance of this for market participants. 

In the previous year, OctaFX, along with numerous other Forex brokers operating in Malaysia, found themselves listed on the Financial Consumer Alert List (FCA) administered by Bank Negara Malaysia (BNM) and the Investor Alert List of the Securities Commission Malaysia (SC). How did OctaFX and other brokers appear on these warning lists? 

How did OctaFX and other brokers find themselves on the alert lists? 


OctaFX is featured in Bank Negara Malaysia’s investor alert list 

BNM and SC have stipulated that their alert lists are meant to guide the public, boosting their awareness of organizations that lack local licensing or regulation from these institutions. Yet, it’s important to note that being on these lists doesn’t necessarily equate to being a scam or fraudulent entity—it only signifies the absence of a local license. 

Like OctaFX, global brokerage firms like XM and Exness also feature on these lists. These brokers hold valid licenses in various foreign jurisdictions. OctaFX has acquired licensing from the FSCA in South Africa and CySEC in Cyprus. Similarly, XM operates under a CySEC license and an Australian ASIC license. Exness holds several licenses from authorities, such as the FCA in the UK and the FSCA in South Africa. Nevertheless, none of these brokers have been licensed by the Securities Commission or Bank Negara. 

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XM and Exness featured on BNM’s Financial Consumer Alert List 

As far as is known, Malaysia doesn’t license any Forex brokers. The Securities Commission is the exclusive licensing body for any entity looking to trade securities and derivatives within the country. Yet, the lone online broker that has successfully obtained the Securities Commission’s Capital Market Services License (CMSL) is Rakuten, a securities-dealing entity born from the partnership of Malaysia’s Kenanga Investment Bank Berhad and Japan’s Rakuten Securities. Other online brokers and different investment possibilities—like derivative CFD and Forex trading—are not recognized by the Securities Commission. 

As per the records in the Securities Commission’s Public Register, a mere 16 companies hold licenses for derivative dealing—most of which are large-scale banks, typically not offering brokerage services—and not one of them is an actual online CFD broker. This low count indicates that Malaysian investors might lack suitable investment opportunities and options in global financial markets. Despite this, the Securities Commission and Bank Negara add all foreign brokers to their alert lists. The lack of a license predominantly impacts certain promotional aspects of the brokers’ operations, but they can still legally onboard clients from Malaysia. 

What’s the reason behind brokers’ decision to maintain an international presence? 

The answer lies in their ability to offer superior trading conditions and remain competitive. The restrictions and constraints brought on by local financial regulators often hinder the array of investment tools, conditions, and bonus plans a broker can provide. This usually drives clients towards brokers offering a broader selection of tools, improved conditions, copy trading services, and attractive promotional and bonus deals. More often than not, these brokers provide Forex trading services internationally. 

Hence, even if Forex brokers were allowed to acquire licenses in Malaysia, they would likely not rush into it. Doing so would significantly deteriorate the trading conditions they offer and put them at a competitive disadvantage against their international counterparts. 

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Securities Commission Malaysia, the governing body for financial service providers 

Does OctaFX continue its operations in Malaysia? 

Yes, OctaFX still functions in Malaysia. Being an international broker, it can accommodate clients from many jurisdictions around the globe. This is evidenced by OctaFX’s clientele, spreading across 180 nations. 

Nevertheless, it is crucial to note that engaging in Forex trading necessitates a comprehensive knowledge of the financial markets and adept use of risk management strategies. Failing to do so could lead to substantial financial loss, regardless of the broker you decide to trade with. Thus, it is paramount that you prepare yourself adequately before funding your account and engaging in any investing or trading activities. 

author avatar image
Chad Smith

Chad Smith is the Director of Research & Analysis here at Chad previously served as an Editor for a number of websites related to finance and trading, where he authored a significant number of published articles about trading and the impact of technology in transforming investing as we know it. Overall, Chad is an active fintech and crypto industry researcher with more than 15 years of trading experience, and you can find him teaching his dog how to trade in his free time.