Best Forex Brokers in Pakistan

Forex Trading in Pakistan

Although many people believe that currency trading is illegal in Pakistan, this notion can’t be any further from the truth. Trading is one of the popular economic activities that Pakistanis are taking up due to its lucrative nature and even ease of trade. The primary regulatory body that has been tasked with overseeing financial transactions and monetary activities in Pakistan is the State Bank of Pakistan. FX brokers who may wish to conduct trading activities in the country will thus have to get a license from this body which will be duly regulated by the guidelines of the bank.

A key regulatory framework in the trading of currencies in Pakistan is the Foreign Exchange Regulation Act (1947). This key piece of framework lists all the rules and regulations about the exchange of foreign currencies. There are two options when one seeks to trade currencies in Pakistan. The first is choosing a local brokerage firm. You will notice that choosing a reliable and even credible brokerage company may be one of the toughest things that all novice traders experience. One way to make this easy is by going with a locally registered Forex brokerage firm. A good way to find out if a local brokerage company is regulated by the State Bank of Pakistan is by asking them if they have a local office or if you can withdraw and even deposit your funds using Pakistani Rupees. It is worth noting that all the Forex brokerage companies that are regulated by these banks will give you the option of making transactions using Pakistani rupees. The second option is going for an international brokerage firm that is known to be reputable. This option will allow you to find more trading features but may expose you to an unwarranted level of risk. Carrying out some due diligence before signing up with an international Forex broker can help mitigate the level of risk that you face. How do you do this?

1. Reading top blogs
2. Perusing review sites
3. Engaging in Forex forums
4. Getting recommendations

Forex regulations in Pakistan

One of the primary roles of the State Bank of Pakistan which affects Forex trading in Pakistan is its role in making sound monetary policies in a bid to ensure the local currency is stable. Being such an ambiguous role, this leaves the bank with a lot to do in terms of ensuring that all the sectors of the economy are performing well. This ultimately led to the creation of the Exchange Policy Department in SBP which was mandated with the function of overseeing the regulation of currency exchanges in the country. It works seamlessly with other law enforcement departments in a bid to root out any illegal Forex brokerage company that may be operating in the country.

You may be wondering what other functions this department carries out. They include ensuring that foreign exchange trading in the country is stable. This can be done by setting up sound monetary policies or even ensuring that foreign currency reserves in the country do not pose a risk to local currency traders. Moreover, this department is mandated with streamlining the foreign exchange market with the government’s financial policies and goals. It plays a consultancy role to the government and other departments in the bank by offering advice on any issues that touch on FTA’a and other international trade policies. Any broker that wishes to operate in the country needs to make sure that the regulations set by the Exchange Policy Department are not only met by the brokerage firm but also by the clients that they tend to.

Legal Requirements to be a Forex Broker in Pakistan

It is not surprising that most of the FX brokerage firms that operate in Pakistan are regulated by several other regulatory bodies outside the country. For example, you might find a Forex broker that is also regulated by CySEC, a regulatory authority that is based in Cyprus. Other brokers may be regulated by the Financial Conduct Authority which is the regulatory body for any traders that are from the United Kingdom. What are some of the requirements for you to be a licensed Forex broker in the country?

1. Minimum capital

Any brokerage firm that wishes to conduct business in the Asian country will need to have a minimum capital of Rs. 20 million which should be paid up before trading commences. Out of this whole figure, only 10% will be deposited with the State Bank of Pakistan. Also, it is worth noting that Forex brokerage companies in the country are expected to stick to what they are licensed to do.

2. Qualified staff

The State Bank of Pakistan has the discretion to determine whether the staff in a specific brokerage firm meets their desired qualification standards. Failure to have a qualified set of employees to conduct the business will eventually lead to a revocation of their license.

3. Licensing

Only the State Bank of Pakistan is given the mandate of issuing and renewing currency trading licenses in the country. Licenses issued by the bank are only valid for a period of up to three years before FX brokers have to apply for a new one. Also, it is worth noting that brokers are required to apply for this renewal three months before their license expires. Failure to follow these rules may lead to a denial or revocation of license as the bank reserves its discretion as the enforcement agency.

4. Leverage

Leverage is also a crucial thing to understand if you wish to participate in the Pakistan Forex market.   Once you start trading in the Pakistani FX market, you will note that the law is quite stringent when it comes to Forex trading, and it is for good reason. While most brokers will choose a standard leverage of about 200:1, they are not likely to offer high leverage. According to the law in Pakistan, these brokers can only offer you a maximum leverage of 3000:1. They are also required to disclose any risk and nature of the business to the client before trading commences.

Top Forex brokerage firms in Pakistan

Although a significant number of Forex brokerage companies allow Pakistan nationals to trade in their platforms, only a few stands out as some of the big names in the Forex market. Here are some of the top Forex brokers where you can trade as a Pakistani.

AvaTrade

With a cumulative experience of about 12 years in the Forex industry, this becomes a difficult Forex brokerage company to ignore. It offers several ways to trade including the use of social trading tools, currency trading, CFDs, and spread betting. In a pool of thousands of brokers, AvaTrade has a trust score of AAA which is quite exceptional considering a large number of unscrupulous brokers. The brokerage firm also offers different types of accounts with all of them requiring a minimum deposit of only $250. The different account types include a mini account, a VIP account, and even a micro account. Not only do they have enticing features, but they also offer a plethora of instruments which total about 250 instruments. They are also one of few brokerage firms in the market which offer Ethereum, Ripple, and Litecoin trading aside from the popular Bitcoin trading.

XTB

Founded in Poland in 2002, XTB has risen to become one of the most promising brokerage firms in the world. Shortly after XTB launched its Forex brokerage services, they were presented with several awards to compliment their exemplary trading services. The FX firm has received the ‘Best European Broker’, an award presented by the Journal of Money Markets. The impressive features and reputable name of the FX brokerage company make it one of the preferred brokerage companies in Europe.

It offers web-based platforms which can easily operate on the MT4 and xStation5 platforms. These platforms have been calibrated to give clients fast execution speeds of around 85 milliseconds which makes it one of the fast and reliable trading platforms that Pakistan nationals can use. Aside from this, you will also get several features and tools to make currency trading a pleasant affair. Marketing insights, calculator tools, analysis, and charts are some of the tools which allow traders to view and execute their trade with ease. As a Pakistan national, you will also have access to the English version of the site which is accessible to international currency traders.

HotForex

Known to be one of the best brokerage firms for both novice and professional traders, HotForex is another reputable Forex brokerage firm that Pakistanis can use to trade currencies across the world. It has its headquarters in Mauritius and is even regulated by the FSC, which is the official financial regulating body in Mauritius. When compared to other brokerage companies, HotForex stands out on several fronts. First, you get access to a wider pool of currencies that include exotic currencies such as the South African Rand or the Zloty from Poland. Also, you get to use the platform in several languages including English, Italian, Arabic, and Spanish among others.

With a minimum deposit of $5, this makes it one of the most affordable currency trading platforms that may be suitable for most beginners. It is also regulated by CySec and offers a leverage of up to 1:1000. Adopting this Forex trading platform will ensure you can have a reliable trading partner without sacrificing quality.

XM

Do you seek a reputable Forex brokerage company that is known all over the world and is also tightly regulated by numerous regulation bodies? XM might be the broker you have been searching for all this time. Once you register with XM, the company offers you several promises which include:

1. Zero negative balance
2. No hidden commission fees
3. 100% execution on all trades
4. No price changes
5. No rejecting of orders

XM is headquartered in Cypress and offers a minimum trading capital of only $5. With XM, you can be sure to get a reputable company that has been in the Forex industry for the past few years. The tight regulations also make it a great trading platform for traders from most parts of the world including Pakistan.

Forex Scams in Pakistan

The State Bank of Pakistan continues to insist that any individual or company that operates illegally in the country will receive a hefty fine or punishment. This does not, however, prevent scammers from targeting Pakistan nationals who may not have sufficient protection as traders in other countries such as the US and the UK. For example, the CEO of Khanani and Kalia was charged in 2008 for illegally moving funds to Afghanistan without following the set regulations on foreign exchange in the country. Although the government had ordered the closure of all the company’s offices, the courts revoked this decision by asserting that there was no sufficient evidence to progress with the case. However, the SBP works tirelessly to ensure only accredited and licensed Forex brokers operate in Pakistan.