Best Forex Brokers in Singapore

History of Forex Brokers in Singapore

A look at the economic and political history of Singapore offers an interesting insight into the stimuli behind the country’s dominance in the Forex industry. Singapore became an independent state in 1963 after over 137 years of British colonial rule. It was initially part of Malaysia but was cut off two years after its independence due to sharp political differences. The Chinese-dominant nation found itself betwixt two friendly neighbors, Malaysia and Indonesia. Even more, it had no natural resources besides its deep harbor and the people.

Unlike most courtiers, Singapore chose to retain the British legal system, education, and language. Its meritocratic system soon led to the growth of elite groups that spearheaded the economy of the nation through trade. The legal system it had inherited from its colonizers made Singapore a business haven for external investors. Even more, the use of the English language made communication more comfortable between the nation’s business personalities and foreign investors. Before long, Forex trade found roots in the country as investors sought to take advantage of the country’s political stability.

It is no secret that most international observers have considered Singapore’s leadership as more authoritarian than it is democratic. However, optimists have pointed out that democracy is gradually taking root in the country. The strict rule, however, has been a blessing to most legitimate investors and Forex brokers, The government of Singapore shows zero tolerance towards illegal and corrupt business organizations and persons. Such has made it an attractive destination for genuine foreign exchange traders and brokers.

The official regulation of the Forex industry in Singapore began in 1971 with the creation of the MAS. It also became the regulatory body for banking institutions, securities, and insurance. It has developed over the years creating a holistic regulatory grasp on the Forex business while encouraging external investors. 

Regulation of Singapore Forex brokers

Singapore has no natural resources of which to boast. As a result, the majority of the residents depend on Forex trade as a primary source of investment. It is, therefore, not surprising that the country has attracted several unscrupulous players who have been out to defraud unwary citizens. However, MAS is dedicated to ensuring the safety of the trader’s investment and a fair playing ground for all.

MAS is the sole regulatory body of the country’s Forex industry. It monitors and authorizes the activities of Forex brokers in the country. It also serves as the nation’s central bank. Consequently, it is in charge of the issuance of the Singapore Dollar, SGD, and monetary policies and also serves as the government’s financial advisor.

Goal and mission of the Monetary Authority of Singapore

The purpose of the MAS is to enhance sustainable economic development. Its mission is to promote professional ethics in the financial sector. It receives credit for the country’s reputation as one of the nations with the lowest corruption ratings. MAS strives to maintain it that way by fighting scammers and frauds through harsh laws and regulations that entail hefty fines and other forms of punishment.

MoneySENSE and its benefits to Forex brokers and traders

MAS views itself as a consumer-centric organization, working to prevent the interest of the country’s consumers from opportunistic companies that might want to exploit them. It launched a financial education program called MoneySENSE in 2003. It aims at providing information to the general public on how to make financial decisions. The Financial Education Committee heads the program.

Forex traders are the primary beneficiaries of the MoneySENSE program. It provides information about the latest scam news and regulations in the Forex industry. It also offers details on how traders can keep off from fraudulent investors.

Importance of choosing a MAS-regulated broker

Assurance of the safety of investment

MAS advises the citizens to deal only with duly regulated Forex brokers. One key benefit is the guarantee of the security of the investment even if the broker collapses. The regulatory organization has put in place several measures to take care of the trader’s bottom line.

Proper management of customer complaints

The law obliges regulated brokers to handle customer complaints amicably and respectfully. It has also provided channels for managing conflicts between the parties. The customer can contact the Financial Industry Dispute Resolution Center or other organizations such as the Singapore Mediation Centre or the Consumer Association of Singapore. Courts are the final resort for solving disputes between the consumer and a Forex broker provided the latter is MAS-regulated.

The regulation of Forex trading in Singapore is probably one of the best at safeguarding consumers’ interests. Additionally, MAS has exhibited an excellent appreciation for trends in the global market, and it strives to accommodate them. There are regulatory organizations that are more reputable than MAS. However, it is undoubted that the Singaporean authority is better than many others in the world.

Requirements to be a Forex broker in Singapore

The Monetary Authority of Singapore has placed several requirements for new Forex brokers, domestic and foreign, that want to operate in the country’s Forex sector.

Registration requirements

Prospective brokers in Singapore must have a Forex license to engage in Forex trading. The first step is registering a company in the country with the primary purpose of providing FX trade services. One then has to submit the company’s Memorandum of Association, business plan, and other complementing documents. The complementing reports provide information on the internal operation of the company. There should also be a disclosure on the absence of conflicts of interest.

The process may be tedious for foreign brokers. Hiring professional consultants in the country’s Forex business might come in handy.

Operational requirements

The primary function of the MAS is its goal of promoting a sustainable economic environment is t safeguard the consumer’s bottom line. As a result, it has laid several operational requirements on all the brokers under its jurisdiction. They include:

• Segregated financial accounts: The law requires that all Forex brokerages in Singapore have different accounts for the business funds and the client’s funds. The goal of this regulation is to ensure that investors can withdraw their money even if the broker collapses. Such protection is one of the reasons why it is vital to opt for licensed brokers.
  
  

• Professional employees: It is a requirement by MAS that all Forex brokers in the country employ staff that is qualified in money markets. Consequently, it requires that each Forex broker provide a list of its employees and their qualifications before opening a business in Singapore. The brokers also provide information on the choice of investment instruments they offer to the clients such as currencies, stocks, or other commodities.
  
  

• Proper bookkeeping: With the increased instances of money laundering, all Forex brokers in Singapore are obliged to provide evidence of their business transactions, Auditing, and adequate accounting are necessary if a broker is to keep its business license.
  
  

• Handling customer complaints: Most Forex trading regulatory agencies focus on the significant aspects of the brokers’ operations. MAS, however, ensures that the broker treats its customers with dignity. It has outlined a system of handling differences between a customer and the broker. The case can only end up in court if the mediating agencies do not resolve the matter.
  
  

Prohibition of the Meta Trader4 platform

MT4, as it is popularly known, is a Forex trading platform that comes with several features. (MT4 Forex brokers list here). A specific feature that makes it a target is its provision for hedging and automatic trading. The latter allows the trader to use trading robots called Expert Advisors to analyze the market trends and trigger automatic transaction executions. The feature led to the prohibition of the platform in Singapore and other countries such as the US. Therefore, Forex brokers that are willing to operate in the Asian city-state must settle for an alternative trading platform.

Limitations and comparisons to other countries

The UK, US, Japan, Hong Kong, Switzerland, and France are some of the Forex centers that measure up to Singapore’s standards. Forex trading in Singapore excels in several ways. First, it is tax-free. Most countries such as the UK tax earnings from Forex trading which has made traders opt for spread betting format to avoid taxes.

Like in most countries, Singapore Forex brokers provide demo accounts. They offer unlimited opportunities for new traders to practice trading with virtual money. A demo account helps a prospective trader determine if the broker is worth investing in and if they can handle the dynamics of financial markets. It also allows the customer to learn the ropes when starting.

 The Forex market is not as restricted in Singapore as it is in the US. However, US brokerages still provide more trading options than those from the Asian nation.

Two organizations, the National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) are responsible for the regulation of the Forex industry in the US. It is unlike Singapore where one agency, MAS, regulates all the financial functions of the government. While it seems to work well in Singapore, it makes one question if there could have been better regulation had the roles have been severed to a specific authority.

FX brokers that use MetaTrader4 have to find alternatives with which to explore the Singapore market. A country such as the UK, which is above Singapore in the Forex trading ranking, allows MT4 trading platforms. MT4‘s auto trading capability is an essential feature for traders who do have the time to go through manual trading.

It is essential to point out that Singapore, despite its political stability, has been criticized as an authoritarian nation. Some have termed the Forex industry as a cartel-managed sector. While there is little empirical evidence to substantiate some of these allegations, a broker should conduct diligent research on the dynamic of the market before jumping in.

Popular Forex brokers in Singapore

Some of the popular Forex brokers in Singapore include:

1. Oanda

2. FX Pro

3. Plus500

4. eToro

5. FXCM 

Oanda

 It is the most popular Singapore-based Forex trading company in the world. It has won several awards in the global markets including the Best Trade Execution Provider, Best Mobile Platform, and Best Value for Money by Investment Trends. It has four other offices outside Singapore in Toronto, London, Tokyo, and Chicago. It is regulated by the regulatory organizations in the respective countries. 

FX Pro

 A London-based Forex broker with offices in the Southeast Asia city-state. It has been on the market since 2006 and has become one of the favorite brokers in the country. 

Plus500

 Plus500 is popular in Asia, Australia, and Europe, though under different names. In Europe, for example, it operates as Plus500 UK Ltd. 

eToro

 The company is a broker in multi-asset as well as social trading. It has other offices in the UK, Cyprus, and Israel. 

FXCM

 It is the most popular brokerage among traders who are interested in no-dealing desk brokers. The broker only facilitates the trader’s direct access to liquidity providers and other traders in the system. The Chinese Yuan is one of the numerous currencies that this company offers its Singapore traders.

Conclusion

Singapore is a haven for Forex traders as its regulation focuses on safeguarding the interest of the trader. Legitimate brokers can thrive in the city-state because MAS protects them from the unfair competition that is common in unregulated markets. However, not all brokers operating in the country are legit. A trader has to confirm the registration status of the company with MAS; you can quickly find more information about the Singapore FX trading market on topbrokers.com.