Is CFD Trading in Malaysia Forbidden?

Hello @Cachaya,

CFD trading in Malaysia is completely legal, so it is not forbidden.

The Securities Commission of Malaysia (SCM) grants Capital Market Services Licenses (CMSL) to CFD brokers who apply to it.

The SCM CMSL licenses are only granted to CFD brokers who plan to offer Local Stock CFDs, Local Commodity CFDs, Local REIT CFDs, Local ETF CFDs and International Index CFDs (such as NAS100, US30, DE40 etc.)

See revised SCM CFD guidelines for 2024 here: https://www.sc.com.my/api/documentms/download.ashx?id=df2998ba-ba87-4864-a449-b23ae25cb108

The SCM regulator in Malaysia does not grant its CFD licenses to forex brokers, so if you must trade forex you have to register with a foreign CFD provider but this means higher risk because you miss out from domestic Malaysian government protection which could come handy if the foreign CFD provider misbehaves.

I would not say that CFD trading is legal in Malaysia, because the question is primary about retail CFD traders. Yes, there are regulations regarding derivatives trading from what I've read.

But the foreign offshore brokers don't fall under this. No foreign CFD brokers are legal in Malaysia, infact most of them are on BNM's alert list: https://www.bnm.gov.my/financial-consumer-alert-list

All the retail traders in Malaysia are trading with foreign CFD brokers, so they are doing so at their own risk. They are unlicensed & also illegal.

Please do your own due diligence, it is not a legal advice.

To add to what @farah said, CFD trading is endorsed and supported by the government of Malaysia but they don't support forex CFD trading and this is why the Securities Commission of Malaysia was ordered not to issue licenses to any forex brokers.

This has not stopped many Malaysians from trading forex CFDs as the simply signup with offshore forex CFD firms but they do so at their own risk.

In Malaysia, the SCM has placed leverage restrictions so you can only trade CFDs with the following leverage:

1. Indices CFD - 1:20

2. Share CFD - 1:10

3. ETF CFD - 1:5

4. REIT CFD (real estate) - 1:10

5. Commodity CFD - 1:6

Herse my take: CFD trading in Malaysia may be legal but it is only legal for so called sophisticated traders (meaning professional/institutional traders) and it is not meant for retail traders.