Labuan regulator agrees to strengthen cooperation with Malaysia

Rick Steves

The MOU will enhance the provision of technical assistance, capacity building and exchange of information between the two regulators as well as monitoring of risks and promoting the stability of the capital market.

The Securities Commission Malaysia (SC) and the Labuan Financial Services Authority (Labuan FSA) have signed a Memorandum of Understanding (MOU) for greater regulatory, enforcement and supervisory co-operation between the two regulators.

Labuan is a Federal Territory of Malaysia that includes Labuan Island and six smaller islands, off the coast of the state of Sabah in East Malaysia. It has been operating an offshore financial centre offering international financial and business services via Labuan IBFC.

Facing the changing business landscape and new regulatory and policy developments, the MOU aims to strengthen a previous agreement between the two agencies in 2004.

The memorandum, which covers the development and regulation of capital market activities in Malaysia, reflects both regulators’ commitment to ensure that Malaysia’s capital markets remain relevant and achieve the intended outcomes for all stakeholders.

Enhancing assistance, capacity, and exchange of information

The Memorandum of Understanding will enable the Malaysia financial watchdog and the Labuan FSA to strengthen collaboration in areas of mutual interest, including monitoring of risks and promoting stability of the capital market. The MOU will also enhance provision of technical assistance, capacity building and exchange of information between the two regulators.

The SC Chairman Datuk Syed Zaid Albar said, “This collaborative arrangement is an important initiative to grow our capital markets and achieve greater cooperation and synergy between the SC and Labuan FSA. Supervision and oversight are always at the core of any regulator’s mandate. This enhanced collaboration towards building a robust, innovative and stable regulatory environment will spur the growth of existing and new market segments and benefit our markets, participants and investors.

Datuk Siti Zainab Omar, Chairman of Labuan FSA, commented: “The MOU will pave the way for the SC and Labuan FSA to further strengthen an already long-standing collaboration between both regulators, in ensuring the steady development of the capital market industry in the Labuan IBFC and Malaysia’s capital market landscape.”

Sheer Markets and Broctagon have recently acquired Labuan licenses

Several brokers within the trading industry have acquired licenses from the Labuan regulator in recent years, including Sheer Markets, Broctagon, and Gotrade.

In May 2021, Broctagon Fintech Group acquired a Labuan Money Broking License, which enables the liquidity provider to now offer regulated bank-grade FX liquidity to its clientele.

The Labuan license will allow the Multi-asset liquidity provider to strategically positioned to support a growing Asian market as it offers clients a tailor-made experience that directly aligns with their individual objectives.

Broctagon is leveraging the fact that it has been part of the Asian FX ecosystem for close to a decade, while most large liquidity providers are based in the West.

In December 2021, Sheer Markets acquired an LFSA license from Malaysia’s Federal Territory of Labuan in order to address demand from non-EU traders and to expand into LATAM, Africa, Asia, and Oceania.

The broker was founded with the mission to introduce a new range of institutional products to retail traders worldwide. The new entity is a milestone but not a surprise.

Besides offering CFDs on FX, Equities, Indices, Commodities and Cryptocurrencies, Sheer Markets is making a name for itself for its NDFs & EMFX trading for retail traders, an untapped market with new investment potential.

The Labuan license opens the doors to an enlarged client base from all over the world as the firm will be able to accept clients from Latin America, Africa, Asia, and Oceania.

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