A Brief History On Forex Brokers Indonesia
Indonesia is one of the fastest growing economies in Asia and is home to a vast reserve of natural resources including gold, copper, oil, and natural gas. With a thriving population that is greater than most of the other countries in the world, Indonesia is home to a large group of young and able residents that are looking to cash in on the numerous business opportunities provided by a free economy.
Indonesia has had a relatively great relationship with the Forex trading market until quite recently. Forex companies from all over the world understood the potential profitability of catering to one of the most lucrative retail trading markets in the world. The decade spanning from 2000 to 2012 has been highly profitable for both Forex companies as well as successful investors, as the Indonesian market was mostly non-regulated. However, during 2013, the Bank of Indonesia came down heavily on several Forex organizations for their alleged misconduct on Indonesian traders. The exponential rise in fraudulent brokers had resulted in investors losing millions of dollars due to scam broker practices.
Eventually, the Indonesian market has come to terms with all the modern requirements of the retail FX market and is slowly maturing into a stable economy that has all the makings of turning into one of the economic superpowers. Indonesia is certainly one of the most important markets that most brokers cannot ignore if they wish to cater to a significant portion of the global population.
Challenges Faced By Indonesian Forex Brokers
The Indonesian economy is riddled with inconsistencies that prevent companies from setting up their business in the country. A high tax structure coupled with a volatile economy is a deterrent to the smooth operations for an international company that seeks stability in the markets. Indonesia is also known for its primarily Muslim beliefs that require companies to adhere to a particular code of conduct, which can be at times against the core principles of that organization. Therefore, Forex brokers find it hard to set up an FX brokerage in Indonesia without making compromises.
During the early days, the Indonesian Forex market was widely open, and the country did not have any central regulatory agency to take care of broker regulation. Forex companies, both genuine, as well as scammers, found it easy to access the highly profitable Indonesian market by manipulating the local currency markets and earning a chunk of the profits. However, the Bank of Indonesia intervened during the reforms of 2013 to ban all Forex brokers from operating in the country.
The next couple of years were revolutionary regarding opening up the Indonesian market to Forex brokers under a strict regulatory regime, which finally allowed traders to return to Forex trading, albeit with a string of conditions attached. The move also paved the way for several local entities to operate as a local Forex broker to give stiff competition to international brokers, which further eroded the once highly lucrative proposition of catering to Indonesian Forex traders.
What Is Indonesia’s Present Stance On FX Trading?
Indonesia has not considered Forex trading to be illegal; therefore, the FX trading market is still active and hugely popular in the region. However, there have been changes on the overall regulatory protocols of Forex brokers, and the Bank of Indonesia has put forward several guidelines that are mandatory for all brokers operating in the country.
The regulatory framework for Forex broker regulation is still in its primary stage, which lacks any convincing set of guidelines that is essential for foreign companies to set up their business in Indonesia. The ever-changing rules and Forex guidelines have forced several mainstream brokers to pause their services in the country, which has also adversely affected the competition in the market. That said, there isn’t any Governmental red tape that inhibits brokers from setting up a company in the country, but the overall regulatory changes within a short span of time is primarily responsible for the diminished interest from mainstream FX companies.
Nevertheless, there are numerous international as well as local Forex brokers in Indonesia that provide an excellent brokerage service according to the trader’s requirements. Since a majority of Indonesian traders are Muslims, several brokers also offer Sharia-compliant and Islamic trading accounts that conform to the rigorous Islamic standards of trading.
How To Ensure The Safety Of Your Funds
Even though the Bank of Indonesia has issued an advisory against Forex brokers, traders can still trade with any broker of their choice. The ultimate decision to open an account and invest in the market lies on the trader, as no amount of regulatory insight from the Indonesian authorities in its present state is sufficient to counter scams or other malicious broker activities. As a trader, you can stay safe against potential broker frauds by choosing regulated Forex brokers that are regulated by the most popular regulatory organizations in the world. Make it a priority to choose a broker that has an excellent reputation and one that has the least number of consumer complaints. No broker is free from issues, but the safety of your funds lies in your ability to choose a broker wisely.
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You should also be willing to perform in-depth research about the Forex market and brokers in general, as some brokers might have an immense popularity in your local market, but they might not be regulated by an official regulatory organization. If you are a trader from Indonesia, you should always ascertain the legality of Forex trading in your country, and you should consult with the certified professionals regarding sending and receiving payments to international brokers.
Can I Expect Forex Brokers In Indonesia To Offer High Levels Of Security?
Indonesia is still a dormant market regarding Forex trading, and the country is only witnessing a change on a larger scale after the intervention of the Bank of Indonesia. It is still early days to consider the Indonesian markets as a global leader in the retail Forex trading market, but there is a huge probability that the country will rank among the best in the coming years. In the meanwhile, traders should deal with existing brokers cautiously, and investors are advised to diversify their investments to mitigate their risk in the market.