Overall Rating: ★★☆☆☆ (2.8/5)

The Labuan Financial Services Authority (Labuan FSA) is the regulator for the Labuan International Business and Financial Centre (IBFC), an offshore jurisdiction under Malaysian sovereignty. While separate from the onshore Securities Commission Malaysia (SC), Labuan FSA grants licences to forex and CFD brokers targeting international markets, particularly across Asia, Africa, and the Middle East.

Brokers operating under Labuan FSA must obtain a Money Broking Licence, which permits them to offer foreign exchange services, including online trading. Requirements include:

• Minimum paid-up capital of RM 500,000 (approx. $100,000+ USD)
• Local office setup and staff
• Appointment of Labuan-based compliance officer and company secretary
• Ongoing financial reporting and capital adequacy

Despite these requirements, Labuan FSA does not impose leverage caps, does not ban bonuses, and does not provide an investor compensation scheme. Its regulatory approach is light-touch, with limited enforcement history and minimal transparency about supervision or penalties.

Client fund segregation is encouraged but not strictly enforced. Traders have no formal legal recourse through the regulator in the event of broker default or fraud. Most Labuan-licensed brokers are international firms seeking to operate with greater flexibility than what is allowed by Tier-1 regulators.

Although Labuan FSA is officially recognised and backed by the Malaysian government, it remains a Tier-3 offshore regulator in practice. Retail traders should not rely solely on this licence and should look for brokers that also hold FCA, ASIC, or CySEC licences.