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I am probably biased but Malaysia is one of my favourite countries to visit. This is mainly because things are confusing and strange so much of the time. Also because I like the way people say ‘la’.
For example, once we were driving through a mountain road that was blocked by men in military uniform. The person driving gave them some peanuts and a pack of Doritos and then they removed the road block and let us pass. This seemed weird so I asked the driver if we had just bribed members of the military with a pack of Doritos.
“No, no,” he said. “They are not soldiers, they are just volunteers, so we bring them something la.”
“So they don’t get paid?” I asked. “But why are they doing it?”
“No, they get paid,” he replied. “They work for the military.”
As a friend there told me, if you try to understand, you’ll go crazy – it’s very similar to the UK in that respect.
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Anyway, in the last couple of months, some brokers have been starting to question what is going on in Malaysia.
The local market is interesting because some people will not touch it, whereas others will do a lot of business there.
For example, Exness has a huge office in Kuala Lumpur but only uses it as an operational hub. They don’t take any Malaysian customers.
Other brands are happy to do business in the country. IC Markets, for instance, has an operational office in Malaysia but is also happy to accept customers from there.
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The ‘problem’ is like other ASEAN countries, you are typically having to rely on reverse solicitation rules to get customers.
Over the last 12 months the local regulator has announced new rules governing ‘finfluencers’ and other indirect marketers. These would directly impact broker partners.
The key part of the new regulations, which come into play on November 1st, is that a third-party marketer becomes responsible as an advertiser if they are promoting a financial product.
If someone breaches the regulations then they can get either up to 10 years in prison, a fine of up to MYR 10m ($2.4m) fine, or a combination of both. Yikes.
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So if you imagine the following scenario. Previously you shared signals on Telegram or some messaging application.
In theory, this would not breach any rules previously (debatable) but under the new rules, it 100% would.
Consequently, three brokers that TradeInformer has spoken to have noted that some IBs in the country are either pausing activity or saying they’ll stop altogether. Some brokers are also no longer taking clients from the country.
“I think a lot of IBs and affiliates are waiting to see what will happen,” said one broker executive. “The problem is the punishment looks so extreme. No one wants to be the test case to see what happens if you break the rules.”
So is it all over? I don’t think so.
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What the rules seem to prohibit is marketing with a direct connection to some kind of activity, particularly if it is to buy or sell. For example, ‘deposit $500 and get a deposit bonus’ or ‘buy gold’.
However, what’s not prohibited is generic demos and trading education. For example, ‘here is how I make money trading x’ and then your video of doing that is using a specific broker’s platform.
Loads of people are already doing stuff like this so I don’t think it’s such a huge deal.
Plus there does appear to be some gray area. For example, let’s say you shared signals directly on Telegram previously. Now you can get someone into something like Discord and then potentially share insights there instead.
This is very similar to what already happens in Malaysia, as well as other countries like the UK.
For example, Trade Nation currently pays a bunch of educators to use their platform but they are not saying ‘copy my signals on Trade Nation’ or anything like that. They just use their platform and link to the site.
Another factor is that a lot of IBs in Malaysia seem anonymous anyway. For instance, I follow an account for trading signals on the KL stock exchange. It’s completely anonymous and I don’t see how you could figure out who is running it. This is the same as in Japan, where there are loads of IBs who have a lot of traffic but you have no idea who is behind it.
It’s also worth noting that a significant proportion of Malaysia’s population is Chinese-speaking. Ads in Mandarin, though likely to be less effective, seem like they would be very difficult – if not impossible – for local authorities to police. Personally I doubt they would do anything either if they were not in English or Malay.
The final point I’d make is that there are the official rules and then there is the way the rules are implemented.
For example, in Malaysia a lot of the time the police come to offices and take people away. Then the next day they are allowed out and continue working. Under those circumstances, how well the rules will be enforced is up in the air. I guess we’ll have to wait for the first test case to come along.
In the meantime, Olymptrade and some other brokers are still running Google ads for deposit bonuses, app downloads and more.
Remember – don’t try to understand, just go with the flow. Otherwise you’ll go crazy.
