Forex brokers in Sri Lanka and their detailed reviews

Even though that is unlikely for you to say that the Forex trading in Sri Lanka is blooming, that is actually the exact state of affairs. Of course, the financial market of the country is not strong, neither is its local currency (LKR). But the Forex market keeps evolving and growing each day. Thus, the Sri Lanka Forex Association (SLFA) was established in 1983 to promote the innovation and development of the financial market and attracting human resources to it. And what is more important, the government tries its best to make Forex trading in Sri Lanka legal. Thus, every brokerage that is eager to start its operations on the territory of the country, is obliged to first undergo the evaluation of CBSL – Central Bank of Sri Lanka.

Foreign currency, in turn, falls under the trusting gaze of the Exchange Control Department (ECD) which is tasked with regulating everything connected to foreign currency exchange within Sri Lanka. Thus, that would be fair to state that Forex trading in Sri Lanka is almost fully transparent and trustworthy. When we say almost, we mean that, of course, there still are some brokers that are trying to operate without regulations and later turned out that those were simply scams. We will definitely highlight the topic in more details later in the article.

 

Forex Sri LankaAs one of the potential Forex traders in Sri Lanka, you might claim that Sri Lankan brokers have a good relationship with India and will allow you to deposit in Rupees. However, you will be surprised because nearly every broker is confined to allowing deposits of only the major currencies and Sri Lankan Rupees (LKR). However, you can still withdraw your profits in USD, EUR, AUD, and GBP, so when it comes to strong and popular currencies you are covered. Also please consider the fact that if you decide to exchange the sum you withdraw to LKR, it will cost you a small fee. You won’t have to worry about customer support, however, because all the good brokers have a 24-hour service for their customers. But still, you shall consider trading only with the reliable Forex brokers Sri Lanka which you might find in the list below.

Check out the best stock brokers in Sri Lanka

AxiTrader

AxiTrader Review

Minimum deposit

$0

Regulation

FCA, ASIC, DFSA

Bonus

20%

Maximum leverage

1:500

Year founded

2007

Trading platform

MT4

XM Group

XM Forex Review

Minimum deposit

5$

Regulation

CySEC, FCA, ASIC

Bonus

30$, 50%+20%

Maximum leverage

30:1

Year founded

2009

Trading platform

MT4, MT5, WebTrader

IQ Option

An in-depth IQ Option Review of fees, opportunities and more

Minimum deposit

$10

Regulation

CySEC

Bonus

N/A

Maximum leverage

1:30

Year founded

2013

Trading platform

WebTrader

MultibankFX

MultiBank FX Review

Minimum deposit

$200

Regulation

ASIC, BaFin, FMA, CNMV, FSC, CIMA, RAK

Bonus

$50,000

Maximum leverage

500:1

Year founded

2005

Trading platform

MT4

HotForex

HotForex Review – Are they one of the best options out there?

Minimum deposit

$5

Regulation

FCA, SV, FSCA, DFSA, FSA

Bonus

100%

Maximum leverage

1:1000

Year founded

2010

Trading platform

MT4, MT5

Forex.com

Forex.com Review

Minimum deposit

250$

Regulation

FCA, NFA

Bonus

N/A

Maximum leverage

200:1

Year founded

1999

Trading platform

MT4

Plus500

Plus500 Review

Minimum deposit

100$

Regulation

FCA

Bonus

N/A

Maximum leverage

30:1

Year founded

2008

Trading platform

Custom

Trading 212

Trading 212 Review

Minimum deposit

100 GBP/EUR,150 USD

Regulation

FCA, FSC

Bonus

N/A

Maximum leverage

1:300

Year founded

2006

Trading platform

Trading 212

AMarkets

Why you should rely on AMarkets reviews

Minimum deposit

No limit

Regulation

FSA

Bonus

25%

Maximum leverage

1:1000

Year founded

2007

Trading platform

MT4, MT5, WebTrader

Z.Com Trade

Z.com Trade Review

Minimum deposit

5$

Regulation

FCA

Bonus

N/A

Maximum leverage

200:1

Year founded

2005

Trading platform

MT4

Trading.com

Trading.com review

Minimum deposit

N/A

Regulation

FCA

Bonus

N/A

Maximum leverage

N/A

Year founded

2019

Trading platform

WebTrader

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of the retail investor, accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The ECD has approved more than 50 brokers in Sri Lanka that can offer you services in Forex trading, however, we both know that approval is not equivalent to quality. Many brokers have offshore bases and operate within Sri Lanka remotely. In the list above you can check Forex brokers in Sri Lanka that have been already checked by financial institutions.

Financial regulations in Sri Lanks and how they operate

Back in 1949, the Monetary Law Act set the Central Bank operations which proclaimed the establishment of the monetary system in Sri Lanka. That is when the Forex in Sri Lanka became a thing and since then everything started evolving quite fast. That financial institution has a wide range of duties and responsibilities like:

  • The management of public debt
  • The management of Foreign Exchange
  • Management of the currency
  • Implementation of monetary policies for the country
  • Maintenance of financial stability

Therefore, it was decided to establish an Exchange Control Department that will regulate the foreign exchange matters only. The department was established as a result of the Exchange Control Act No. 24 in 1953. That was done in order for Forex trading Sri Lanka to reach the level of other Forex giants on the market. Moreover, in 2017, the Foreign Exchange Act was introduced. That meant that yet another regulatory body appeared that is responsible for the control of foreign exchange transactions flow.

Notably, under that act, there were three groups of individuals/institutions created that were officially permitted to deal with Forex operations in Sri Lanka. Those are:

  • Authorized Dealers
  • Restricted Dealers
  • Dealers for a Specific Purpose

The first group consists of banks mainly, either private or public ones. The second group represents the bodies that were officially prohibited by the CBSL from carrying out any financial operations. And, finally, the last group includes those individuals/organizations that were appointed by the central bank to deal in foreign exchange for specific purposes subject to terms and conditions.

 

So, you need to understand when it comes to Forex regulation, Sri Lanka has an impressive hierarchical structure of governmental bodies that are responsible for dealing with such.

Is Forex trading legal in Sri Lanka? And what are the restrictions?

Forex trading Sri LankaIf you are wondering ‘How to start Forex trading in Sri Lanka’, then you may first need to understand its structure and certain regulations that are coming in power when someone is trying to establish brokerage in Sri Lanka. As that might become a tricky thing to do there. The government of the country made sure that Forex trading would be as transparent as possible. In order to do that, it is of utmost importance not to let the scammers and fraudulent brokerages to start their operations on the market.

Thus, Sri Lanka Forex brokers need to obtain the license from the ECD. But to do that, they need to meet an extensive list of requirements.

If you want to operate freely in the Sri Lankan Forex market, then you will be needing a document called “Certificate of Authorization”. This document can only be obtained from the Director of Domestic Operations of CBSL. Brokers that have already started doing business and haven’t acquired the “Certificate of Authorization” will automatically be classified as illegal and restricted to operate on the financial market.

It is highly demanded by the regulatory body of Sri Lanka that when the broker is disclosing information or making a report that they use clear terminology and always state conditions on which transactions will be based on. CBSL will have the full mandate when it comes to finding out information it has deemed as suspiciously hidden away. Every broker will need to comply with the regulations that it will accept when receiving the “Certificate of Authorization”.

The ECD has also noted the fact that many Forex brokers in Sri Lanka harder unqualified personnel and were costing their customers money and time. Therefore, the rules dictate that every broker needs to hire only the most qualified and competent staff within the country.

Please also note the fact that you will not be able to become the CEO or even a member of a brokerage firm if you have any records of conviction in debt repaying or moral crime. The lack of academic papers also disqualifies any potential candidates for senior positions in the firm. Take into consideration the fact that CBSL is allowed to check on you any time and in case of any suspicious aspect in the brokerage’s operations, the investigation will be prolongated for an uncertain time. In the case of you being guilty, you will be revoked of your title of “Licenced Sri Lankan Forex broker”.

how to start Forex trading in Sri LankaFees and penalties under the Foreign Exchange Act

All of the best Forex traders in Sri Lanka are already familiar with the penalties and certain fees that will be required to be paid by CBSL in case of any failure. Therefore, in order to start trading in Sri Lanka, you need to educate yourself about such queries first.

First, you need to understand that CBSL has all rights to check on you. And in case if there is any resistance from the side of the trader, or some of the documents were suspicious, the representative of CBSL can make an application to the Magistrate Court and obtain a Court Order. And if you won’t comply with the order, you will be fined with Rs. 500,000. If that happens again, then the fine will be increased to Rs. 100,000 for each day the offense continues.

But if you are a broker and there were some suspicious actions from your side noticed by the central bank, then CBSL may either revoke your license or keep you from providing brokerage service for up to 12 months.

If you are third-party and violated any of the Act provisions, you will be fined with Rs. 1,000,000.

Scams needed to avoid in Sri Lanka

Scamming has been around roughly the same amount of time that humans have been around. And that is not an exception for Forex Sri Lanka market as well. It has come a long way and embedded itself in today’s technologically developed world. As in any other country, Sri Lanka demands that you be as vigilant as ever when trading Forex on its market. Reports of Forex scams began to circulate in early 2009. Over the years big corporations have become too big of a target for scammers, therefore, they decided to venture out in the sea of untrained and inexperienced traders to hunt.

In 2016, LKR currency was very fragile, the only way the CBSL was seeing was inflating the currency by themselves. This was probably a gold mine for Forex scammers in Sri Lanka when they would offer high returns in future deals, hoping to fool traders that didn’t know of the inflation plans. This was the reason the IMF actually criticized the CBSL and connected them to the increasing amount of online Forex scams.

Fortunately for the traders, most of the scammers were warded off by the CBSL and the Sri Lankan Forex market became a place to thrive once again. Hopefully, they had learned their lesson, and we’re talking about all of them, the traders, scammers, and CBSL themselves. No matter how under control a web space can be, there will always be a scammer that can squeeze through, so we advise you that you follow the ECD guidelines and stay safe from all the scammers that are out there.

Bottom line

When you are wondering whether is binary options legal in Sri Lanka or it is not even worth investing your time and money in it, you might be interested to hear the following. Forex trading in Sri Lanka has become one of the most fast-growing industries in the country. Moreover, a trading value of over $5 trillion made currency trading one of the most profitable domains.

However, earning money on Forex trading is a tricky and long path anyway. Thus, you need to analyze all the pros and cons beforehand and decide for yourself whether you are eager to risk your hard-earned money. But if you have decided to go for it, the Sri Lankan Forex market might definitely be one of the most beneficial ones out there.