Best Forex Brokers in Indonesia

• Charges administrative fees on inactive accounts
• The platform could use more customization features

Is Forex Trading Legal in Indonesia?

Unlike Europe, Asia does not host that many regions that have legalized and properly regulated forex trading. While it is still fairly new, forex trading has started gaining more popularity in Indonesia. Its legal status, however, is somewhat complex, and with local regulatory limitations, many traders might choose to invest, buy, and sell currency pairs with offshore brokers.

While forex trading is legal and regulated in Indonesia, it is considered a legal form of trading only when performed under specific regulations. With the majority of Indonesians being Muslims, trading currency pairs is considered halal (that is “permissible”) only when traders are using special Islamic accounts to do their trading.

Indonesian traders can open trading accounts with brokers regulated by the OJK and the BAPPEBTI, it is also possible to register with an offshore broker regulated by other authorities. However, these brokers must be also operating in accordance with the specific regulations implemented by the Indonesian authorities. That means that offshore brokers can cater to Indonesian traders only if they are offering them the option to open so-called Islamic or swap-free trading accounts where there are no rollover interest rates on overnight positions.

The Indonesian regulators are responsible for ensuring a secure and fair trading environment for forex traders reading in Indonesia. That said, the local authorities are implementing robust regulations to reduce the risk related to trading activities, which may sometimes limit access to some products and markets. That is the reason for many Indonesian traders to choose offshore brokers that may offer a wider selection of markets and trading options.

BAPPEBTI Regulation Info

While the OJK is the regulatory body that oversees the operations of entities offering financial services in Indonesia, in order to be eligible to offer trading services to Indonesian residents, brokers are required to obtain a BAPPEBTI license. To do that, companies must meet several conditions that ensure compliance with local regulations and a specific financial system that guarantees operations compliant with the Sharia Law.

License applicants are asked to provide proof of financial stability, with a specific operational minimum capital requirement ensuring clients’ protection. The minimum capital that traders must guarantee in order to obtain a license depends on the types of services they will offer as well as the trading volume of the brokerage company.

The documents that applicants are required to submit when applying for a BAPPEBTI license include information about the structure of the entity, a detailed business plan, strategies for risk management as well as compliance procedures. Once a license application has been submitted by a trading company, the regulator conducts stringent due diligence checks and audits of the entity. These steps ensure that only reputable forex brokers will be allowed to join the Indonesian market.

How Can I Verify BAPPEBTI Authorization?

If you want to be certain that the broker you have chosen is regulated by the local authorities in Indonesia, you can easily verify the company’s license. Whenever you choose a brand, you can check at the bottom of its home page for any information related to its regulators and trading licenses. If the broker has been licensed by the BAPPEBTI, you should be able to see the logo of the agency as well as the information related to the serial number of the license issued to the company.

Since the OJK is also responsible for the regulation of trading operations in Indonesia, there should also be information about the company being authorized to operate by the OJK. One can also verify a brand’s license and regulation by visiting the official website of BAPPEBTI and looking for the official registry listing all licensed Indonesian companies offering forex trading and other financial services. Conversely, when trading with an offshore broker licensed elsewhere, you can check the licensee databases of the relevant regulatory bodies overseeing its operations.

Are My Funds Safe with Forex Brokers in Indonesia?

If you are wondering how safe trading with Indonesian brokers is, you can rest assured that your funds are always handled with extra care by regulated Indonesian trading websites. It is crucial to know that local authorities are strict about the conditions entities should meet before they are given permission to operate in Indonesia.

As already mentioned, companies are required to meet the condition of a specific minimum operational capital to ensure the safety of their clients’ money. Meanwhile, OJK regulatory guidelines require brokers to keep their customers’ funds segregated, making sure they can always have access to the funds they have deposited and earned while trading.

What is more, licensed entities must implement robust anti-money laundering and anti-terrorist financing policies. Meanwhile, a KYC (Know Your Customer) process is typically implemented by regulated Indonesian brokers to prevent identity theft cases.

Under the current regulations governing the trading market in Indonesia, only specific banks and registered securities companies are allowed to provide forex trading services in Indonesia. This further proves that your money will be handled by some of the most reputable entities operating in the country.

Do Indonesian Brokers Provide Negative Balance Protection?

In addition to the aforementioned measures that ensure secure trading for Indonesians, brokers regulated by local authorities are also required to offer negative balance protection. While Indonesian traders can also join foreign brokers regulated in different regions, said trading companies are also required to operate following guidelines imposed by Indonesian regulators. That is why Indonesian traders are typically able to make use of negative balance protection no matter the broker they choose to trade with.

Having this additional layer of security added to your trading account will allow you to avoid instances of accumulating losses that will make you indebted to the broker. This is especially useful for inexperienced traders who may not be able to assess the potential risk of trading currency pairs with higher leverage. Having negative balance protection will simply not allow you to suffer losses that exceed the amount you have currently deposited into your trading account.

Do Traders Pay Tax on Forex Trading in Indonesia?

Since forex trading is a legal and regulated activity in Indonesia, money earned from trading currency pairs is subject to taxation. Indonesian forex traders are asked to submit tax applications to the local tax authorities and pay any tax that may be applied to their gains. The exact rate of the tax and the amount that is paid by each trader may vary, depending on the trading volumes and the income that has been generated. Individual income tax rates range from 5% to 35%, depending on the income bracket.

To make sure they are fully compliant with current taxation regulations, Indonesian traders are advised to contact local tax experts and ask for their professional help. We should note that avoiding taxes in the case of accumulating gains through forex trading is considered a crime in Indonesia and one can face fines of 200% of their unpaid taxes as well as imprisonment of up to 6 years. Local forex traders can file their annual tax returns electronically on the platform provided by the Indonesian Tax Office (ITO).

How Does the Available Leverage of BAPPEBTI-Regulated Brokers Compare to the Leverage at

When trading currency pairs, one of the key factors that most traders consider is the leverage they can enjoy. In most cases, the maximum leverage that is allowed on currency pairs depends on the limits imposed by local regulators ensuring a safer and less risky trading environment for traders. While some investors are looking for better potential returns by taking advantage of leverage, it should be noted that many traders end up losing huge amounts in a rapid manner due to higher leverage. That is why some regulators have significantly reduced the leverage limits, especially on exotic pairs.

Under OJK regulations, the maximum leverage that Indonesian forex brokers can offer on major currency pairs is capped at 1:1100. Meanwhile, the maximum leverage that can be provided on exotic pairs is capped at 1:20. When compared to the limits introduced in different jurisdictions, it can be concluded that the Indonesian regulator has introduced a significantly higher leverage maximum on major currency pairs. That said, the leverage on exotic pairs is similar to the one adopted by many brokers regulated offshore.

If you take a look at brokers that have been licensed to operate in EU and EEA regions, you will have a maximum allowed leverage of 1:30 on major currency pairs and 1:20 on exotic pairs. Meanwhile, US brokers are allowed to offer a maximum leverage of 1:50 on major currency pairs. That said, forex brokers operating in the US are also permitted to impose lower leverage limits to further reduce the risk factor during forex trading.

If the 1:1,100 leverage introduced by Indonesian regulators looks significantly higher compared to the maximum leverage in different jurisdictions, you should take a look at the maximums allowed by regulators like the FSA. Take for example brokers operating in the Seychelles where the maximum leverage on major currency pairs can go as high as 1:5,000. Even that leverage ratio is not the highest one you can encounter at different offshore brokers. That said, one should always keep in mind that trading with such high leverage can be extremely risky and cost traders huge and rapid losses.

What Do You Need to Qualify to be Designated as a Professional Trader in Indonesia?

Often traders who enjoy placing more orders and trade with higher volumes might seek higher leverage offerings and better trading conditions. In that case, they might be allowed to open professional trading accounts with forex brokers. However, traders usually need to fulfill several conditions in order to prove they qualify for professional trading accounts. Depending on the jurisdiction where the broker has been regulated, the conditions that must be met and the documents that need to be submitted to qualify for professional trading status may differ.

Typically, retail traders must prove they are well-experienced in the trading field, they have extensive knowledge of financial markets, and they have the portfolio to back up their trading volumes. Usually, to prove they are eligible for professional trading, investors might be asked to provide documents showing their work experience of at least one year in the financial market field. There also might be a minimum on the high-volume transactions traders have made in the past one year, proving their experience in trading. Lastly, to qualify for professional status, traders might be asked to provide proof of the value of the financial instruments portfolio, with a specific minimum required to ensure their eligibility.

You will notice that each broker that allows its customers to open professional accounts will require things like bank statements, letters from current or former employers, and other pieces of documents that will prove the eligibility of traders for professional trading status.

What Trading Platforms Are Available to Indonesian Traders

The availability of trading platforms depends on the brokerage company traders have chosen for their forex trading endeavors. Each forex broker chooses which platform to adopt and offer its clients, with current popular choices usually being implemented by most Indonesian brokers. It is also possible for a brand to provide an exclusive platform developed specifically for members of the broker.

MetaTrader 4: Allowing easy trading for both beginners and advanced traders, MT4 is a popular trading platform that can be found at quite a few brokers catering to Indonesian traders. Featuring several great tools for tracking markets, MT4 is a great solution that is typically adapted for both desktop and mobile trading.

MetaTrader 5: You will notice that many Indonesian brokers offer their clients to trade multiple currency pairs as well as other products through the MT5 platform. Offering a more advanced trading experience, with a larger number of markets and even more charting and technical analysis tools. Optimized for desktop and mobile devices, MT5 offers Indonesian traders easy and intuitive trading at any time and place.

cTrader: Many brokers have also added cTrader to their lists of supported trading platforms. Compared to other options, cTrader offers a more innovative trading experience, with a variety of instruments like charts, technical analysis, and drawing tools being included in the platform’s interface. Fast order execution is also one of the great features of cTrader that many trading enthusiasts would appreciate.

If interested in expanding your knowledge of forex trading regulations in Indonesia, you can find additional information on this matter in the links provided below. Visiting the local regulator’s website occasionally will help you keep up to speed with the latest regulatory developments in the Southeast Asian country.

1. BAPPEBTI issues licenses to forex brokers targeting traders in Indonesia and monitors their operations. The regulator’s website is available only in Indonesian.
2. The Financial Services Authority (OJK) oversees the local financial industry, works to maintain its stability, and safeguards consumer interests.
3. The official BAPPEBTI register lists all market players authorized to operate in Indonesia, including futures and forex brokers. It contains license numbers, registered addresses and other contact information of locally licensed entities.
4. Conversely, you can contact BAPPEBTI to inquire about the regulatory status of a forex broker you are interested in. Several communication channels are available, including email ([email protected]), telephone (021 2301 665, 2301 663, 2301 654, 2301 645), and instant messaging through WhatsApp (0811-1109-901).
5. Indonesian traders can submit complaints quickly and efficiently by using the designated complaints portal of BAPPEBTI. Using the portal requires registration, however.
6. You can also follow BAPPEBTI on social media platforms like X, Instagram, and Facebook to keep abreast of the latest announcements published by the regulator.
7. Some forex brokers accept Indonesian customers with licenses issued by offshore regulators like the Seychelles Financial Services Authority (FSA), the Belize International Financial Services Commission (IFSC), the Securities Commission of the Bahamas (SCB), or the Vanuatu Financial Services Commission (VFSC).