Sri Lanka is not a big country. The country’s currency is not big in the Forex trading world either. However, Forex trading is one of the most lucrative businesses in this Asian country. The many FX brokers that offer trading services to Sri Lankans are required by law to be registered and licensed by the Central Bank of Sri Lanka. There are many brokers out there which are not regulated by the CBS or any other credible regulatory body. As a diligent trader, you must insist on only opening an account with a Sri Lankan regulated Forex broker.
The Sri Lankan central bank controls the overall financial market of the country. It has a special department called the Exchange Control Department (ECD) which is mandated with the role of overseeing everything that revolves around foreign currency in the country. In order to avoid being scammed, as a trader, you are advised to visit (www.cbsl.gov.lk) and go to the ECD page where you will find the list of all regulated top Sri Lankan FX brokers.
In Sri Lanka, it won’t be hard to find that many of the brokers you come across don’t offer Rupee deposits or withdrawals. But there are those which will let you deposit and withdraw your money in Sri Lankan Rupee. Many of the ECD regulated Forex brokers should have this feature. All the brokers, however, do let their clients withdraw their money in form of USD, AUD, GBP and even EUR. While this might seem a small hurdle, remember that if you withdraw your money in any one of these currencies, you will be forced to change it back to LKR at a fee. A good broker should have a professional support team which is reachable 24 hours of every business day.
There are more than 50 brokers that are approved by ECD to offer Forex trading services in Sri Lanka. Many of these brokers have been incorporated outside Sri Lanka and only have virtual offices here. There are other brokers which have fully manned offices. In our well-researched study, we show you Sri Lanka’s Forex brokers list. From this list, you can pick the right broker to enable you to trade the way you want.
Visit the website of your favourite FX broker to learn more about what they offer. Alternatively, check out our reviews of all brokers in Sri Lanka. On this list, we let you get the hard facts about the many brokers in the country. Besides facts, you will also enjoy safety and convenience when you read FX brokers reviews on our website.
Under the Monetary Act of 1949, the Central Bank of Sri Lanka was founded in 1950. The bank’s acronym is CBSL and a governor acts as its CEO. The bank oversees all the financial and monetary policies in the country. The functions of the bank are diverse and many. For this reason, an Exchange Control Department was created to help in the management and the regulating of the foreign exchange matters. Among the functions that the bank does include;
The function of foreign exchange falls under the Exchange Control Department (ECD) which is part of the Central Bank of Sri Lanka. It performs all the foreign exchange regulatory functions on behalf of the government. The department was established under Exchange Control Act No. 24 1953. It is concentrated on monitoring foreign exchange flow in and out of the country. A major review was done to the ECD regulations in 2005 and later on reviewed in 2008. This was done in light of the then very archaic rules and the fact that the department wants the Forex market to catch up with technology.
A Foreign Exchange Act No 12 2017 was introduced in 2017 whereby the new Department of Foreign Exchange was established. The changes and the effects of the departments are yet to be fully realized. It is a department of the central bank.
To start with, every FX trader should know that only Sri Lankan regulated Forex brokers are allowed to do business in Sri Lanka. This does not mean that there are no rogue brokers that want to bypass the system. However, traders who are located outside Sri Lanka are not bound by the ECD rules. They can engage with any broker they so wish. But of course one must abide with the laws and regulations of the particular country they are in.
It is legal to engage in Forex trading. All you have to do is find a top FX Sri Lanka broker that is regulated by the CBSL. For a broker to be considered as one being regulated by ECD and by extension CBSL, it must have fulfilled a long list of requirements. These requirements include;
The broker must apply for a ‘Certificate of Authorization’. Such form should be forwarded to the Director, Domestic Operations of CBSL. If a broker does not have the certificate and is already doing business and wishes to continue, they must apply for the certificate.
An ECD regulated Forex broker shall only act as an agent, moderator and never as a principal. They should also clearly state the qualifying conditions on which every transaction will be based on. At the same time, a broker should always use clear terminology which is unambiguous.
The broker must comply with all regulations that relate to regulations of foreign exchange and money market transactions issued by the CBSL when sharing such information with other parties.
The staff working at any regulated Forex broker must possess adequate competences to allow them to perform their duties properly.
A person will fail to qualify to become a CEO or be a member of management at a brokerage firm if they have ever been convicted of a moral crime or failed to repay a debt according to the demands of a court. If a person doesn’t have proper academic papers, they should also not be considered for senior positions in a Forex firm.
If a broker fails to give the right information or omits to give material information, punitive measures will be taken after an investigation has been concluded. Such punitive measures include the revocation of Forex broker license. A broker may be disqualified from conducting certain services or a public warning may be issued by the board.
Some of the largest Forex brokers in Sri Lanka give their clients different types of trading experiences. Such a broker will enable you to trade a range of currency pairs. On top of that, you will also get a chance to trade in Contract-for-Difference (CFD). There is no rule or regulation from ECD which has banned the CFD trading. Forex trading is very popular among the tech-savvy population of Colombo and other large cities of Sri Lanka. While CFD trading is catching up, it is the cryptocurrency which will present Forex trading with a true challenge. Currently, Sri Lanka cryptocurrency brokers are also doubling as FX brokers too. This is especially the case after Bitcoin made headways in 2017.
Like in every other country which is open to technology, scammers are to be found. In Sri Lanka, Forex related thefts started to be reported as early as 2009. Even though the then $1.1 million theft involved a big corporation, Ceylinco Shriram Ltd, over the years, individual traders have been targeted by scammers. In 2016, the CBSL announced that it would steer the country’s currency towards an inflation regime. This is after many years of the bank trying to control the rates even though demand from private and public sectors was shooting through the roof. In response to this move, IMF warned that the CBSL was counterproductive and might even attract Forex criminals who would want to take advantage of the then fragile LKR. The CBSL somewhat managed to keep at bay many of the much-feared FX scammers. As a trader, you are advised to follow the ECD Forex guidelines which in return mean that you will less likely be a victim of Sri Lanka Forex scams.
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