I’ve met a huge amount of forex traders through various online communities over the past 5 years. I, however, have only met one trader from South Korea. This is interesting as South Korea is forecast to be a powerhouse in the forex industry. With that in mind, is forex trading legal in South Korea? Is it even possible? Let’s find out so you can stay on the right side of the law…
Forex trading is legal in South Korea. The market is relegated by the FSC and BOK, although regulations aren’t too oppressive. South Korea is poised to be a large player in the forex industry over the coming years, with more retail traders from the country than ever before.
Forex Trading In South Korea – Is It Legal?
Forex trading is completely legal in South Korea (with the exception of minors). The BOK (Bank of Korea) are responsible for helping to create the regulations about the industry and monitor policies in relation to forex trading.
The Financial Services Commission (FSC) and The Government has implemented several laws to govern and regulate forex and other types of foreign exchange transactions, so South Koreans can trade currencies in a safe and secure environment.
This means that for retail traders like you and I, forex trading is completely legal in South Korea and has fairly low levels of regulation compared to some countries. For instance, in India, traders only have certain currency pairs at their disposal. However, if you’re trading in South Korea you’ll have access to all currency pairs, metals and exotics!
South Korea is not included on most broker rankings due to the fact that it’s a very small market when compared to other countries. However, South Koreans do have access to an enormous range of brokers that are regulated in other countries. You aren’t limited to only trading with a Korean broker – great news!
There’s also not many retail traders in South Korea, which means there is huge potential for growth! For instance, the average monthly deposit per trader is estimated to be around $5,000 (which is quite high compared to most markets). And it’s no surprise really when you consider that the average monthly income is around the $3,900 mark.
Do Forex Traders In South Korea Have To Pay Tax?
We are not licensed to give tax advise to forex traders. Tax and forex have been a very tricky subject over the last few years, with accountants trying to get their own heads around the legislation.
All we can say is that you will have to tax profits obtained from forex trading in South Korea. You’ll need to consult an accountant and ideally an accountant with experience dealing with CFD’s and derivatives. Failure to do so could result in very expensive fines.
There are usually tax incentives and strategies used by accountants in various countries. For instance, in the UK, traders can do spread betting as a tax free way to trade the markets. This is why it’s worth consulting an accountant – they will most likely have possible strategies in place!
Are South Korean Forex Traders Allowed To Trade With Any Broker?
Luckily, South Korean forex traders have access to a huge range of forex trading brokers. You won’t have to just trade with a broker based in the country, you can use regulated brokers around the world! The large majority of brokers will welcome traders from South Korea.
You can also use offshore / unregulated brokers, but the risks are much higher. Although the KYC process will be less strict and the leverages will be higher, it’s not recommended that you use such brokers due to the increased risk.
Offshore brokers aren’t subject to any of the regulations that keep traders safe, meaning they can run riot with your deposit, manipulate spreads and disappear off the market without ever being held accountable. I’d only use an unregulated broker if it’s your last option!
There are actually fairly strict regulations for forex brokers opening up in South Korea…
Since the first brokers opened in South Korea, they’ve had to follow suit and adhere to strict guidelines and regulations. This is good for you as a forex trader as it will make sure you’re trading on safe and secure platforms.
For instance, some of the requirements brokers need to adhere to include:
1. Establishing a separate trading (non-banking) division within the company with its own risk management and control functions. This is an anti-corruption measure. It basically prevents brokers from running both banking and forex divisions at the same time, which could lead to conflicts of interest.
2. Providing a separate infrastructure platform for the trading division to allow for better monitoring of client accounts and stronger internal control measures.
3. Requiring all employees working in trading divisions have at least 2 years of experience as a broker or trader before being allowed to work with clients. This will ensure that your broker understands what you’re doing.
Can South Korean Forex Traders Use Any Currency Pairs?
Forex traders in South Korea are able to trade any and all currency pairs. This is great news and the lack of restriction gives huge opportunities to traders! Many traders in South Korea like to trade the popular currency pairs, such as the EUR/USD, USD/JPY and AUD/USD.
Trying to open up an account with a broker that doesn’t support your desired currency pair will be difficult! Luckily South Korean traders wanting to trade the majors can do so via any of the brokers available.
The other currencies you might like to trade in South Korea include the GBP/JPY and CHF/JPY. These pairs are useful for traders wanting to go long on currencies and benefit from a rising market.
However, you’ll need to be aware of high spreads when trading these currency pairs. The aforementioned EUR/USD is usually much easier to trade as there are no spreads to consider.
In Summary – Is Forex Trading Possible In South Korea?
In conclusion, forex trading is completely legal in South Korea. Although regulated, the markets are still easily accessible and provide a great opportunity for investors based in South Korea.
All South Korean traders have access to a huge range of brokers, there is no restriction on which you can trade with. This includes both regulated and offshore brokers!
Whether you want to trade the majors or other currencies, you won’t be stopped!
Are you a forex trader in South Korea? Let me know in the comments below..