A B-book does not fit inside a Labuan money broking licence. It puts your firm opposite every client trade, with your own money at risk. That is dealing as principal, and the guidelines rule it out.
In broker slang, an A-book broker passes a client's order to a counterparty, while a B-book broker keeps the order and takes the other side. The guidelines use neither broker term. Labuan FSA's money broking guidelines of 9 September 2024 talk about principals, liquidity providers and market makers, and a B-book broker is the principal in its client's trade.
The licence is built around the intermediary role
Paragraph 1.1 describes money broking as arranging transactions between buyers and sellers in the money or foreign exchange markets, for a brokerage fee. It then excludes buying or selling currencies as a principal, a liquidity provider or a market maker, and Labuan FSA gives its reason there: the line keeps the intermediary clearly apart from the parties to the trade, so that dealing stays transparent and fair. Paragraph 6.1 repeats the point: the licensee acts as a mediator and is "strictly not permitted to act as a principal". A footnote to that paragraph restricts position-taking and says the broker may not speculate or engage in proprietary trading.
The name causes the confusion, in our view. What brokers often call a Labuan forex licence sounds like permission to deal in foreign exchange. It is the money broking licence, and it gives permission to broker foreign exchange. The guidelines never use the word forex.
The platform test is where each order ends up
The test comes from paragraph 6.1, where the licensee mediates and never acts as a principal. Paragraph 9.5 adds that the broker must make the capacity it acts in absolutely clear to its clients.
A platform where any order can end up in the broker's own book falls outside the licence.
Where every order goes to a counterparty, the requirements that remain include capital, substance and, for a broker regulated elsewhere, a letter of awareness or written consent from the home regulator.
Five more limits sit beside the principal rule
| Topic | What the rules say | Source |
|---|---|---|
| Instruments | Money and foreign exchange products. CFDs on other underlying assets are not permitted, which in practice means shares, indices and commodities. Digital assets are covered below. | Guidelines, paragraphs 6.1 and 6.2 |
| Client leverage | Broker expected to cap it at 100:1, a minimum margin of 1%. | Guidelines, paragraph 7.6 |
| Client leverage, digital assets | Broker expected to cap it at 1:1. | Guidelines, paragraph 7.6 |
| Market approvals | The broker obtains the necessary approvals from the governing authorities in the domestic markets it serves. | Guidelines, paragraph 7.15; Labuan FSA FAQ |
| Clients | The business is intended for institutional investors and high-net-worth individuals, which Appendix II defines. | Guidelines, paragraph 7.6 |
The leverage figures limit what your clients can take on and say nothing about your own gearing, and Labuan FSA words them as an expectation.
Client money sits in accounts kept separate from the broker's own and marked client by client, is never mixed with its general assets and is not available to pay its debts. Labuan FSA expects client withdrawals to be completed within three working days of the request (paragraph 9.4).
Digital assets turn on whether the token is securities
A Labuan money broker may broker digital assets too (paragraph 6.2). It brings counterparties together and provides the system that matches their orders, but it cannot trade the assets as principal. Two limits come with digital assets. The asset must not have the features of securities as defined in section 2 of the Labuan Financial Services and Securities Act 2010, and Labuan FSA expects client leverage to be capped at 1:1. Minimum paid-up capital also rises from RM1,000,000 to RM1,500,000.
Whether a token is securities decides the route, and our piece on which Labuan licence a crypto exchange needs works through that question.
Separate guidelines on digital money broking platforms, issued in December 2025, take effect on 1 January 2027.
Frequently Asked Questions
Can a Labuan money broker run a B-book?
No. A Labuan money broker is strictly not permitted to act as a principal, a liquidity provider or a market maker, and a B-book puts the broker on the other side of its client's trade.
What is the maximum leverage for a Labuan money broker's clients?
Labuan FSA expects a maximum of 100:1 on clients' trading transactions, a minimum margin of 1%, and 1:1 on digital assets.
Can a Labuan money broker offer CFDs?
Only on money or foreign exchange products. CFDs on other underlying assets are not permitted under the licence, which in practice means shares, indices and commodities. Digital assets are a separate permitted activity.