Importance of Regulation for Institutional Trading
When it comes to the institutional trading, local central banks loosely control the currency markets. There is certainly no single global regulator present for policing the worldwide forex market. However, the require of a regulator for the institutional forex business cannot be ruled out altogether and You will find a couple of factors behind that as well:

Systemic significance of the massive Banks

Till this date, the forex trading losses for some of the biggest corporations and financial institutions aren't officially released. Even for trades with such big scales, There's always a possibility that on wrong currency bets, losses worth billion cash will happen. It is a truth that currency trading is a zero sum game: however, if a big bank incurs massive losses, the same is expected to have a ripple effect on the global economy as well, mainly due to the fact of the symmetric significance of the same.

Higher Hedging Costs

If the speculation gets to an excessive level, the currency volatility in forex trading will be increased as well. Such things lead to higher expenses incurred by the corporations as well as the other commercial players as well, mainly since of hedging currency risk.

Undue Enrichment of a couple of men and women at the expense of Million Others

If a currency moves in an exaggerated or unjustified way, the same generally has an adverse impact on the overall economy of the nation, apart from currency markets. a few of these moves may be justified by the underlying economic fundamentals in a couple of instances. However, for several other cases, the temporary weakness in a currency can easily be exploited by the speculators, that as well pretty ruthlessly. This sends the currency into a free-fall, just for self-fulfilling prophecy. Such incidents typically trigger capital flight as well as a prolonged recession as well. This is precipitated by sharply higher interest rates for defending the currency. On the last 2 decades, this scenario has played out in numerous occasions and as an example, you are able to take the collapse that Baht, the main currency of Thailand skilled in July, 1997. A next crisis all over the Asian area followed as well. The currency speculators were able to exploit the scenario and make profits worth millions. However, many other people inside the affected nations suffered.

Major currency traders may oppose the notion of regulation for the institutional trading system for their own positive aspects and proper functioning. However, for the sake of overall transparency, It is required and hence the significance cannot be ruled out altogether.