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 call for of a regulator for the institutional forex business cannot be ruled out altogether and You can find some reasons behind that as well:

Systemic significance of the big Banks

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

Higher Hedging Costs

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

Undue Enrichment of several individuals at the cost 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 can be justified by the underlying financial fundamentals in a couple of instances. However, for numerous other cases, the temporary weakness in a currency can easily be exploited by the speculators, that at the same time fairly ruthlessly. This sends the currency into a free-fall, just for self-fulfilling prophecy. Such incidents often trigger capital flight plus a prolonged recession as well. This is precipitated by sharply higher interest rates for defending the currency. On the last 2 decades, this circumstance has played out in numerous occasions and as an example, you can take the collapse that Baht, the main currency of Thailand skilled in July, 1997. A subsequent crisis all over the Asian area followed as well. The currency speculators were able to exploit the situation and make profits worth millions. However, many other men and women in the affected nations suffered.

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