Importance of Regulation for Institutional Trading
When it comes to the institutional trading, local central banks loosely control the currency markets. There's no single global regulator present for policing the worldwide forex market. However, the demand of a regulator for the institutional forex market cannot be ruled out altogether and You'll find a few reasons behind that as well:

Systemic importance of the large Banks

Till this date, the forex trading losses for a couple of of the biggest corporations and monetary institutions aren't officially released. Even for trades with such big scales, There is constantly a possibility that on wrong currency bets, losses worth billion funds will happen. It's a truth that currency trading is quite a zero sum game: however, if a huge bank incurs big losses, the same is expected to have a ripple effect on the global economy as well, mainly since 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 probably be increased as well. Such items lead to higher costs incurred by the corporations and also the other commercial players as well, mainly simply because of hedging currency risk.

Undue Enrichment of a couple of folks 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. some of these moves might be justified by the underlying monetary fundamentals in several instances. However, for several other cases, the temporary weakness in a currency can easily be exploited by the speculators, that at the same time pretty ruthlessly. This sends the currency into a free-fall, just for self-fulfilling prophecy. Such incidents frequently trigger capital flight and 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 many occasions and as an example, you are able to take the collapse that Baht, the significant currency of Thailand experienced in July, 1997. A next crisis all over the Asian location followed as well. The currency speculators were able to exploit the situation and make profits worth millions. However, numerous other folks inside the affected nations suffered.

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