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 need of a regulator for the institutional forex business cannot be ruled out altogether and You will find a couple of reasons behind that as well:

Systemic importance of the huge Banks

Till this date, the forex trading losses for some of the biggest corporations and financial institutions usually are not officially released. Even for trades with such large scales, There's always a possibility that on wrong currency bets, losses worth billion dollars will happen. It is a reality that currency trading is really a zero sum game: however, if a big bank incurs big losses, the same is expected to have a ripple effect on the global economy as well, mainly since 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 things lead to higher costs incurred by the corporations and the other commercial players as well, mainly simply because of hedging currency risk.

Undue Enrichment of some people at the price 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 economic fundamentals in a few instances. However, for multiple 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 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 situation has played out in numerous occasions and as an example, you can take the collapse that Baht, the significant currency of Thailand skilled in July, 1997. A subsequent crisis all over the Asian region followed as well. The currency speculators were able to exploit the circumstance and make profits worth millions. However, multiple other people within the affected nations suffered.

Major currency traders may well oppose the concept of regulation for the institutional trading method 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.