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 need of a regulator for the institutional forex market cannot be ruled out altogether and There are a few factors behind that as well:

Systemic significance of the big Banks

Till this date, the forex trading losses for a few of the biggest corporations and economic institutions aren't officially released. Even for trades with such big scales, There is certainly constantly a possibility that on wrong currency bets, losses worth billion cash will happen. It is a truth that currency trading can be a zero sum game: however, if a huge bank incurs large 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 is going to be increased as well. Such issues lead to higher expenses incurred by the corporations as well as the other commercial players as well, mainly because of hedging currency risk.

Undue Enrichment of some 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 may 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 also fairly ruthlessly. This sends the currency into a free-fall, just for self-fulfilling prophecy. Such incidents typically trigger capital flight along with a prolonged recession as well. This really 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 main currency of Thailand skilled in July, 1997. A subsequent crisis all over the Asian location followed as well. The currency speculators were able to exploit the scenario and make profits worth millions. However, several other folks within the affected nations suffered.

Major currency traders may possibly oppose the concept of regulation for the institutional trading system for their incredibly own benefits and proper functioning. However, for the sake of overall transparency, It's required and hence the importance cannot be ruled out altogether.