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 business cannot be ruled out altogether and There are a few factors behind that as well:

Systemic significance of the large Banks

Till this date, the forex trading losses for a couple of of the biggest corporations and financial institutions are not officially released. Even for trades with such large scales, There is constantly a possibility that on wrong currency bets, losses worth billion funds will happen. It is a truth that currency trading is quite a zero sum game: however, if a large bank incurs huge 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 things lead to higher expenses incurred by the corporations and as well the other commercial players as well, mainly since of hedging currency risk.

Undue Enrichment of several folks in 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. several of these moves could be justified by the underlying financial fundamentals in a few instances. However, for several other cases, the temporary weakness in a currency can easily be exploited by the speculators, that too fairly ruthlessly. This sends the currency into a free-fall, just for self-fulfilling prophecy. Such incidents usually 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 situation has played out in numerous occasions and as an example, you are able to take the collapse that Baht, the key 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 situation and make profits worth millions. However, multiple other individuals inside the affected nations suffered.

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