Forex Trading – UAE Options

Forex Trading – UAE Options

Foreign exchange market, or Forex, is the largest market in the world, in terms of the daily trading volume. Especially with the help of the internet, individual traders now get east access to the foreign exchange market through international banks or brokers making a secondary market.

The emerging GCC market has surprised the world as it has grown from humble beginnings to a trillion dollars industry in recent years. The forex traders here are trading in the same sectors as in London, New York and Tokyo, but the trading volume is increasing far more rapidly.

And amongst the region, the UAE stands out particularly due to its relatively well-developed financial system and continuous efforts in building up a business-friendly environment.

Forex Trading in the UAE

The UAE was the first country that established supporting infrastructures for the financial sector in the region. It provides both local and international investors comprehensive regulation system and flexible operation choices with various types of legal entities.

Despite religious law and economical differences, the country is now implementing a more Western-style business model that welcoming foreign investors as well as diversified investing routes. During recent years, the UAE has successfully reduced its dependence on oil and petroleum products. The main sources of revenue are tourism, real estate, aviation, and most significantly financial services.

With the world-class infrastructure, business-friendly environment, mature legal and regulation system, UAE has attracted a number of foreign investors come here to establish their forex companies or branches.

Available options for Forex in UAE

There are a number of forex brokerage companies in Dubai offering forex to local and abroad citizens. Some foreign companies only establish and maintain a presence there through a normal free zone company without regulation requirements.

If you are interested to do Forex trading activities in UAE…

There are 3 routes available for you: Mainland Company, ADGM and DIFC.

Mainland Company

Anyone that familiar with the UAE business must beware of its Mainland Company structure, especially its 51% local ownership requirement. However, it is undeniable that the Mainland Company provides you with the maximum freedom to access the local markets and customers.

Any mainland company that intends to provide forex trading services are regulated by the Central Bank of the UAE and licensed by the Securities and Commodities Authority (SCA).

Free zone options

UAE government also offers several options for potential investors to set up a financial business in the region but keep the 100% ownership of their business. Both ADGM in Abu Dhabi and DIFC in Dubai are exclusive economic zones for financial companies, such as forex trading. The only limitation for Free Zone companies is that they are not allowed to directly trade with the local market.

UAE free zones have their own register regime and practice procedure, providing investors with straightforward administration services. Some of them also have own regulator body and court for regulated services providers.

  1. Abu Dhabi Global Market (ADGM)

ADGM is an international financial centre strategically located in the capital of the UAE. It is established by the UAE Federal Decree with three independent authorities – the Registration Authority (RA), the Financial Services Regulatory Authority (FSRA) and ADGM Courts — together ensure the provision of a world-class environment and infrastructure for investors.

The Financial Services Regulatory Authority (FSRA) is the regulatory body for financial entities operates within the free zone.

  1. Dubai International Financial Center (DIFC)

DIFC is a special area in Dubai that providing independent regulatory and legal system. As one of the world’s leading financial centre, DIFC aims to provide a secure and efficient platform enabling financial institutions and businesses to develop and expand their market in the region.

Forex brokers in DIFC are regulated by its own regulatory body Dubai Financial Services Authority (DFSA). It is the independent regulator of financial services conducted in or from the DIFC.

Besides the access to the Middle East market and 0% taxation benefits, both Mainland Company and Free Zone Company may assist the shareholders and employees to apply for the UAE residency permits. Our Dubai team shall be pleased to provide assistance including company incorporation, license application as well as the UAE residency permit.

If you don’t intend to conduct forex trading in UAE, or you already have a regulated foreign company…

A representative office in any normal free zone would be more suitable.

Representative Offices of Foreign Company

In some cases, foreign investors already have set up their company and got the relevant license in other countries but are interested to expand their business to the Middle East and the UAE region. Instead of investing too much to establish a new company and apply for the UAE license, the investors could only open a representative office in any free zone, such as DMCC.

Dubai presence but without applying for another license!

The investor could use its representative office in Dubai for marketing purposes to promote its forex products and services and get connect with more customers around the region.

Furthermore, this type of representative office is also able to provide some outsourcing services related to Forex, such as training in the forex industry.

If you are trading with your own money…

DMCC FZ Company with specific membership is available as well.

Dubai Multi Commodities Center (DMCC)

DMCC is located in the heart of Dubai and recognized as the world’s no.1 free zone. It is the global commodities trading centre in the MENA region.

Regarding forex trading, there are 2 types of activities allowed in the DMCC.

  1. Trading in FX, OTC and Exchange Traded Derivatives on its own behalf with counterparties deemed acceptable by DMCC: includes firms whose main activities are based on the trading of their own money in forex or OTC and Exchange Traded Derivatives with counterparties which are regulated by authorities deemed acceptable by DMCC. Instead of a specific license, it is further required that the firm obtain a membership of Dubai Professional Trading Group.
  2. Trading for a proprietary account on regulated exchanges: includes firms whose main activities are based on the trading of their own money in FX, OTC and Exchange Traded Derivatives on regulated exchanges. The firm is required to obtain the membership of Dubai Gold & Commodities Exchange (DGCX).

To sum up, the UAE provides foreign investors with various and flexible options for them to choose and decide the most suitable structure according to their own needs. The tax benefits from the UAE’s zero corporate tax and extended double tax treaties networks, world-class infrastructures, and business-friendly environment have attracted many famous forex companies come here and established their offices or headquarters.

Our Dubai team is equipped with professional specialists with knowledge of the UAE legal and regulation systems, enabling us to assist you incorporating the company and applying for the relevant licences and release you from the complicated preparation and application process.

Contact us now to get a further discussion on your needs.

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