United Arab Emirates (UAE), located in Arabian Peninsula, is a sovereign state and one of the Gulf Cooperation Council’s seven countries. The country is a federation of 7 Emirates, namely- Abu Dhabi, Ras Al Khaimah, Dubai, Ajman, Fujairah, Umm Al-Quwain, and Sharjah. Its official religion is Islam, and the official language is Arabic. It is one of the world’s richest states and second richest in the Gulf Cooperation Council (GCC), after Saudi Arabia. The country got its independence in 1971, and after that, it has experienced tremendous growth in its economy. It has abundant oil reserves. UAE reached this global position due to the rulers’ wise development decisions in the early years. They invested the income from oil exports in the country’s education and infrastructural development, which paved the way to its current position in the world economy. The majority of the UAE’s population comprises immigrants who provide for a large part of the human resource. Dubai, the largest city or emirate of UAE, is densely populated and is famous for its tourism.
UAE Financial Market
Earlier, the UAE’s economy was mainly based on fishing, date palms cultivation, pearl diving, and farming. The scenario changed with the discovery of oil reserves, and the economy grew as the trade of oil increased. Now, UAE actively trades in bonds, equities, commodities, securities, mutual funds, Islamic bonds, oils, gold, silver, etc.
The Securities and Commodity Authority mostly regulates trading in UAE (CSA), founded in 2000. The two main security exchange markets that were introduced under SCA in the same year are:
- Abu Dhabi Securities Exchange (ADX)- a stock exchange based in Abu Dhabi. ADX was set up to trade shares in the UAE and provide a platform for the investment of funds and security of these investments to grow the economy.
- Dubai Financial Market (DFM)- A stock exchange based in Dubai has many international member companies. DFM is a public joint-stock company dealing in ETFs, equity, securities, etc.
Both ADX and DFM are bound to work under the laws set by the SCA.
Apart from these two major stock exchanges in the UAE, some other financial institutions or markets are set up for the smooth functioning of trading in different commodities and securities. These financial markets are listed below:
- Dubai Multi Commodities Centre (DMCC)- Initiated in 2002, DMCC aims to provide a physical market for the trading of commodities. Particularly trading in four commodity groups – gold, silver, tea, and pearl, DMCC is a part of the Jumeirah Lakes Towers free zone.
- Dubai International Financial Centre (DIFC)- It is a center created by the Government of Dubai in 2002 to serve as a financial ecosystem, housing many companies. It provides a free zone to many asset management companies, consulting institutions, insurance companies, several banks, and law consultation services to operate their business in a wide FinTech environment.
- Dubai Diamond Exchange (DDE)- Providing a platform to over 1000 domestic and international companies dealing in diamonds and other precious stones, DDE is located in Almas Tower in Jumeirah Lakes Towers free zone. Being the only bourse (trading venue), it is a kind in the GCC associated with the World Federation of Diamonds Bourses (WFDB). It is a government initiative to provide a platform where domestic and international precious stones companies can trade in a more liberal environment.
- Dubai Pearl Exchange (DPE)- Pearl trading has been a part of the UAE’s economy for centuries. To meet the demand for pearls worldwide and the need to promote the growth of pearl trading, DMCC initiated DPE. It provides an independent platform to trade natural and cultured/farmed pearls.
- Dubai Gold & Commodities Exchange (DGCX)- Initiated in November 2005 as a subsidiary of DMCC, DGCX was the first derivatives exchange, and present-day leading derivatives exchange all over the Middle East. It deals in currencies, equities, hydrocarbons, and metals.
- Dubai Mercantile Exchange (DME)- Commenced in June 2007, DME deals in commodities and energy futures. It has set its aims at providing a platform for efficient risk management with fair and transparent price discovery. DME provides the fairest benchmark for crude oil due to the presence of the Oman Crude Oil Futures Contract (DME Oman), which is its flagship contract.
- NASDAQ Dubai- As both DFM and ADX mostly list domestic companies and work under domestic laws, NASDAQ Dubai works on international trading laws. It aims at providing foreign investment opportunities to the traders. Companies can raise money internationally, and traders can invest globally. NASDAQ deals in equities, conventional bonds, futures and derivatives, Sukuk (Islamic bonds) and other Islamic products, exchange-traded commodities and funds, Real Estate Investment Trusts (REITs), etc.
Trading in the UAE – Best Trading Company in Dubai
List of forex companies in Dubai (international):
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List of foreign exchange companies in UAEForex Trading Brokers in Dubai:
One of the best trading company in Dubai is Hotforex because this branch of HF Markets (DIFC) Ltd is authorized and regulated by the Dubai Financial Services Authority (DFSA) under license number F004885 and has more than 2 million clients (traders), one of the best client support.
HotForex is a safe and reputable broker in the UAE. They have been able to provide traders with fast trades. This ensures trades are completed quickly. They offer a total of 48 currency pairs. This is very important as it allows for versatile trading. They also offer online education regarding the forex market. Traders need to understand the market before making any trades. IQ Option is another top broker in the UAE. IQ Option has been able to provide traders with a user-friendly platform. For example, IQ Option has been a strong choice for beginners. Many traders enjoy this as they are learning the developing market. IQ Option also offers digital options for stocks as well as other trading services. IQ Option does not charge any fee for holding positions.
Pepperstone is another regulated and certified ECN broker. They offer a total of 70 currency pairs. Pepperstone offers a “no freezing” service. This helps traders to complete their transactions efficiently and therefore avoid complications or issues during the process. Pepperstone also offers fast trades. All of the brokers listed are ensured for reputability. This confirms that traders are protected to avoid financial loss. When trading with online platforms and brokers, it is essential to use caution and do thorough research. As a result of the large volume of trades made on the market, it is important to confirm each trade’s details. National regulations encourage traders to only complete transactions with reputable sources. The UAE also offers language services to accommodate both locals and foreigners. Therefore it is simple and convenient to trade. All UAE residents have access to the most reputable brokers on the forex market.
HYCM is another popular and reputable broker in the UAE. They have been DFSA regulated in Dubai. This has helped traders to confirm the reputability of the platform. They offer Arabic and English support. This is very important as the United Arab Emirates is a very diverse country. Therefore offering support in both languages allows traders to interact in the language they prefer.
The UAE’s economy is mostly based on trading rather than industry. It has gained numerous investors in the past few years, both local and international. It has attracted many big brands to set up their units in cities like Dubai and Abu Dhabi, bringing in more investment. In the past few years, the UAE has experienced a significant increase in online trading as well. It has provided investors with adequate trade facilities and proved to be a better market for surplus gains. The ongoing projects and infrastructural development that is believed to have worth billions will also help lift the economy further.
If you are looking for the best trading company in Dubai, let’s look at the possible and available platforms or securities that investors can trade in in the UAE.
- Forex Trading- Forex trading is legal and done freely and on a large scale in the UAE. The central bank of the UAE is the body regulating the forex market. In contrast, the brokers’ license needs to be approved by the CSA (Securities and Commodity Authority), providing a favorable platform to traders for forex trading. Although the larger fraction of the forex trading is done in Dubai’s financial market, one is not allowed to trade in forex without a license obtained legally from any of the authorities. Since the UAE does not charge any taxes on an individual or a company’s wealth, it attracts even more foreign traders to trade in its financial markets. However, one must make sure that the forex broker is regulated and well equipped with relevant knowledge.
- CFD Trading- CFDs or Contracts for Difference is a contract between two parties on an asset or securities. At the end of the contract, parties exchange the difference between the current value of the asset and the value when they entered the contract. Based on the trader’s knowledge, he/she can predict if the prices are expected to go upward or downward and accordingly buy or sell CFDs. In the case of CFDs, ownership is not transferred to the buyer as it is a derivative product. There are certain regulations set by the Central Bank of UAE regarding the trading of CFDs, and all the licensed brokers are registered with Dubai Financial Services Authority (DFSA). So before choosing a broker for forex or CFD trading, make sure the broker is listed with DFSA and is licensed.
- Demo Accounts: Demo Accounts are always a good option when a trader is entering a new market or when the trader is new. Demo accounts help you learn the rules and tactics of trading in a certain market using virtual money instead of using your own capital. UAE offers demo accounts to the traders who wish to learn about its financial markets in a more detailed form.
- Islamic Accounts: Islam follows the Sharia Law that works on the principle that earning profit is illegal (haram). Almost all the UAE brokers offer Islamic accounts following the Sharia Law.
Opportunities and Challenges of Trading In The UAE
UAE’s liberal laws for trading provides a free flow and a friendly environment for traders. With liberal laws, there are also regulatory bodies to protect the interest and funds of the investors. Due to GCC’s presence, UAE’s proximity to other Arab countries provides a way to enter into the market of these GCC countries also. No taxation policies, multiple trading account options, political stability, technologically advanced systems, and different trading platforms make UAE an attraction for traders.
The well-developed markets of the UK and other European countries continuously impose a threat to the UAE’s financial markets. There are certain areas of services and investment that give preferences to the Arab nationals, which can sometimes restrict international traders’ entry. Language can also be a barrier in communication as Arabic is the preferred language, and many times, documents are received or printed in Arabic. Moreover, large, established companies here can also act as a competition as some of them prefer to have their own less liberal laws.
Points to Consider While Selecting Your Broker
Because of such a large financial market and the opportunities for trading, there are numerous brokers available in the UAE. Searching for a broker takes time, effort, and knowledge. As a trader, one must be aware of his investment needs, develop a proper plan for the investment, and then search for the broker that goes with the trader’s plan. To make this search efficient, there are certain questions that the traders must get the answers to get the best broker in the UAE.
The questions are:
- How experienced is your UAE broker?
Experience plays a big role in the financial markets. The broker’s time spent in the market and the ability to trade at different trading platforms can help the trader determine the broker’s level of experience. An experienced broker can definitely help you in the long run with your investment plans, and trading can be done smoothly. At the same time, an inexperienced broker may not give the returns that the trader may be expecting.
- How is the client’s experience with the broker?
One other way to understand the broker’s experience and work ethic is to get feedback from his past or current clients or customers. You can know many things about the broker, like, is transparent about his trading actions, if he educates the client about the market regulations, or if he has ever been a part of any misconduct. The number of clients may also work as a good indicator of the broker’s trading knowledge. Consider more than 15 a good number.
- What are the cost and fees of the broker?
Brokers charge fees or commission for the services rendered by them to the traders, which adds up to the trader’s trade execution fees. Knowing them beforehand can help the trader determine the funds available to him to invest after deducting the commission. So, the trader must always ask the broker to be transparent about his fees and commission and know if any hidden charges can hinder his/her investment plans in the future.
- How aware is your UAE broker about the international market?
Trading in securities, like forex, requires knowledge of the international financial markets also. Ensure that the broker is well-versed in the regulations and laws of other international financial markets and a smooth trading experience. The broker may also have some international sources that can further make your experience of trading profitable.
- How quickly can your UAE broker move your funds?
Trading transactions can take time. It all depends on the broker’s efficiency, how fast he can help you get your transactions done. Transactions in trading involve deposits, withdrawal, transfers, etc. If the broker can get such transactions done within 2 to 3 days, consider that the broker is quick and efficient. It is important to get quick transactions when these investments are your regular income, and any delay in the movement of funds can cause delays in your future investment plans.
- How secure are your funds with the UAE broker?
Hiring a broker requires you to entrust your funds with the broker. It is not new that unregulated brokers misuse the trader’s funds, so it is important to determine that the broker is regulated and under which regulatory body. Traders may also consider conducting a background check on the broker’s past work to look for any misconduct he/she may have been a part of.
When it comes to trading in the UAE, their laws are stringent, and they are known for upholding it. It is safe to say that you will find reliable brokers and trading companies here. As the trading markets and brokers are highly regulated, you can expect the safety of our funds. The rest of your journey depends on how well you can read the market and develop a strategy.
Top Forex Brokers In UAE (Including Dubai)
Finding the most reputable broker in the United Arab Emirates is simple when you know exactly what to look for. Finding a reputable and high-quality broker makes all the difference when trading. Reputable brokers are important to ensure financial safety and proper investments. Whenever finances are involved, it is essential to do proper research. XM is one of the most reputable brokers in the UAE. They have been listed amongst the top ten brokers due to their unique services for beginners and advanced traders. Trading platforms need to support beginners as well as seasoned traders. This encourages growth and development. XM is a fully regulated platform. This ensures safety and security when trading. Finding the most reputable forex companies in UAE is critical for success.