Looking for a Forex Broker in Dubai? Introducing DFSA Forex Brokers
Dubai is the most populated city in the United Arab Emirates, and has become a global city and business hub for the Middle East. It is actually the capital of the Emirate of Dubai, one of seven emirates that make up the country. In the Emirates, a more Western style of business is adopted, and this is what drives their economy. The main source of revenue is no longer their oil reserves, as these are now limited and production is low. Instead, revenue tends to come from tourism, real estate, aviation, and financial services.
There is one special area of Dubai, known as the Dubai International Financial Centre (DIFC), where things are a little different from the rest of the city, and indeed the rest of the United Arab Emirates.
What is the DIFC?
The DIFC is a federal financial free zone, occupying around 110 acres of the city. It has its own courts and legal system, is completely separate from the rest of the country, and maintains jurisdiction over civil, commercial, corporate, employment, trusts and securities law matters. At the head of the regulation side of things is the Dubai Financial Services Authority. It is this organisation that is responsible for regulation of Forex brokers in Dubai, or at least a small part of it. The DFSA is only able to oversee financial services in the free zone, and it aims to provide a service of international standard. The body that is responsible for financial markets outside of the DIFC is the UAE’s Federal Securities and Commodities Authority.
You might be wondering why such an area was created, so let’s try to explain. It was created in 2004 after a number of laws were passed, in order to provide a platform that financial institutions and businesses could utilise, and to create a beneficial environment for progress, growth, and economic development. This has been possible because there is a legal, physical and business infrastructure in place that is in line with international standards.
DFSA-regulated brokers and the DFSA
When the DIFC was created, a regulatory body also came into being, known as the Dubai Financial Services Authority. It is an independent financial services regulator, and oversees all relevant services conducted in or from the Dubai free zone. The relevant services include the following:
- Credit and banking services
- Collective investment firms
- Asset management
- Commodities futures trading
- Islamic finance
- Trust and custody services
- International equities exchange
- International commodities derivatives exchange
Other responsibilities include overseeing and enforcing counter-terrorism financing and anti-money-laundering. The DFSA also has the authority to undertake investigations into regulated entities, which include DFSA Forex brokers.
How the DFSA can help you and your Forex trading?
The most obvious way is, of course, the regulation of Forex brokers in Dubai. But it also helps in a number of other ways including the following:
- Providing consumers with the latest regulatory news
- Enabling investors to understand the basics of investment in general
- Providing advice on how consumers can avoid scams
- Providing details of regulated firms
- Giving advice on resolving complaints and disputes.
Regulation of retail Forex brokers in Dubai is relatively new.
When the DIFC was first established it was only brokers with professional clients who were able to set up shop. Retail investors, or those with very little capital, had to look elsewhere for a regulated Forex broker. More than $1 million in liquid assets was one requirement, and brokers were also required to get a retail endorsement if services were directed at retail clients. Needless to say, there weren’t very many takers for DFSC-regulated status.
The Authority changed its mind, however, because there was an increasing demand for retail Forex trading. It wasn’t plain sailing for Forex brokers in Dubai, though, because legal limitations, systems and control requirements were introduced at the same time. Most of the new requirements centred around the use of UAE dirhams, but included additional controls and measures, such as the following examples:
- Risk disclosure statements have to be signed by individual retail clients.
- Compliance and client-facing staff have to meet minimum experience requirements.
- Clients have to be monitored, and their funds segregated.
- There is a minimum margin requirement of 2% and 5% for major and other currency pairs respectively.
- Five years’ retail experience in providing financial services under the supervision of a respected regulator is necessary.
Should you have problems with a DFSA Forex broker, there is a procedure to follow.
In order to be recognised as a DFSA-regulated broker, there have to be mechanisms in place to deal with any customer complaints. The first step to take with any complaint is to contact the financial services provider with the aim of resolving the problem. This will also be the quickest and most efficient course of action. You should make sure you put any complaints in writing and keep records of any further communication.
Hopefully, you should be able to reach a satisfactory conclusion to the problem, but if this is not possible your next step will be to contact the DFSA. The complaint has to be submitted in writing. The DFSA will carefully assess the facts and decide whether there is an appropriate course of action. The Authority isn’t interested in seeking commercial outcomes unless they happen to be in the public interest. The DFSA complaints process should only take a few weeks, but it will include contacting witnesses, consulting with other regulators, and liaising with specialists. The process may take a little longer if the problem is complex. The DFSA will advise you whether the investigation is going to be taken further, and whether they are going to take any action.
Hopefully, you are now in a much better position to decide on the best Forex broker in Dubai. Our advice is to pick a DFSA-regulated broker, because this is the best possible way to safeguard your investment and yourself. It is your decision entirely, but picking an unregulated broker will leave you wide open and at greater risk of losing all your capital.