The foreign exchange (Forex) is currently the largest and the most liquid market in the world. The United Arab Emirates has already established itself as a major center for forex (Foreign Exchange) trading. It offers endless opportunities for investors to earn from fluctuations in currency prices. Besides, with the thriving business sector and ample support from the government, budding entrepreneurs can easily establish a Forex Trading Company in Dubai.
However, one question that bothers everyone is whether or not forex trading is legal in Dubai. Let’s find the answer in this article.
Forex Trading in the UAE: Benefits
Since forex trading is legal in the United Arab Emirates, the providers of foreign exchange are rapidly increasing in the country. Talking about Dubai, the city has become a hub for such companies due to its strategic geographical positioning, pro-business environment, advanced infrastructure, and status as a global financial center.
Just like any other business sector in Dubai, UAE, forex trading is also a profitable venture. This is probably why many forex trading companies have established a name for their brands in the marketplace. Apart from being profitable and hassle-free, there are many other advantages to starting a Forex Trading Company in Dubai –
- Flexible –
Forex trading can be done anytime, anywhere without a lot of effort. All you need is an electronic device with good internet connectivity. Trading with such minimal requirements and irrespective of the market conditions is one of the key benefits of foreign exchange trading in Dubai. Even in a recession, investors can make a profit out of this venture. Besides, the risks are also manageable with high liquidity and low transaction costs.
- Strong economy and tax benefits –
As the economy of Dubai is rapidly evolving, more and more people from around the world are being drawn to the city. Moreover, the tax benefits provided to investors by the Dubai government help save money and empower them to earn extra revenue that can be used for other business growth activities.
- Secured and regulated –
The well-established regulatory framework of the UAE controls financial activities including forex trading. The Dubai Financial Services Authority (DFSA) oversees all the activities of foreign exchange trading in the Dubai market and issues the licenses to the investors. It ensures that trading, exchange, and other financial activities are being carried out in accordance with the legal framework. It is also responsible for regulating financial bodies in Dubai.
- Easy business setup –
Setting up a Forex Trading Company in Dubai is easy. Generally, people are doubtful of investing in the foreign exchange market, but the industry has managed to maintain a good reputation. Hence, investors, by starting a forex company in Dubai, can explore the sector with thorough interest.
Licenses to start a Forex Trading Company in Dubai
Your business model determines the type of license you would require for a Forex Trading company formation in UAE –
- DMCC License (Category 3)
Companies that will trade forex with their own capital can acquire this license. This is a professional license that is simpler and less expensive than other available options. However, the DMCC license doesn’t allow the handling of client funds.
- DIFC License (Category 3 A)
On the contrary, the DIFC license, also known as the Brokerage License, manages client funds. It is ideal for companies offering forex brokerage services and allows them to trade forex, commodities, and derivatives. The DIFC license is issued by the Dubai Financial Services Authority. It requires compliance with the stringent regulations of the authority and is expensive compared to the DMCC license.
Procedure to start a Forex Trading Company in Dubai
You are willing to step into the forex trading industry but have no idea how to go about it. So, here’s a guide to oil the wheels of your forex trading company formation in UAE –
Market analysis
Traders often tend to overlook this major step, which is in-depth market analysis. Before setting foot in the foreign exchange industry, it is vital to know about the pros, cons, risks, etc., associated with the venture. This will help make a well-versed decision.
Alternatively, approaching the right forex broker like the business setup consultants at Shuraa can help get this information in addition to helping you understand all the aspects of forex trading.
Assess your needs
You need to have a clear understanding of what you want to achieve via forex trading and within what timeframe. Newbies must avoid indulging in hefty trading practices that involve a lot of capital. On the contrary, experienced traders must look for seasoned brokers who can offer a reliable forex trading platform and update them with the new policy changes as well. Hence, you must always evaluate your needs and requirements before applying for a Dubai forex trading license.
Choose a location
There are various free zones and mainland options available for investors to set up their business in Dubai. Each has its own perks and drawbacks. Dubai Multi Commodities Centre (DMCC) and Dubai International Financial Centre (DIFC) are the popular choices for forex company formation in UAE.
Register your company
Once you have determined your location, register your company with the relevant authorities. This phase involves securing a trade license and establishing a corporate bank account. Based on your location, you might require a local sponsor to complete this process.
Find a broker
Always choose a broker that has a legal affiliation with a government agency. Although the UAE government strictly opposes fraudulent brokers, investors must analyze the forex trading brokers and select the one that is licensed and regulated by a reputable authority such as the Securities and Commodities Authority (SCA). Furthermore, check if the broker uses the ECN (electronic communication network) and what are the margin policies maintained by the brokerage agency.
The best way to understand the trading platform is to ask for a demo account from the broker. Once you are satisfied, you can finalize the broker for your forex operations.
Acquire a forex trading license
For a forex trading license, you need to approach the DFSA (Dubai Financial Service Authority). It follows an independent legal framework and oversees the trading of commodities, international equities, exchange, etc. in the UAE. Besides, to issue a license, the DFSA conducts a company fit test to check the credibility of brokerage firms and assess their efficiency to run a forex trading company in Dubai.
Start trading
Once your Forex account is live, you can start trading. The best way is to formulate an educated trading plan and stick to it. Make sure to leave no stone unturned if you want to gain decent profits right from the start. The forex trading license will allow you to trade in all streams including high-capitalization stocks and cryptocurrencies.
Cost of Forex Trading license in Dubai
The following factors affect the overall cost of establishing a forex trading business in Dubai –
- Number of required visas
- Business Location
- Office rent
- Bank account opening charges
- Additional approvals
Best Forex Brokers in the UAE
Here’s a curated list of regulated and reliable brokers in the United Arab Emirates –
- Pepperstone
- XTB
- XM
- Skilling
- HFM Markets
- eToro
- Eightcap
- FXNovus
- AvaTrade
- ModMount
Collaborate with Shuraa – Your Business Buddy
Shuraa Business Setup has assisted over 50,000 company formation in the UAE, especially in Dubai. Their seasoned business setup consultants are happier to help launch your Forex Trading Company in Dubai. They will not only provide insightful information but also help with the relevant paperwork, documentation, and more.
So, book a free consultation with Shuraa advisors and learn more about Forex Trading in the UAE. Connect at www.shuraa.com
