Regulated Forex Brokers
Dubai is an important city in the global financial map and is home to some of the richest retail traders in the entire world. Being an Islamic city that follows several strict religious customs and laws, Forex brokers in Dubai are required to follow the numerous Sharia laws that are designed to satisfy the different Islamic beliefs. While the Middle Eastern countries are known for their conservative approach to businesses and the financial sector in general, Dubai is pretty lenient and straightforward in its approach by providing several opportunities for global firms and entrepreneurs to set up their base in a relatively tax-free environment. Forex trading has invoked an immense amount of interest among investors from Dubai, and the Dubai Government has set up an independent regulatory authority to oversee the regulation and supervision of all financial entities operating in the country. The Dubai Financial Services Authority (DFSA) was launched in the year 2004 and works alongside the Dubai International Financial Center, which acts as an exclusive economic zone for attracting companies dealing in the financial sector. DIFC is one of the very few opportunities offered by the Dubai Government for potential investors to set up a financial business in the region that allows 100% foreign ownership. Traditionally, all businesses in the UAE requires a company to have a local UAE citizen to be a majority shareholder. However, the concept of free zones has enabled Dubai to come across as a business friendly nation that allows complete ownership and offers a unique opportunity for companies to set up shop in Dubai with virtually no interference from the local authorities.
Regulatory Guidelines To Be Followed By DFSA Forex Brokers?
The DFSA is designed according to the global regulatory standards adopted by leading economies such as the US and the UK. The DFSA has more in common with the NFA and the CFTC, rather than any of the other regulatory agencies, which makes the Dubai’s regulatory environment similar in structure to the one adopted by the US regulatory agencies. However, the DIFC and the DFSA works with different jurisdictions by signing a Memorandum of Understanding between the leading financial regulators in the world. DFSA regulated brokers have the option of setting up a brokerage by following the regulatory guidelines adopted by the US, the UK, or the Cyprus, which are the primary regulatory agencies that have a valid MOU with the DFSA and the DIFC. DFSA stipulates several trading restrictions such as higher minimum margin requirements ranging from 2% to 5% (essentially lowering the leverage to 1:20-1:50), no SWAPs for Islamic traders, and other trading restrictions that are devised in line with Dubai’s religious beliefs. All DFSA regulated brokers should offer a standard risk disclosure statement to its traders, and can only provide retail trading accounts to investors that are approved by the DFSA. Retail Forex traders in the region should be able to control at least $1 million in trading assets, and should not indulge in any trading activities that involve the local currency, the UAE Dirham. DFSA requires all regulated member firms to adhere to the guidelines issued by the respective jurisdictions as well as the policies issued by the UAE authorities. Every DFSA regulated Forex broker should provide regular audit reports and a track of financial transactions to ensure that regulated financial entities conform to the standards set forward by the agency. The DFSA is also committed to maintaining strict anti-money laundering laws and to counter-terrorist financing laws, and the DFSA has included these two clauses right up at the beginning of its rulebook. The DFSA regulatory guidelines also incorporate other aspects of marketing and promotions for financial products, as the DFSA regulated brokers are supposed to follow fair and honest rules of competition. The DFSA does not entertain companies that follow unethical advertising strategies or misrepresenting the facts in any manner. DFSA supervises every regulated member to guarantee that every company follows the code of conduct as prescribed in their license for ensuring a fair and honest marketplace. DFSA is quick to penalize any business that operates out of the framework stipulated by the authorities, and companies can face serious consequences if they do not adhere to the rules outlined in their license.
Are There Any Scam Brokers In Dubai?
Dubai only allows DFSA Forex brokers to carry out financial activities in the entire UAE. It is illegal for any company to offer any services to UAE residents without obtaining the necessary licenses. Businesses may face severe penalties and lawsuits, including prison time if any individual or a company indulges in any activity that is deemed illegal by the relevant authorities. However, Dubai does offer an opportunity for investors to set up a business in their special economic zones for providing services to a global audience. Therefore, it is possible for brokers to set up their brokerage in Dubai without being regulated by the DFSA. In such an instance, investors are not protected by any regulatory laws or supervisions that are usually available with DFSA regulated broker. Consequently, several investors had faced problems with Dubai-based brokers and were victims of numerous frauds and financial scams. It should be mentioned that the problem only exists with non-regulated brokers, as all DFSA regulated Forex brokers do not indulge in any scams due to regulatory backlash from the DFSA and authorities.
Customer Protection From DFSA
DFSA has issued a detailed complaint resolution process that enables customers to approach higher authorities if they are unable to resolve their differences directly with the broker. All brokers are legally bound to offer the most comprehensive assistance to their traders, but if no amicable resolution is found, both parties have the option of approaching a private court facilitated by the DIFC. All complaint resolution process and regulatory supervision is carried out independently through the DIFC and DFSA courts and is kept away from the regular judiciary system of the UAE. Therefore, every foreign investor can be assured of complete transparency of the legal proceedings without worrying about the interference from any other authority.
How To Verify The Authenticity Of Forex Brokers In Dubai
DFSA regulated brokers are listed in the official DFSA registry, which should be the most accurate and verifiable source for determining the authenticity DFSA Forex brokers. If you are not entirely sure about the DFSA regulatory status of a broker, the best course of action is to ask the broker or its representatives for a copy of licenses or ask them to provide an official link that validates the necessary licenses. Genuine brokers will always impart the licensing information, as all regulatory agencies require their member companies to provide all regulatory and licensing information to consumers upon request. DFSA regulated Forex brokers may not be suitable for all investors, especially considering the limitations on trading and the high amount of trading capital required for opening a trading account. DFSA brokers might also impose several trading restrictions to comply with the Sharia law, which can be detrimental to the outcome of a trading strategy. Only choose a Forex broker in Dubai if you are a resident of the country if you have access to a large trading capital, and if you are comfortable complying with the Islamic rules of Forex trading.