Good Forex Bonuses
The United Arab Emirates (UAE) has highly restrictive laws that prohibit traders and investors from following several trading strategies that are adopted by professional investors from across the globe. For instance, the Securities & Commodities Authority of the UAE (SCAUAE) had until recently banned the concept of short-selling stocks, which is considered as one of the major components that facilitate the liquidity of the market. However, the SCAUAE understood the implications of banning short-selling of stocks and has gone on record to verify that SCAUAE allows short-selling, albeit by following several terms and conditions as stipulated by the authorities. SCA UAE Forex brokers also come directly under the Sharia laws of trading that determine the legality of Forex trading under Islamic rules. The UAE is a country that follows its traditions and beliefs to the core, and all UAE businesses must be able to satisfy the country’s requirements if they expect to tap into the rich UAE financial markets. UAE is home to some of the largest high-net-worth individuals in the world, and Forex trading is proving to be an extremely attractive proposition to traders from the UAE. Consequently, SCAUAE regulated brokers are issued various guidelines that enable the authorities to protect its investors from financial practices and consumer abuse. SCAUAE issues stringent penalties and heavy sanctions against any financial company that deviates from its prescribed code of conduct. The SCA UAE changes its regulations and provides new legislations to ensure that the UAE financial markets can keep with the current trends in the global financial markets. All SCAUAE Forex brokers are required to have a UAE national as its majority shareholder, and all legal rights as well as other operational guidelines are entrusted with the majority shareholder. It is the duty of the Forex brokers in United Arab Emirates to have a team of professionals at the helm of its operations that are capable of running the brokerage according to the regulations put forward by the SCAUAE. Brokers may offer Forex brokerage services and allied products to investors in the UAE after receiving the required licenses, as it is forbidden for any financial entities to deal with any financial product without the prior authorization from the concerned authorities.
The Licensing Requirements of SCA UAE Forex Brokers
SCAUAE regulated brokers should follow the following legal guidelines to be able to operate in the UAE financial markets:
1. All financial companies must be owned by a UAE national or a corporate organization that has its natural stakeholders as UAE citizens or other persons that are a part of the Gulf Cooperation Council. The SC AUAE regulated firm must ensure that its owners must have at least 51% of the capital and a majority stake in the company to be able to operate under the SCA license. All legal documents as well as agreements between partners and shareholders are drafted in Arabic and are subject to the laws of the UAE under its respective jurisdiction.
2. SCAUAE regulated brokers should hold at least $8.2 million in operating capital with an additional minimum of $5.5 million as bank guarantee. The bank guarantee is subject to increase according to the business volume of the broker and is determined by the SCAUAE according to the nature of operations of the firm. If a company has an international presence, the bank guarantee may be split up between the banks in the UAE and global banks, but brokers are required to hold at least $5.5 million as bank guarantee for ensuring the liquidity of its client positions. All capital, as well as bank guarantees, are to be held in UAE banks in its local currency, the UAE Dirham (AED).
3. Brokers dealing in commodities trading are expected to hold additional capital as well as be a member of the DGCX, and brokers are allowed 100% ownership through the DMCC or the DIFC, which are independent special economic zones provided for brokers to operate without the support of a local sponsor.
4. Financial companies under the SCAUAE are subject to routine audit reports, and these companies should have a detailed liquidation procedure in place to ensure that all investors are compensated according to the rules prescribed by the authorities. No bankruptcies or insolvency procedures are allowed without the proper authorization of the relevant authorities.
5. All members and employees of a firm must have adequate professional knowledge as well as skills to operate in the financial markets, and they should not have any criminal background or be banned by any institution in the UAE. SCAUAE requires its member firms to have a knowledgeable workforce that can provide high-quality services to its clients.
Are SCAUAE Regulated Forex Brokers Subject To Sharia Laws?
Forex trading involves several aspects that are against the Sharia law, which includes interest (SWAP) rates and bonuses that are considered to be against the core principles of Islamic beliefs. Therefore, Forex brokers have now created specific Sharia-compliant Forex trading accounts that are aimed at traders following Islamic ideals, and are widely adopted by t Muslim traders. The SCAUAE also require Forex brokers and other financial companies to follow Sharia laws while providing services to its investors. Therefore, Muslim traders can rejoice in the fact that all SCAUAE regulated brokers offer Sharia-compliant accounts without reservation, and several overseas brokers that have set up their business in the region also follow Sharia laws for their trading products.
Are Forex Brokers In UAE Suitable For International FX Traders?
There are no obvious advantages for traders to choose UAE-specific brokers unless they are looking for Sharia compliant trading accounts. UAE Forex brokers are also suitable for expats and other investors who are located in the country, which allows them to hold brokers accountable for their actions in case they indulge in any financial malpractice. On the other hand, UAE Forex brokers stipulate high margin requirements and require traders to invest heavily to be able to access the FX markets. The higher margin requirements may be deterrent to small retail traders who are unable to raise large funds to invest in FX currencies. Therefore, Forex brokers in the UAE are certainly more oriented towards catering to a wealthy clientele, which prevents smaller retail traders from taking advantage of the excellent regulatory protection offered by SCAUAE Forex brokers.
Keep Your Funds From Brokers Scams
Although UAE is home to high regulatory standards, several brokers take advantage of UAE’s special economic zones to trick traders into thinking that they are trading with a regulated broker. Some companies also trick unsuspecting traders by providing several incentives that attract traders on the pretext of ultimate riches, which will eventually lead to scams and financial frauds. Since it is impossible for the regulatory agencies to stay on top of such fraudulent activities, traders should be more aware of their rights and only choose regulated brokers that are specifically listed on the official SCAUAE website. If a broker is unable to provide legitimate information on its regulatory status, you should always stay away from such a company and move on to a regulated broker that can guarantee the safety of your funds.