The UAE is the fastest growing business and financial hub in the Middle East region. UAE’s broad based economy, pro-investor legal framework and world-class infrastructure is an attraction for all the types of investors around the globe including Forex Traders.
With approximately 85% of its population being expats, sending remittances to their home countries they are certainly a great potential for forex traders. With an aim to reap the proceeds of unique demographics, business friendly environment, tax benefits and pro-investor legal regime, a good number of global forex giants are gearing up to enter and capture the booming Forex Trading market in the UAE.
WHAT ARE THE MAIN OPTIONS?
Forex Trading is a regulated business activity in the UAE and the businesses aspiring to carry out the forex trading activities are required to establish a legal entity upon duly obtaining the approvals from the concerned regulatory authorities under the Laws and Regulations of the UAE. The UAE offers a variety of options of activities and venues for the traders when it comes to obtaining a license for the forex trading i.e. Forex Trading License in the Dubai International Financial Center (DIFC) and Dubai Multi Commodities Center (DMCC).
The DIFC license caters mostly for Forex companies that wish to be licensed in the UAE for providing Forex trading services and want to handle third party funds. The DMCC license is mainly for Companies and Individuals that wish to do Forex trading on their own funds.
FOREX TRADING LICENSE IN DIFC
DIFC is a premier financial hub based in Dubai. It offers a unique variety of benefits to its registered entities including the accessibility to regional wealth and investment opportunities, 100% foreign ownership, advantageous taxation system, international legal system based on the English Common Law and exemption from the local UAE Laws. All these benefits make DIFC, the premier choice of Forex Traders who intend to establish their presence in the UAE, GCC and Middle East.
DIFC allows the Forex Trading Services under the Category 3A License called the Brokerage License. Under Brokerage License, a Licensee can trade in forex, commodities and derivatives. DIFC Brokerage License allows for ‘Dealing in Investments as Agent’ and ‘Dealing in Investments as Principal’ (matched Principal basis).
Dubai Financial Services Authority (DFSA) is the supervisory body that oversees and regulates DIFC entities with the high risk activities including the Brokerage License. The base capital requirement for the brokerage License is USD$ 500,000, whereas, the actual capital requirement is based upon the Risk Capital and Expenditure based capital requirement.
FOREX TRADING LICENSE IN DMCC
DMCC is one of the prestigious hub for global trade in Dubai, UAE and the fastest growing free zone. DMCC is the outcome of strategic initiative taken by the Dubai Government to provide a marketplace with necessary physical and financial infrastructure to run a thriving commodities market. Entities based in the DMCC enjoy many advantages including but not limited to the 100% foreign ownership, advantageous taxation system and world class infrastructure.
DMCC offers Forex Trading activity under the head of Trading Proprietary account on regulated exchanges (DMCC). DMCC companies with such activity are allowed to trade their own money in FX, OTC and Exchange Traded Derivatives on regulated exchanges. In addition to the above, DMCC offers the activity of Trading in DGCX contracts (DMCC). Companies with such license are allowed to trade in DGCX listed contracts for client accounts under broker membership.
There is no specific regulatory body for DMCC companies opting for the Trading Proprietary account on regulated exchanges activity and have less stringent requirements. However, for companies carrying out the Trading in DGCX contracts (DMCC) business activity under DMCC must obtain approval from the Securities and Exchange Authority (SCA) and such approval is mandatory. The SCA shall be also acting as regulatory authority. The Capital requirement for the DMCC entities carrying out the Trading Proprietary account on regulated exchanges and trading in the DGCX listed contracts is AED 50,000 (Approximately USD$ 13,600).
Our Dubai team is equipped with professional specialists with knowledge of the UAE legal and regulation systems, enabling us to assist you to incorporate your proposed company and applying for the relevant licences and relieve you from the complicated preparation and application process.
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