DFSA - Broker regulation in Dubai

DFSA

Dubai is the capital of the Emirate of Dubai and has become a business centre for the Middle East. In 2005, a special economic zone was created in the city under the name of the Dubai International Financial Centre (DIFC). A financial regulatory agency for the zone - the Dubai Financial Services Authority (DFSA) - was then created.

The DFSA's jurisdiction covers only the territory of the Dubai International Financial Centre, providing a regulatory environment that complies with international standards.

The DFSA's regulatory mandate includes asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodity futures trading, Islamic finance, insurance, an international stock exchange and an international commodity derivatives exchange. In addition to regulating financial and ancillary services, the DFSA is in charge of overseeing and enforcing the anti-money laundering (AML) and counter-terrorist financing (CTF) requirements applicable in the DIFC.

Dubai only allows DFSA forex brokers to conduct financial activities throughout the UAE. However, Dubai allows companies to set up shop in the DIFC to provide services to international traders. It is therefore possible for brokers to establish their brokerage activities in Dubai without being regulated by the DFSA. Here, though, traders aren't protected by the regulatory laws or supervision that are generally available to brokers regulated by the DFSA. As a result, some investors have encountered problems with brokers based in Dubai and have fallen victim to financial frauds/scams. It should be noted that this is only a problem with unregulated brokers, as no broker regulated by the DFSA engages in any scams due to the backlash from the DFSA and the authorities.

The DFSA's regulation of forex brokers

The DFSA imposes strict standards on forex brokers operating under its jurisdiction. These requirements include the regular submission of audit reports and the traceability of financial transactions, ensuring that the regulated entities comply with established standards.

To date, there is no specific compensation fund set up by the DFSA to protect traders in the event of a broker's barkruptcy. However, the DFSA does require brokers to maintain adequate levels of capital and adhere to strict risk management standards to ensure investor protection. It's therefore key that traders pick well-regulated brokers and find out what safeguards they have in place to protect their funds.

The DFSA limits the maximum leverage for retail forex traders to 1:20, which means that traders can trade up to 20 times their account balance. This measure aims to protect you by limiting the risks associated with high leverage.

How can I check if a broker is regulated by the DFSA?

To verify whether a broker is regulated by the DFSA (Dubai Financial Services Authority), you can consult its profile on the "PUBLIC REGISTER" page on the DFSA's official website. Here are detailed steps for you:

Identify the broker's details

1️⃣ Find the broker's licence or reference number (preferred), or simply use the broker's name. This information is generally available on the broker's official website.

2️⃣ Go to this webpage: dfsa.ae/public-register/firms. Using the search bar, enter the licence/reference number or the broker's name.

DFSA license

3️⃣ Once the results are displayed, review the details provided on the DFSA website. Make sure that the broker is authorised to offer the following services:

  • Futures for Arranging Deals in Investments.

  • Dealing in Investments as Principal.

  • Carrying on Authorised Financial Services with or for Retail Clients.

4️⃣ Make sure that the contact details shown on the DFSA's page match those given by the broker (website, email address, phone numbers, etc.).

Pepperstone DFSA

How do I settle a dispute with a broker regulated by the DFSA ?

If you have a dispute with a broker regulated by the DFSA (Dubai Financial Services Authority), do the following to try to resolve the problem:

1. Contact the broker directly

The recommended first step is to contact the broker directly. Explain your problem clearly and try to find an amicable solution. In many cases, an open and constructive discussion can quickly resolve your issue.

2. Call on the DFSA

If you're not satisfied with the response or solution proposed by the broker, you can contact the DFSA to ask for its help in resolving the dispute.

The DFSA will only consider complaints that are submitted in writing. Here's how to submit a complaint:

  1. Online form: Fill in the online complaint form available at the following address: dfsa.ae/make-enquiry#complaints.

  2. Mail: Send your written complaint to the following address: DFSA, Level 13, The Gate, P.O. Box 75850, Dubai, UAE.

  3. Fax: You can also fax your complaint to +971 (0)4 362 0801.

The DFSA acts as a mediator and helps to resolve disputes between regulated brokers and traders.

3. Going to court in Dubai

If neither of the first two solutions resolves the dispute, you may want to consider taking the case to court in Dubai. This option should be considered as a last resort, as it can be lengthy and costly. It is advisable to consult a specialised lawyer before taking legal action.

By following these steps, you maximise your chances of effectively resolving a dispute with a DFSA-regulated broker.

Conclusion

Choosing a broker regulated by the DFSA is a guarantee of security for your capital. The rigour of this body guarantees that the entities it supervises comply with the highest standards of trader protection and transparency. By taking the time to check the legitimacy of a broker, you minimise risks and allow yourself to trade with confidence.

Recommended forex brokers for traders living in Dubai:

BrokersRegulationIslamic accountsOfficial website
DFSA, FSCA, FCA, CySEC, FSAyesHF Markets website
FRSA, FSCA, JFSA, ASIC, CBFSAI, BVI FSCyesAvaTrade website
FCA, ASIC, CySEC, JSCyesAdmiral Markets website
FCA, ASIC, CySEC, BaFin, DFSA, CMA, SCByesPepperstone website
DFSA, CNMV, FCA, KNF, CySEC, BIFSC, FSCAyesXTB website
ASIC: Australia, BaFin: Germany, BIFSC: Belize, BVI FSC: British Virgin Islands, CBFSAI: Ireland, CMA: Oman, CNMV: Spain, CySEC: Cyprus, DFSA: Duba, FCA: United Kingdom, FRSA: Abu Dhabi, FSA: Seychelles, FSCA: South Africa, JFSA: Japan, JSC: Jordan, KNF: Poland, SCB: Bahamas

CFD trading involves a significant risk of loss, so it is not suitable for all investors. 74 to 89% of retail trading accounts lose money trading CFDs.

FAQ: Everything you need to know about the DFSA and broker regulation

What is the DFSA?

The DFSA (Dubai Financial Services Authority) is the DIFC's (Dubai International Financial Centre) independent regulator. It's in charge of supervising financial and ancillary services in this special economic zone created in 2005.

What is the DFSA's scope of responsibility?

The DFSA's authority covers the DIFC territory only. It applies international regulatory standards and supervises a number of activities, including:

  • Asset management
  • Banking and credit services
  • Securities
  • Collective investment funds
  • Islamic finance
  • Insurance
  • Commodities and derivatives trading
  • Compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) requirements.

Are forex brokers required to be regulated by the DFSA?

To operate in the United Arab Emirates, forex brokers must be regulated by the DFSA. However, some brokers based in Dubai are not under the supervision of the DFSA, which exempts them from its strict rules. Traders should therefore be cautious and favour brokers regulated by the DFSA to ensure better protection.

What is the maximum leverage authorised by the DFSA?

The DFSA limits the maximum leverage for retail traders to 1:20. This is to reduce the risks associated with high leverage.

Why should I choose a broker regulated by the DFSA?

A broker regulated by the DFSA offers:

  • Compliance with international standards.
  • Increased transparency thanks to regular audits.
  • Better protection against fraudulent practices.