Why are brokers flocking to the United Arab Emirates?

In recent years, the United Arab Emirates (UAE) has opened up to the world of Western and global finance. Although this Middle Eastern country may seem inconspicuous in terms of area and population, its GDP is one of the highest, both in total and per capita.

With the emergence of free economic zones and independent financial centers in the UAE, global finance has been offered an essential gateway to the Eastern world and hitherto unexplored markets. This includes brokers and trading platforms in the forex and CFD sectors, so eager to seek regulation at the eastern end of the Arabian Peninsula.

The United Arab Emirates attracts brokers from all over the world

The regulatory situation for derivatives trading in the UAE is unclear, and several licensing bodies stand out on the ground. The main national entity is the UAE's SCA (Securities and Commodities Authority). This agency was created in 1999 and reports directly to the Minister of Economic Affairs. Administratively and financially, it remains independent.

However, the entire UAE is divided into seven emirates, with independent institutions that regulate financial market rules. The most popular destinations for brokers are Dubai and Abu Dhabi.

In the first, there is a special economic zone called the Dubai International Financial Center (DIFC). It is independent of federal law imposed by the SCA and is regulated by the Dubai Financial Services Authority (DFSA), established in 2005.

The capital of the United Arab Emirates, Abu Dhabi, is another financial center and a free economic zone in the country. Officially known as Abu Dhabi Global Market (ADGM), ADGM was established in 2013 and functions as a financial services regulator, registrar and local court to adjudicate related matters. to the investment industry.

While Middle Eastern countries can be a difficult market for Western companies, due to cultural differences and religious laws, the DIFC and ADGM economic zones have attracted many forex and CFD brokers to the market for years, who are looking for new markets for their services and new traders.

Over the past few years, the ADGM license has been granted to AvaTrade and Exinity, among others. XTB and Pepperstone and many others operate under the supervision of the DFSA.

It should also be noted that in 2019 ADGM introduced regulations governing the digital asset market, becoming an attractive venue for cryptocurrency and blockchain-related businesses.

News this year reveals that the entire country is gearing up for federal licensing of Virtual Asset Service Providers (VASPs for short) under the ACS Executive Orders.

“The United Arab Emirates has joined the group of leading financial centers globally and has been ranked as the most attractive financial center in the MENA region. The Middle East also seems to have a very positive future when it comes to the fintech, which supports our business goal of providing the highest quality solutions and technology support for our customers."

"The UAE is a fast growing and highly adaptable country that provides and regulates everything necessary not only for fair competition among FX/CFD companies. They also prioritize unique and exceptional services in the framework of a client-centric mechanism, in which investors benefit from a blend of exceptional experience and absolute confidence guided by the regulations and tools applied by the UAE", says Achraf Drid, Managing Director of XTB MENA.

UAE traders among the biggest spenders in the forex market

Cryptocurrency brokers and platforms are eagerly turning to the Middle East, not only because of its vast population (more than 390 million people inhabit this part of the world), but also because of preferential licensing terms and lower market saturation than in Europe.

The "depth of portfolios" is also essential. Historical data has clearly shown that traders from this part of the world regularly make the largest deposits into their trading accounts.

In August 2020, it was an average of $15,500 (for comparison, investors from Switzerland were depositing around $8,100 at the same time), and in September of the same year, it was almost $16,600. These numbers were also confirmed by data released early last year.