Overview of Forex in the Middle East
The oil rich Middle East has been a market most FX brokers want to capture, with stong economic growth, per
The oil rich Middle East has been a market most FX brokers want to capture, with stong economic growth, per capita incomes and cash to play with!
The region has a very diverse uptake in financial markets; some countries have been pioneers in the field since the 70’s whereas other nations are finally entering electronic trading.
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The central bank of Jordan was the first to intervene on the OTC FX market and put a blanket ban on all brokers spot FX and CFD, we look at what brokers can do to set up in this mature trading environment.
Leading brokers such as FXCM and Saxo have taken their strides and established regulated offices in Dubai, Dubai has been a safe destination for brokers across the Middle East and South Asia as it has a developed offshore market and free trade zone as well as an internationally recognised regulated environment..
Dubai has been positioning itself as a financial hub for the entire region and is setting the scene for well governed stock and commodities exchanges. The authorities regulate FX as an asset class however there is confusion as to what regulation the DIFC or the Emirates Securities and Commodities Authority actually govern.
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The cat and mouse race has been spreading across the GCC, Bahrain another sovereign state looking for foreign fame as a financial epicentre opened its doors to FX regulation, however the leading UK and US brokers have preferred Dubai.
Local banks haven’t been shy in offering margin based products, we look at what the banks are offering and where there is space for more whitelabel’s.
Forexmagnates along with industry professionals looks at the history, the regulations and the opportunities this pot of gold offers.
The report stretches back to the early days of FX and highlights the key factors affecting growth and trading activity in the last decade.
The full report is available in the latest quarterly report.
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Mostly Middle East Investors to trade in Forex Market but due to Islamic reason most of the investor are away from the FX trading. They are looking for a Muslim broker who offer them Islamic Forex Account according to the Shariah Law.
“Leading brokers such as FXCM and Saxo have taken their strides and established regulated offices in Dubai…” That’s not entirely accurate … FXCM did not set up a regulated office for Forex in Dubai, they have a DMCC company that does not regulate Forex. They only use it as a call center and they force clients to sign agreements under FXCM MENA which is based in Lebanon. SAXO on the other hand did setup an office in DIFC and tried to operate under DFSA regulation but unfortunately they were never granted a full retail license. They only got one that… Read more »
Nasir, your right; the element of Riba is quite important to many investors in MENA however it is known to be abused by the carry traders. MC – you are definitely correct the scenario in Dubai and Middle East in general is not clear, i have personally met leading law firms and regulators who have tried to clarify what exactly is regulated if any and to whom. In so far as FXCM regulated under DMCC, DMCC have their own principles and procedures which aren’t like FSA but give traders some security. We will be analyzing volumes and exact regulations in… Read more »
Many brokers now offer swap-free accounts. But I’m sure local servers/local language helps acquire customers.
Volume is not great or even growing significantly for any of the larger global brokers with offices in the region. As long as any of the larger local bank or brokers are not entering the market it will not take off big time. In 2007 one of the larger brokers in Dubai; Shuaa bought Orion (probably the largest local Marging FX player) but nothing happened. Accordingly to rumours a vast majority of the volume steams from expats in the region and not locals ?. Qatar will be the next place to open offices – the global brokers will probably leave… Read more »
Forgot to tell that ADS in Abu Dhabi should be doing quite well ?, But again – my guess is that volume comes from outside the region.
But if i had to put my money on a broker in the region I would put it on ADS over FXCM, Saxo ……… Being local means something even though most of the people there are Brits, Germans and Danes??
If you dig deeper into ADS you will find that it is heavily involved in Squared Financial, they are basically one and the same. The plan was that at the beginning ADS would be a WLP of Squared and then as this grew the WLP would be reversed in time. The majority of ADS client base is imported, this being the sales traders that work there have to bring in their own book…no clients then no job after a period. While this is all good for a short term basis and also reflects good on the bottom line volume it… Read more »
Guys … just to clarify a few points. I am based in the UAE. I work for a financial service company and I know the local rules and regulations. They are very very clear. DMCC does NOT regulate forex. I have spoken to the head of licensing of DMCC and they told me that they force companies that setup there sign a document that specifically says that they will NOT do any forex. So not only is what FXCM doing NOT legal and NOT regulated … they are knowingly deceiving clients by claiming they are regulated and also knowingly lying… Read more »
Also on the subject of ADS: I know the company very well (they tried to recruit me twice) The good stuff: ADS does have very strong backing and very deep pockets because the main shareholder is part of the Abu Dhabi Royal family. Thats how they got the central bank license and that’s how they could afford to put up the necessary capital.. They also headhunted some high profile guys for the top management positions. The bad stuff: All their junior/ middle management staff are people they had to recruit locally (in the UAE) and its the sort of bottom… Read more »
I know ADS inside out as I have been working there. All the above comments are correct. They are not doing any good. no volumes, no clients… it is just a fancy company with no business. They have the money they will spend it and then the will shutdown. They are not doing any real marketing to attract new business, relying on the employees they bought to bring their own clients but everyone knows except them that this will not work.