If you have had any doubt about that the forex and CFDs brokerage space in the Middle East is different, today’s vibrant discussion during the MENA-focused panel on the iFX Expo should have dispelled that.
Well-versed panelists who are operating brokerages in the region shared with the audience key aspects and challenges related to succeeding to onboard clients in the MENA region. While some similarities with the rest of the world are present, like the preference of traditional major FX and indices, other aspects of the local industry are widely different.
Physical Office Space
All five panelists, which included Amana’s Chief Business Development Officer Ziad Melhem, CFI’s Deputy CEO Nidal Abdel Hadi, Equiti Group’s Head of Brokerage, Mohammed Isbeer, ATFX UAE’s CEO Ryan Tsui, and Elizabeth Rayment from Your Mind Media, highlighted one key aspect for success in the MENA region: physical office space.
Clients from the Middle East and North Africa have been very reluctant to trust brokers due to several bad actors in the past damaging the industry and local cultural peculiarities. In order to be able to gain the trust of customers in the MENA region, physical presence on the spot is a must.
2020 Global Market Outlook: How the “Known Unknowns” Can Affect CurrenciesGo to article >>
Having a place where the brokers meet their clients creates additional costs, but it is the most common way to gain trust, especially from higher-value clients. As in the rest of the world, a portion of the local population is looking to diversify away from traditional investments, and forex and CFDs have seen some traction in recent years.
All broker representatives sitting on the panel have confirmed that clients from the MENA region are very demanding. Advertisement should be strategic, and firms should avoid relying on general market studies used in the West, the panelists shared.
Apparently, the Middle East is a different story when it comes to client behavior. Customers are very conservative and shy away from companies which are not able to satisfy their needs easily. Probing the sentiment about a given company via social media could be a particularly useful approach when a broker is gathering information about the market.
Saudi Regulation and Top Markets
With the news that Saudi Arabia has come into the regulatory landscape of the industry just weeks ago, brokers are expressing interest in the new regulatory framework. That said, due to the early stage of the regulation, there is lack of clarity as to what are the rules and how firms can obtain an official permit to operate in the lucrative Saudi Arabian market.
A consensus emerged about the most attractive markets in the region among panelists: the UAE, Saudi Arabia, and Kuwait have been singled out as the top destinations to onboard clients. Egypt and Lebanon have also been mentioned to have great potential at a key time for diversification of client flows in the forex and CFDs brokerage industry.