In the world’s financial market Dubai plays a significant role. As this city is ruled by strict religious standards, here Forex brokers must follow the various Islamic laws the purpose of which is to correspond to the religious beliefs.
But this city is tolerant and liberal in giving some opportunities for foreign businesses to establish their companies in a comparatively nontaxable climate. In fact, when Forex trading has delighted UAE bankers, the Government of Dubai has established an autonomous Authority to regulate financial businesses.
The financial regulatory agency, Dubai Financial Services Authority (DFSA), started its activity 17 years ago, its powers are vested at the Dubai International Financial Center financial-free zone. For potential investors, this leading financial hub for the Middle East, Africa, and South Asia is one of a few opportunities to start a business in financial sphere there, with 100 % foreign ownership. As a rule, a major stakeholder in all UAE companies must be a local citizen.
The DFSA Regulation
The DFSA follows the international regulatory standards. The regulatory regime is similar to the regime applying in the US and the UK. In many ways, the DFSA tooks a similar approach as applied by the Commodity Futures Trading Commission and the National Futures Association. In addition, it is worth mentioning, that the DFSA and the DIFC conclude Memorandums of Understanding with such reputable jurisdictions as the UK, the US and Cyprus. The dealers may conduct activity pursuant to the guidelines of the aforementioned jurisdictions.
There are some limitations such as higher minimum margin (from 2% to 5 %), lowering the leverage to 1:20-1:50, restriction on trading with Islamic traders and others.
All dealers regulated by the DFSA are obliged to give a risk disclosure statement and they are permitted to offer income statements only to officially agreed bankers. It is allowed for retail Forex traders to control no less than $1 mln in trading securities, but they shouldn’t take part in any commercial or business activities that include the currency of UAE. All regulated businesses must follow the jurisdiction instructions and the UAE Islamic terms. To ensure the correspondence of financial institutions to the norms, each Forex broker should provide regular audit and financial operations reports.
The DFSA obliges to adhere to strict AML/CFT regime. The DFSA regulated brokers are expected to adhere to fair rules of competitiveness. This gives proof that every company follows the protocol according to their license providing fair and transparent marketing. If any company breaks the rules, it will be subject to penalty.
Customer Protection
A comprehensive complaint handling procedure is provided by the Dubai Financial Services Authority. If customers fail to resolve any discrepancies with their dealers, it allows them to address the claim to higher authorities. Brokers are obliged by law to provide full support to their traders, but if no resolution is found, both parties are allowed to approach a private court. The process of complaint resolution, as well as regulatory supervision, is performed independently thought separate DIFC and DFSA courts. Thus, full transparency of the legal proceedings without the involvement of any other administration is guaranteed.
Eternity Law International will provide you with expert advice on obtaining a forex broker license in a suitable jurisdiction. If you have any questions or need advice on obtaining a forex broker license, call us at the phones indicated on the site, or write to CRM form, our specialists will answer you online.