The Central Bank of the United Arab Emirates (CB UAE) is, among other things, in charge of supervising Forex companies and their activities. The Central Bank is also in charge of the monetary policy, banking, and credits with the goal of boosting the national economic growth. One of the Bank’s objectives is to stabilize the national currency Dirham by keeping the exchange rate fixed against the USD and ensure free convertibility of the Dirham into foreign currencies. The UAE Dirham was released in circulation in the 1970s, and it has been under the supervision of the Currency Board until the formation of the UAE Central Bank in 1980. The CB of UAE is authorized to grant licenses to brokerage companies dealing in currencies and commodities or intermediary companies in currency market transactions.
The CB UAE and Forex Regulations
Forex has become widely known even in the Islamic part of the world, assuming a dominant role in the UAE and most specifically in Dubai. Many broker companies from the West rushed to open a regional office in the attractive country to offer their services to the warm-hearted citizens of the UAE. If you are one of the adventurous traders who want to dive into the exotic world of the Middle East, then, there are several factors you should take into consideration. The first would be to find a licensed broker. The UAE market can sometimes seem unregulated, especially if you sign with an unregistered broker. Therefore, a CB or SCA registered broker is a must in the UAE. Those are the brokers with a professional attitude whose goal is to establish a long-term client-base. They offer professional services and walk the extra mile for their clients. The CB of UAE makes sure that registered brokers follow the law and abide by rules and regulations which emphasize costumer protection, healthy competition, fairness and transparency, and professionalism.
Specific Provisions for UAE Forex Brokers
Getting a license from the Central Bank of UAE is no easy task, as there are multiple provisions in place, making sure those brokers who do get licensed offer high-quality services and conduct their business in a fair and transparent manner. The bank works closely with the SCA (Securities and Commodities Authority) to make sure all the prerequisites are fulfilled prior to issuing a license. The most important among these requirements are:
- The intermediary (Forex broker) should be a UAE citizen
- At least 60% of the total paid-up capital in the company in question should be national shareholding
- The minimum capital ranges between one and three million dirham, depending on the scope of activities
These stipulations make it clear that regulated UAE Forex brokers undergo a lot of scrutiny, making sure they can provide proper services to their clients. Offshore brokers are welcome, but they need to have a domestic representative in the country, and, naturally, they have to prove their liquidity. A Forex broker without sufficient cash on hand is a disaster waiting to happen.
SCA Mission and Values
The SCA also plays an important role in the process of licensing and monitoring. It is their duty to make sure registered Forex brokers in UAE maintain compliance with the law and keep their business practices fair and honest. The SCA does everything its power to protect traders and improve overall financial markets by developing and adjusting relevant legislations to fit the circumstances. Values they hold in the highest regard include:
- Transparency
- Fairness and equity
- Partnership & cooperation
- Creativity
Together with the Central Bank, the SCA seeks to create a market where relevant information is known and easily accessible to everyone. This includes details about licenses as well as relevant info about any past or current problems a particular UAE Forex broker may have. They firmly believe that everyone involved in the trading process are entitled to have their rights fully protected, as long as they keep up with their obligations. Through key partnership and creativity, the SCA hopes to create a market that fits modern trading needs. This doesn’t only cover Forex, but capital markets in general. What this means for top Forex brokers in UAE is that they have to keep up with changes as well, adopting new business policies and adjusting to new regulations and market needs.
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A Job & a Hobby
As already mentioned the UAE are a very rich and stable country. This means that, unlike in some poorer countries, Forex trading is often regarded as a fun and thrilling hobby by traders from this country. Many of those who get involved with the market are not doing so to get rich (since they are rich already), but do it simply to pass some time and see if they can beat the odds. Of course, there are also those who took Forex trading in the UAE as their primary source of income. Just like anywhere else in the world, those who apply themselves to learning the skills and following the news excel, while others are struggling. What’s important to realize is the following. Given this kind of an environment, the UAE regulatory bodies have no need whatsoever to allow shady brokers into the market. They will grant licenses only to those Forex brokers who truly deserve them and who can prove their intentions are honest and their business model is a healthy one. If you are considering entering a foreign market, you will not regret if you sign with one of the UAE brokers registered with the CB of the UAE. The service they offer is excellent and well-regulated. Be one of the brave ones and participate in the evolution of Forex in the exotic country of the Middle East.