The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.
When choosing a broker, one of the most important factors to consider is whether it is regulated. If you open an account with a broker that operates under license from the Dubai Financial Services Authority (DFSA), you’re heading in the right direction for safer trading. A harsh reality experienced by all too many traders is that the sector, unfortunately, attracts scams and scammers. One of the most common risks is wiring funds to a broker that promises incredible returns but doesn’t even return your funds.
Making a paper profit and not being able to claw back your funds is a painful experience, which is where regulators such as the DFSA step in. The DFSA is the independent regulator of financial services conducted in or from the Dubai International Financial Centre (DIFC). Its mandate covers asset management, securities, collective investment funds, banking, trust and custody services, Islamic finance, commodities futures trading, an international equities exchange and an international commodities derivatives exchange. Founded in 2004, it has built a reputation as being an internationally-recognised regulator, overseeing the financial markets to ensure business is carried out in a strong and fair manner.
Pepperstone Financial Services (DIFC) Limited is authorised and regulated by DFSA.
DFSA Reference Number: F004356.
Address: Unit PL-CT-00-15-OF-2A, Level 15, Currency Tower 2, DIFC, PO 482087, Dubai, UAE
Swissquote MEA Ltd. is regulated by DFSA with DFSA Reference Number: F001438.
Address: Office No 3, Level 9, Currency House Building, Tower 2, DIFC, PO Box 121364, Dubai, UAE
Henyep Capital Markets (DIFC) Limited is regulated by DFSA with DFSA Reference Number: F000048.
Address: Tenancy 903, Level 9, Liberty House, DIFC, PO Box 506540, Dubai, UAE
IG Limited is regulated by the DFSA with DFSA Reference Number: F001780.
Address: Units 2 & 3, Level 27, Al Fattan Currency House, Tower 2, DIFC, PO Box 506968, Dubai, UAE.
HF Markets (DIFC) Ltd is authorised and regulated by the Dubai Financial Services Authority (DFSA) under licence number F004885.
Address: Unit Office 612, Level 6, Index Tower, DIFC, PO Box 507274, Dubai, UAE.
FxPro Global Markets MENA Limited is regulated by DFSA with DFSA Reference Number: F003333.
Address: Unit 1010, Level 10, Index Tower, DIFC, PO Box 507126, Dubai, UAE
Amanah Capital LLP is regulated by the DFSA with DFSA Reference Number: F003269.
Address: Office 10, Level 5, Building 3, DIFC Precinct, DIFC, PO Box 15, Dubai, UAE.
AxiCorp Financial Services Pty Ltd is regulated by DFSA with DFSA Reference Number: F003742.
Address: Office 105, Level 1, Tower 2, Al Fattan Currency House, DIFC, PO Box 507299, Dubai, UAE.
Well-run brokerage firms compete with each other in all sorts of ways. Some are super-aggressive on pricing, while others offer superior trade support. A newbie looking to find the best broker for them will consider a range of factors including the amount of free research, accessibility to customer services, markets on offer, the functionality of the trading platform and reliability of execution.
That competition among brokers is great news for the end-users who get great service and low costs as a result. Reputable firms with a unique selling position have a chance of being a long-term success. Regulation can help in two ways:
The DFSA’s role is to regulate companies and individuals operating in the financial services sector, and enforce laws to protect traders and investors.
If your chosen broker is licensed by the DFSA, you can take comfort from the following features associated with that regulator:
Leverage terms by asset type for DFSA regulated firms supporting retail CFD trading:
The above list of what the DFSA does to regulate the financial markets only scratches the surface. A visit to its site provides more detail, but it’s clear to see, the regulator is serious about ensuring the DIFC operates in an orderly and efficient manner.
There are several laws and religious customs relating to Shariah law that have to be followed. Brokers have to operate in a manner that is in line with Islamic beliefs.
In the United Arab Emirates (UAE), only DFSA brokers can carry out financial activities. It is illegal for any company to offer any services to UAE residents without obtaining the necessary licence.
There are a lot of hoops to jump through for any firm that wants to gain and keep a DFSA licence. The application process itself takes months and involves a lot of form filling. The onus is on the broker to demonstrate that it has a compliant business model.
Applicant firms must ensure its staff are not on the DFSA blacklist and are have the skills and experience required to run the business.
After gaining the licence, there is more work and expense. Licensed firms are required to satisfy DFSA reporting obligations and keep up to date with new rule changes.
Any firm wanting to be DFSA-regulated needs to be prepared to invest heavily in the application process and ongoing reporting. If costs are to be recouped over the long-term, then the broker needs to have a good chance of success and that means they need to have many aspects that will attract clients.
It’s a win-win. The process means that brokers need to be both safer and better. All things considered, it appears surprising that some retail investors still lose money by using fraudulent brokers who are unregulated.
There is still one challenge left. Given that unregulated brokers are not an option, there is still the question of considering the pool of brokers who are DFSA regulated. This requires getting to know more about them and how they might fit your type of trading.
One way is to open an account with a DFSA-regulated broker. It is not only safe but will help you learn more about trading and what each broker offers. There are no-strings, so there’s no harm in shopping around until you find a best fit.
It’s worth noting how much effort DFSA-regulated firms put into ensuring they operate in full compliance with the rules. The main reason they do this is that it’s an obvious selling point to potential clients. Those who are new to trading, in particular, can take confidence from using a DFSA regulated broker.
The protection that applies is extensive and always changing. The good news for traders is that keeping up to date with new rules is down to the broker. Clients can instead look for the rubber-stamp of approval and focus on developing their trading skills.
The situation is constantly changing and new firms such as XTB have issued statements stating they are also in the process of applying for a license.