Forex is a global market that has become increasingly popular with technological advancements. If we take a look back over the past few years, we can see that the golden chances and good outcomes in the foreign exchange market have drawn a huge number of investors and dealers, making it one of the most lucrative sources of income. As a result, the forex industry is growing in Dubai, and the UAE’s financial district is one of the world’s top 10 fastest-growing locations for forex businesses! With so much growth, understanding how to start a forex brokerage in Dubai can be challenging—but this article will help you get started!
9 Fundamental Steps of Starting A Forex Brokerage in Dubai
- Select Economic Zone
You need to select an economic zone to start the forex brokerage. A mainland zone and a free zone are the two alternatives. These two economic zones have their own unique sets of rules, regulations, laws, benefits, and special requirements. Which economic zone is perfect depends on the needs and preferences of the businesses.
Dubai Free Zone Dubai Mainland Zone Authority Dubai Free Zone provides regional benefits. Free zone authorities and entities monitor it independently. Dubai Mainland is an economic zone monitored by a governmental Body; The Department of Economic Development (DED) Ownership to the Foreigners Offers 100% foreign ownerships. Offers complete control over business, but need to have a local sponsor for foreigners. Area of Business Have limited business areas. No Restrictions on business areas. Cost Starting a business in Dubai free zones depends on its type and size. Each free zone has its own charges, and certain Dubai free zones require minimum share capital, which increases company formation costs. Setting up a business in Dubai mainland might be expensive. You can create a business in Dubai mainland for AED 25,999 (MI included). However, the cost depends on the business type, number of shareholders, and office space rented. Cost-Effectiveness Free zones aren’t cost-effective because they limit company scope. Dubai mainland offers more business options and a future for the company than free zones.
- Research on Target Market
Having a clear idea of your target market is very important. Once you have an idea of who your potential clients are and where they come from, it will be much easier to choose the right place to register your brokerage company. The requirements for Forex licensing vary from country to country, so choosing the best jurisdiction is very essential. Tax provisions and legal terms make Cyprus a popular choice for forex business. To make a sophisticated decision, it is necessary to compare these different authorities. Make sure you thoroughly research, compare, and assess several jurisdictions before choosing the right one.
- Have enough start-up capital
Setting up a forex brokerage requires a handsome amount of capital. So, you must have enough financial resources to cover the business costs for over a year. FX Meta Tech will guide you to learn about the investment and capital requirements in the different economic zones. Besides that, it will also give you information related to the costs involved in the UAE.
- Partnership with a Liquidity Provider
Liquidity is the lifeblood of a Forex brokerage. So, making a partnership with a leading liquidity provider is very important. Before starting a new Forex brokerage in dubai, one of the most important steps is to select a liquidity Provider who satisfies both your needs and meets your trust.
Check out the following features before selecting the liquidity provider:
- Trustworthiness: Check if the LP is regulated or not.
- The proposal: Make sure the LP covers the Forex, commodities, indexes, bullions, bonds, stocks, etc.
- Execution: Selected liquidity providers execute transactions safely, accurately, promptly, and transparently.
- Pricing: The chances of gaining more profits increase if LP offers tight spreads.
- Get Forex Trading License
You have to visit Dubai Financial Services Authority (DFSA) to solicit the Forex Trading License. Having an independent legal framework. This authoritative body strictly looks after the UAE’s financial trading activities, exchange, international equities, etc.DSFA conducts a credibility test with the purpose of checking and verifying the reliability of the company. Once you pass the test, you are all set to get the license and operate a forex brokerage firm in Dubai.
Required Documents: You will need to submit the following list of documents to the authorities along with your application:
- Trade Name Options
- Passport Copies of Shareholders
- Visa Copies (Residence/Entry Stamp/Visit)
- Other relevant documents
As soon as the DFSA approves your application, it is necessary to open a local bank account and deposit a certain amount of money, around AED 50,000, in order to start trading activities. (According to 2020)
Around AED 32,000 is the average cost of a Forex trading license in Dubai.
Important Facts Related to a DFSA Forex Broker License in Dubai
- A physical office and local directors are a strict requirement
- Paid-up capital is set at 500,000 AED
- Leverage set at 50:1 for major currency pairs & gold
- Two types of license permissions: Dealing in Investment as Principal & Agent
- The application process is lengthy and will take a minimum of 12 months, if not more
- Connect with a Reliable Payment Gateway Provider
It is important to collaborate with payment gateway service providers you can trust. So, it gives the brokers the tools they need to compete effectively in the market and gives clients different ways to deposit and withdraw their money. As you will have to deal with money 24 hours a day, the first thing your clients and forex traders will do when they sign up with you or before they do is put money into their trading account. They will also sometimes take money out of the account. Therefore, you need a Payment Gateway that helps you manage deposits and withdrawals for your target customers.
The must-have features of the best Payment Gateway Providers
- Best price and fee rates.
- Accept multi currencies for payment processing.
- Advanced Security System.
- Hassle-free unlimited transactions.
You must have researched their preferred payment mode like Credit Card, Debit Card, Bank Transfer, PayPal, Neteller, Skrill, etc.
- Trading Platform Integration
Trading platforms give you all the assistance you need to have safe access to trade, research reports, stock price analysis, market news, etc., in real-time. Some well-known trading platforms are MT4, MT5, UTIP, cTrader, Ninja Trader, ZuluTrade, and many others.
Some standard features that a trading platform should have are:
- Professional analytics tools
- Integrated trading strategies
- Advanced charting features
- Forex CRM Solution
Customer Relationship Management (CRM) is a digital solution to ensure effective and efficient management of the entire spectrum of client relations. The right CRM would increase both revenue and ultimate efficiency.
A standard brokerage CRM must have three types of platforms. They are-
- Admin/Back Office: Brokers monitor, manage & operate the whole brokerage business activities at a single platform.
- Client Panel: Brokerage’s clients will carry out all their account & transactions related activities.
- Multi IB/ Partner Panel: Brokers can increase the growth & potential of the brokerage.
CRM will make the withdrawal, deposit, and internal transfer easy. Furthermore, when clients face difficulties, they can easily inform their broker through a support system called a ticket.
Benefits of Ideal Forex CRM:
- Streamline the Sales Procedures.
- Centralize Customer Information
- Follow Up on Customer’s Journey
- Collaboration Between Departments
- Additional Tools Integration.
- Go live
After completing the steps mentioned above, double-check the systems and technical aspects, along with the trading platform, mobile applications, and payment systems. Then you will be fully ready to launch your website.
Forex Brokerage with White Label Solution
If you don’t want to go through any hassle to start a Forex Brokerage, you can go for White label Solution.
Forex brokers should choose the option of white labelling instead of setting up their own forex brokerage from scratch because it is faster and easier. However, the marketplace is so highly competitive, and the entry barriers are so large that you have little chance of succeeding without an expert or proven provider who can offer the forex white label solution, either partially or as a whole turnkey solution package, particularly if you are a new entrant to the forex market.
In short, you can lease a part of the server from any business that provides such a service, or start a white-label company in exchange for a monthly charge plus a nominal set-up fee, to avoid any of the headaches and difficulties involved with setting up a forex brokerage on your own, from start to finish.
The benefits of Forex white label solutions are :
- Increase revenue and profits.
- Grow the reputation of the business.
- Improve client retention.
- Less costly than having a full-time license
- Easy to operate.
Best Forex brokerage solutions
As a broker, you need Forex brokerage solutions to run your business smoothly. When you’re looking for the best Forex brokerage services, make sure they offer:
- 100% system stability
- Integrated IB and MAM system
- Multi-assisting CRM trading platform
- Completely customizable securities settings
- Local time zones supported
- Fully open API
Setting up a forex brokerage business is a journey that is filled with both highs and lows. After you have gained an understanding of the process, it will be simple for you to launch and manage a profitable forex brokerage in dubai.
Hopefully, the guidelines will offer a comprehensive view of the process of launching a Forex brokerage in dubai.