Making money on stock trading has long ceased to be the lot of the chosen. Achievements in the field of information and digital technologies have opened the doors to off- and online platforms to a wide range of users from different countries, including the Arab Emirates. This article contains information about the leading brokerage companies in Dubai, provides a brief overview of the local financial market, taking into account its strengths and weaknesses.
UAE Financial Market
Over the past decades, the Emirati economy has functioned as an international financial center. Constant deregulation and reorganization completely changed the financial sector back in 2000, which led to significant positive changes in the banking sector, insurance, shipping, and commodity markets.
DFM (Dubai Financial Market) and ADX (Abu Dhabi Securities Exchange) are the two main exchanges. Both are controlled by the SCA (Securities and Commodities Administration). Here are traded:
- agricultural products;
- mutual funds;
- islamic bonds;
- precious metals;
- foreign currency.
Advantages and problems of trading
The UAE means internal stability, low tax rates, and a loyal regulatory framework. The country has concluded cooperation agreements with many international regulatory bodies, which have set themselves the goal of standardizing and regulating ICOs. The economic data of the World Bank confirms the favorable rating of the financial environment of the region. The Principality ranks 44th in the credit rating according to the World Bank.
The United Arab Emirates provides good opportunities for people interested in investing in securities or real estate. Given the internal stability, favorable business environment, low tax rates, many banks, ordinary, as well as cryptocurrency exchanges have made the Emirates their headquarters.
At the same time, starting last year, the UAE introduced a value-added tax, which led to an increase in costs on the Dubai Stock Exchange.
The ongoing clashes with Qatar are also affecting the region’s economy, and so far there is no end in sight to the disputes. Brokers in the UAE suffered the most, as many international traders refused to cooperate with them.
What financial institutions are there in the UAE
Abu Dhabi Securities Exchange
Founded in 2000, it offers financial instruments such as funds, various types of securities.
Dubai Financial Market
Founded by the government of the country in 2000, it is engaged in numerous financial transactions, for example, ETFs, equity instruments, securities.
Dubai International Financial Center
Founded in 2002 with the aim of turning Dubai into an international financial leader. DIFC operates in a free economic zone.
Dubai Multi-product Center
Located in the free economic zone Jumeirah Lakes Towers, sells tea, diamonds, gold, pearls.
Dubai Diamond Exchange
It is a legal exchange closely associated with the World Federation of Diamond Exchanges.
Dubai Pearl Exchange
She is known for trading natural as well as artificial pearls.
Dubai Gold and Commodities Exchange
Trades stocks, currencies, metals, hydrocarbons.
Dubai Commodity Exchange
It is managed by the DFSA, provides futures contracts for goods and energy.
An internationally recognized stock exchange in the Middle East. Any corporations on this site immediately receive worldwide recognition and trust. Here they trade:
- sukuk (Islamic bonds), products based on Sharia;
- traditional bonds;
- futures contracts and derivatives;
Products for trading through brokers of the United Arab Emirates
Brokers (intermediaries) offer a wide range of products on their platforms and in trading applications.
Stocks and ETFs
Traders invest in their chosen British, American and global securities and ETFs, as well as in dividend stocks, in order to receive passive income.
CFDs (or contracts for difference in prices) allow traders to trade without being the owners of the items being traded. The intermediary is only required to place bets on the price movement. CFD trading provides leverage that allows you to open larger positions with small resources and make a profit, as if the purchase / sale operations were carried out with the involvement of large capital.
The cryptocurrency market has been the fastest growing in recent years. It continues to gain popularity at a rapid pace due to the significant profit that can be obtained with the help of virtual currency. Bitcoin worth 6 billion US dollars is traded around the world every day.
For the United Arab Emirates, cryptocurrency trading is a relatively new business, accessibility to them depends on local regulation. Since cryptocurrencies work with decentralized assets, things like interest rate changes, political instability, do not affect cryptocurrencies as much as national currencies.
Due to the high proportion of the young population with a growing income level and the wide adaptation of online technologies, the volume of buying/ selling cryptocurrencies in the principality is constantly growing.
The foreign exchange market is the most extensive trading space in the world. The daily trading volume is 5.1 trillion US dollars. This is a huge amount compared to other sectors of the financial market. Using Forex, you can earn money by buying / selling currencies, making a profit from fluctuations in their prices. Forex is becoming increasingly popular in the United Arab Emirates. Advances in online technology, wider Internet coverage, increased competition among brokerage companies have made trading more accessible, reduced costs.
- Cost reduction. Forex trading usually involves very low commission costs.
- Numerous options for transactions, including futures and spot.
- High liquidity. Compared to other stock markets, Forex has more participants. This leads to more liquidity, which is an advantage. The use of leverage also allows you to manage significantly larger positions with the help of small capital deposits.
- Central bank intervention. Central banks rarely interfere in Forex transactions. Traders place orders directly with their chosen interactive intermediaries, who then continue the process.
- Suggested currency pairs. There are about twenty-eight currency pairs available. This also includes the eight main ones from the Forex website. Traders who are able to cope with volatility can simply switch to other currencies without losing funds.
- The intervention of brokerage companies often leads to unfair commission fees, as well as a lack of transparency.
- Some advanced features require users to register VIP accounts of retail investors, which costs more.
- Sometimes, due to high leverage, increased risk factors are involved, that is, traders lose money quickly. Any uncertainty about the value of currencies can lead either to an increase in profits or to more significant losses.
- Prices may rise or fall in response to currency volatility, which leads to high risk.
- High risk of fraud.
How to choose the best stock broker
Below are some tips, using which you can choose an exchange intermediary that can best achieve your goals.
View the services offered
Each exchange intermediary offers its own package of services, the set of which may vary greatly. Some offer market research and analytics services, while others offer free webinars and educational materials designed to help you gain an advantage in your investments.
All this is important in order to be aware of current trading trends. However, choose the package that you need.
Look at their market reach
In Dubai, stockbrokers are usually members of local stock exchanges such as DFM or NASDAQ Dubai, which guarantees access to markets in Dubai.
Some intermediaries have access to international markets. Here the profit may be higher, but the commissions will also be high.
Before entering into a contract, decide whether you want to bring your investments to the domestic or international level.
Check commission schemes
Stockbrokers vary greatly in their commission rates. The bid is largely based on the additional benefits that the client receives. Here is a general rule: services with a large number of offers are more expensive, and with less – more accessible. The greater the market reach, the more you will have to pay. Also, firms can set a higher or lower minimum cost of the deposit, allow or prohibit making small orders.
The conclusion is this: choose schemes without options, for which you will have to overpay, but which you are not going to use.
Opinions of other clients always helps to form an initial opinion about the company with which you plan to conclude a contract. Reviews usually write about how comfortable cooperation is, describe personal experience of relationships, investment results, and other useful information. The more positive reviews describing successful examples of cooperation, the more confidence in the company.
5 best stock brokers in the UAE
There are 3 types of online stock brokers available to clients, offering different options for cooperation. Before making a choice, it is important to understand and analyze the entire range of services offered.
Below is a description of the 5 best online brokers with a comparison of their strengths and weaknesses. The best stock intermediaries were selected based on a detailed analysis of 133 popular brokerage companies with an assessment of their overall effectiveness in various categories:
- availability of stock markets/exchanges and products;
- transaction fees and commissions (trading, non-trading, deposits, withdrawals);
- a variety of platform tools (fundamental and in-depth market analysis, opportunities for profitability research);
- number of first-level financial regulators;
- availability of Islamic accounts (work on sharia);
- responsiveness of their customer support.
In addition, the pros and cons of each broker are revealed. An analytical conclusion with the main conclusions will simplify the decision-making process when choosing.
Rating 4.7/5. Holder of the title “Best Social Trading Broker 2022 among UAE users”.
Founded in 2017, eToro has gained more than 25 million users worldwide, making it one of the most reputable players in the industry.
Combining simple types of orders, as well as the functions of copying transactions, eToro is an interesting exchange intermediary for beginners.
In addition to access to 2,800 real shares, eToro users are entitled to trade 2,850 shares in the form of CFDs (contracts for difference), which means that they will profit from price movements.
The structure of the eToro commission for trading is average for the industry. Users do not pay commission, but must pay:
- spreads — vary depending on current stock market conditions, available in real time;
- night – $5;
- currency conversion services – 0.0050 points (for deposits other than US dollars);
- inactivity — $10 per month after 12 months of inactivity.
eToro’s own platform (Web Trader) is intuitive: it includes several options for charting, order types, as well as basic risk management tools, such as: stop loss, take profit and trailing stop. Clients also have the right to use the capabilities of the award-winning CopyTrader platform, which allows you to copy accurate trades, portfolios of professional traders.
In addition to demo and standard accounts, eToro works with Islamic accounts that allow users to trade only halal stocks.
eToro is licensed by three first-tier regulators, including the SEC, FCA, CySEC and ASIC, which makes mediation safe for the client.
- 0% commission;
- the industry’s leading social trading app;
- more than 5,000 trading symbols;
- access to fractional shares;
- low minimum deposit ($50);
- quick account opening;
- convenient mobile application;
- an industry-leading social media app;
- excellent opportunities for cryptocurrency transactions;
- responsive customer support.
- algorithmic trading is not available;
- Forex and CFD commissions are above the industry average;
- educational as well as research tools are limited;
- there are no advanced trading functions.
Rating 4.9/5. Due to the fast and reliable execution of transactions, access to more than 5,000 different international stocks and options on them, the absence of commission fees for securities transactions, this is the best choice for professional, active traders.
TradeStation users have access to a powerful platform that allows them to develop, test, optimize, track and automate various strategies. They have at their disposal a palette of tools for dynamic market scanning, advanced order management, and fully customizable charts. These functions are suitable for experienced traders, but will be difficult for ordinary investors.
As for the execution of orders, TradeStation guarantees high execution speed (0.040 seconds), reliability through the use of a combination of advanced routing technology and connection to dozens of stock, futures, options market centers.
TradeStation also offers a historical database of daily securities data for 50 years and intraday securities data for 28 years. This will be needed if the client wants to check strategies for a historical period.
- $0 commission;
- fast, reliable order execution;
- advanced trading platform, as well as functionality;
- extensive research section for fundamental analysis;
- support for algorithmic and exchange day trading.
- payment for inaction.
Rating 4.8/5. It offers more than 100 000 financial instruments, including 17 500 shares with the possibility of short sale, high liquidity, competitive commission structure. It is the best choice for professional intraday traders and institutional investors.
Customers have the right to choose between two main trading platforms:
- Trader Workstation TWS is an advanced desktop version suitable for experienced traders as well as institutional investors. It offers advanced trading tools, more than 100 different types of orders.
- Client Portal – the web version is suitable for beginners.
Both platforms have extensive research capabilities, intuitive design, and guarantee fast, reliable execution of transactions. There are various customization options for all types of stock traders, including dynamic charts, a full-fledged news widget, option chains, detailed information about the flow of orders.
The Interactive Brokers platform and features, compared to other brokers, allows trading without commission on the Lite account and a competitive commission structure in the amount of $ 0.0005 to $0.005 per share on the Pro account. There is no charge for withdrawals, inactivity or maintenance.
- everyday and advanced trading platforms and features;
- high speed of execution of transactions, reliability;
- the lowest commission structure in the industry;
- the margin rate on the loan on shares is 1.3%;
- best market coverage in the industry;
- convenient, intuitive mobile application;
- day trading, scalping, algorithmic and automatic trading are allowed;
- compatible features for regular and professional traders;
- responsive customer support.
- replenishment of the account is limited to bank transfer and credit cards in any currency. This may be a disadvantage if you want to use multiple options for depositing/withdrawing funds, including electronic payments.
Rating 4.5\5. It offers the largest selection of securities in the UAE (almost 50 000 types on the main and developing sites), therefore it is an interesting choice for professional traders looking for a variety of assets. Users have additional access to 40,000 securities, including crypto-ETFs and ETNs.
Both of Saxo Bank’s proprietary platforms (SaxoTraderGO and SaxoTraderPRO) guarantee the speed, reliability of transaction execution, the right to use extensive training material, as well as advanced securities trading functions. These include:
- integration with TradingView;
- possibility of automatic bidding via API;
- access to the trading floor;
- early access to IPO.
Operations are carried out quickly, reliably, and the level of liquidity is high.
Commission fees start at $1 per share, so they are competitive and may even decrease with an increase in trading volume. The company does not charge a commission for management or storage, but you will have to pay for inaction ($ 100 for 180 days).
Opening an account for residents of the Principality starts from $2 000. Muslim traders choose the option of an account without Islamic swaps, but they have the right to buy and sell securities of halal companies only.
- access to 30,000 shares and 19,000 CFDs on them;
- competitive fees from $0.001 per unit for active traders;
- advanced order and account type protection functions;
- winner of the title “Best in its class” in the field of education and research;
- high market reach;
- fully customizable trading features on SaxoTrader Go;
- advanced order and account type protection functions;
- clear mobile application;
- day trading, scalping, algorithmic, as well as automatic trading are allowed.
- high minimum deposit for clients;
- long setup procedure.
Rating 4.2/5. It is an intermediary with a full range of services, combining automated investment, independent trading, as well as consulting. Such a set of options gives users the opportunity to get many different services from one toolbar at a reasonable price.
The Sarwa trading platform (Sarwa Trade) allows you to trade more than 4 000 international stocks and ETFs, which can be bought in bulk or in smaller fractions (fractional). The platform has an intuitive design, offers simple options for buying / selling, watch lists, types of orders (market, limit).
Sarwa does not charge a commission for trading, converting, withdrawing funds or inaction. This makes Sarwa an inexpensive exchange intermediary, an interesting choice for traders who need low commissions.
No minimum deposit is required to open an account. UAE citizens have the right to make contributions directly in dirhams (local currency).
- zero commission;
- no minimum deposit required;
- an easy-to-use trading platform;
- regulated by DFSA and FSRA;
- local offices of the brokerage company in Dubai and Abu Dhabi;
- suitable for beginners and long-term investors;
- independent and automatic trading is allowed;
- free consulting;
- deposits in UAE dirhams are allowed (without conversion fee).
- research, educational tools below average;
- algorithmic bargaining is not supported;
- only traditional bank transfers are offered to replenish your account.