Last update: 31 August 2020
6 min read

SCA UAE Forex Regulation & Best Brokers

Are you looking for the best SCA UAE regulated brokers? If so, you’re in the right place. Our experts are here to share information with you including what the SCA is, what they do, and tips on finding the best SCA regulated brokers in the UAE.

Forex trading is a risky form of investment, so it’s important to safeguard your investment. One way to do this is to choose a regulated broker.

There are a number of well-known regulatory bodies like the FCA and BaFIN but, if you live in the United Arab Emirates, financial markets are regulated and governed by the SCA UAE. It stands for the Securities and Commodities Authority, and it has the authority to set laws and standards which participants in the financial markets must comply with. That includes SCA UAE regulated brokers.

Best and most trusted forex brokers in April 2024

Finding the best SCA UAE regulated brokers

The trading market is constantly developing in the UAE, which means new organizations are always popping up. The best brokers of last year are not necessarily the best this year.

If you want to find the best SCA UAE regulated brokers today, read the full guide below. We’ll explain exactly what to look for in a broker, with specific reference to the current trading climate in the UAE.

The Securities and Commodities Authority is working to improve market conditions

Forex brokers in the United Arab Emirates which are regulated by the SCA can feel confident the Authority is working to improve market conditions and bring them into line with more regulated countries. It does this in a number of different ways.
Cooperating with other authorities
From the very beginning, the SCA has worked with its counterparties around the world, aiming to boost cooperations and exchanging information. Countries they’ve worked with include Kuwait, Romania, Pakistan, Malaysia, Poland. Canada, UK, and South Africa.
Joining International Organization
The SCA is a member of a number of international organizations, including the UASA, GCC, IFSB (Islamic Financial Services Board), and ANNA (Association of National Numbering Agencies). It is also a member of the IOSCO (International Organization of Securities Commission). This international Organization started in 1983 and brings together security regulators from around the world. It is well-known for setting standards for the security industry, and more than 95% of the world’s securities markets are members.
Working with internal bodies
The SCA UAE has relations and cooperates with both local and federal bodies, professional institutions and educational agencies to ensure the local community have access to the best possible services. These include the Ministry of Finance, Central Bank of the UAE, Department of Economic Development, Dubai and the Dubai Gold and Commodities Exchange.

What is the Securities and Commodities Authority UAE?

Securities and Commodities Authority UAE logoThe Securities and Commodities Authority was set up in 2000 following a federal decree by the UAE President to set up a public authority in the country’s capital. It enjoys financial and administrative independence and is a legal entity in its own right. It does, however, report directly to the Economy Minister.

What are the SCA UAE’s responsibilities?

The main objectives of the SCA are to supervise and monitor the financial markets in the UAE. The ultimate goals of the organization are to:

  • Help develop a stable environment which will attract investment to the country’s capital market
  • Protect the rights of investors and other participants of the capital market
  • Encourage good practices by all market participants
  • Provide the best possible service in respect of quality, efficiency, and transparency

In the United Arab Emirates, regulation of brokers is a little different to the norm. The UAE Central Bank is the principal financial services regulator for brokers in the United Arab Emirates. But any companies which want to operate in the country are also subject to additional registration and licensing requirements at the federal and emirate levels. This means, if you want the best possible protection of your investment, you should be looking for SCA UAE regulated brokers. Additionally, you should be checking that the organization is regulated by the Central Bank.

An important feature to look for in SCA UAE regulated brokers

In the United Arab Emirates, the majority of the natural population are followers of Islam. When it comes to forex traders, there is a large amount of deliberation as to whether such a form of investment is possible in respect of Sharia law. There are some who say it is, and others who say absolutely not. Let’s look at some of the facts and you should be in a better position to decide for yourself.

Sharia law prohibits its followers from earning interest on their giving. If you apply this literally in the forex world, it applies to interest which it is possible to earn on trades. But a way has been devised which makes it possible for Muslims to trade forex and still be within the law.

Traders can avoid this grey area by opening an interest-free trading account (sometimes called Riba forex). Forex brokers generally charge interest on positions which may be left open overnight by a trader. It isn’t usually profit for the broker, but is charged to cover bank fees which apply when a broker has open positions overnight. These charges are called rollover fees.

How an Islamic account can help you trade lawfully

With an Islamic account, these fees are waived. In other words, swaps aren’t based on interest, as with an ordinary account. Instead, Islamic account holders are charged a service fee for lots or contracts left open overnight.

There are a number of SCA UAE regulated brokers who now offer this type of account, but remember – a number of other features should also play a part in your decision. These include the level of service that the best SCA regulated brokers in the United Arab Emirates offer, as well as trading conditions. If you are able to find a few which fit the bill, it would be a good idea to open an Islamic account with more than one and experience what is offered first-hand.

We will end by stressing the importance of choosing to trade with the best SCA UAE regulated Brokers. Only by doing so can you maximize the safety of your investment. If you are already considered the names of some brokers it is possible to check the status of a license at the website of the SCA. Also, perform due diligence and check whether the broker is regulated by the Central Bank of UAE.

How to check for SCA UAE regulation

So, you’ve found what you consider to the best UAE broker, but you’re not sure if they’re regulated by the SCA. What can you do?

First, you can take a look at their website. This is a quick way to find out if they’re claiming to be SCA UAE regulated. If they are, it will usually be clear via a message in the footer of their website. Or possibly an ‘About Us’ section.

The issue is that some brokers could mislead you, and post inaccurate information about their licenses. To avoid this, you can go direct to the source and check the official SCA website. There, you’ll be able to find out if the broker you’re thinking about using is being honest about their SCA license.

Frequently Asked Questions (FAQs)

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