SCAUAE Forex Regulation & Best Brokers
Forex trading is a risky form of investment. Which is why it is important to safeguard your investment as best as you can. One way to reduce the likelihood of falling victim of fraud or scams, and to safeguard your capital, is to only choose a regulated Forex broker. There are a number of well-known names in the world of Forex regulation such as the FCA, BaFIN, CFTC, and CySEC, but what about the regulatory body if you happen to live in the United Arab Emirates? Financial markets in the United Arab Emirates are regulated and governed by the SCA UAE. Otherwise known as the Securities and Commodities Authority UAE. The SCA has authority to set laws and standards which participants in the financial markets must comply with. And that includes SCA UAE regulated brokers. By working with financial providers the SCA is able to protect investors and deliver the best possible trading platform.
Introducing the Securities and Commodities Authority UAE
The 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. The main objectives of the SCA are to supervise and monitor the financial markets in the UAE. The ultimate goals of the organization are:
- Help to develop a stable environment which will attract investment to the country’s capital market
- Protecting the rights of investors and other participants of the capital market
- Encourage good practices by all market participants
- To provide the best possible service in respect of quality, efficiency, and transparency
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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 Forex 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. Which means if you want the best possible protection of your investment you should be looking for SCA UAE regulated brokers and also be checking the organization is regulated by the Central Bank.
An important feature to look for in SCA UAE Forex 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. This means if you apply this literally in the Forex world it applies to interest which it is possible to earn on Forex trades. A way has been devised which makes it possible for Muslims to trade Forex and still be within the law. It is possible by opening an interest-free Forex trading (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. With an Islamic account the interest charges 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 a Forex broker in the United Arab Emirates offers, 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.
The Securities and Commodities Authority are 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 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. 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. We will end by stressing the importance of choosing regulated Forex Brokers in the UAE. 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.