Dubai, a bustling city in the United Arab Emirates (UAE), is home to one of the most advanced and powerful stock markets in the world. There are some things to know about if you are wondering for trading in Dubai. The Dubai Financial Market (DFM), established in 2000, is widely recognized as the best-regulated market in the Middle East and North Africa region, with strong international practices.
The UAE government has created a supportive environment for investors by simplifying the documentation and account opening process and ensuring a well-regulated and investor-friendly business climate. As a result, setting up a trading account and launching a business on the DFM trading floor has never been easier.
In this article, we will cover everything you need to know to start trade in Dubai and the UAE, including how to establish a trading account, the regulatory requirements you need to meet, and the benefits of investing in the DFM.
Table of Contents
Reasons to trade in Dubai
A Booming economy
The United Arab Emirates has a strong and varied economy that is not dependent only on oil, unlike many other countries in the Middle East. They have made progress in developing other industries such as tourism, finance, logistics, and construction. The UAE has a high per capita income, which means each person makes a good amount of money. They have built excellent airports, seaports, highways, and public transportation, making it an attractive place for businesses and investors.
Pro-Business Climate
The UAE has a business-friendly environment, ranked 16th out of 190 economies in 2020 by the World Bank’s Doing Business Index. The country has simple company incorporation, almost no taxes, and excellent infrastructure. Additionally, there are many opportunities to make money, whether you work online or offline, and the country has flexible trading hours.
Attracting Foreign Investors to trade in Dubai
To attract foreign investors to run business or to do trading with Dubai and the UAE, the Government have took Several Foreign Investors friendly policies. Below are some terms to know:
Taxation: The UAE has very relaxed tax laws compared to other countries. They don’t impose personal taxes, except for a flat 5% value-added tax
Ownership: Foreign investors are now allowed to fully own their companies in the UAE, as the Ministry of Economy permits 100% ownership.
Foreign nationals: Between 80% and 90% of the United Arab Emirates’ current workforce consists of individuals from foreign nations.
Trading in Dubai: Markets and Indexes Available
One of the main markets available in Dubai is the Dubai Financial Market (DFM). The DFM is one of the leading stock exchanges in the region, providing a platform for trading a wide range of securities, including stocks, bonds, and mutual funds. The DFM lists many of the leading companies in the UAE, such as Emirates NBD and Emaar Properties.
Another market available in Dubai is the Nasdaq Dubai, which specializes in trading equities, bonds, and Sukuk (Islamic bonds). The Nasdaq Dubai provides investors with access to regional and international companies, including those listed on the Nasdaq stock exchange in the United States.
In addition to these markets, Dubai also offers several indexes for investors to track the performance of specific sectors and asset classes. One of the most widely followed indexes in Dubai is the Dubai Financial Market General Index (DFMGI), which tracks the performance of companies listed on the DFM.
Other indexes available in Dubai include the Nasdaq Dubai Shariah Index, which tracks the performance of Shariah-compliant companies listed on the Nasdaq Dubai, and the FTSE NASDAQ Dubai UAE 20 Index, which tracks the performance of the 20 largest and most liquid companies listed on the DFM and Nasdaq Dubai.
Market information for trading UAE shares
The UAE stock market is known as the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX). These two exchanges together form the UAE stock market.
To start trading UAE shares, you will need to open a trading account with a licensed broker in the UAE. You can find a list of licensed brokers on the websites of the DFM and ADX.
Once you have opened a trading account, you can start buying and selling shares of companies listed on the DFM and ADX. Some of the largest companies listed on these exchanges include Emirates NBD, Emaar Properties, Abu Dhabi National Oil Company (ADNOC), Dubai Islamic Bank, and Dubai World Trade Centre.
It is important to note that the UAE stock market operates on Sunday through Thursday from 10:00 AM to 2:00 PM UAE time. Additionally, trading is closed on public holidays in the UAE. To stay up-to-date with the latest news and market trends, you can visit the DFM and ADX websites, as well as other financial news sources. It is also important to conduct thorough research and analysis before making any investment decisions.
How to Begin Trading in Dubai?
Dubai’s government is known for its desire to create a highly conducive business environment, and trading stocks in the United Arab Emirates is a simple process that reflects this goal. To begin trading in Dubai, follow these straightforward steps.
- Obtain Your NIN or Investor Number
The NIN, or Investor Number, is both your identity and a regulatory requirement for trading in Dubai. You can apply to the Dubai Financial Market (DFM) in one of three ways to obtain this number.
Option 1: Use the DFM App
DFM has recently expanded and updated its mobile app. You can use it to apply for your NIN, submit the necessary documents, and receive regulatory approval quickly. The entire application process can be completed in as little as three minutes, and your NIN will be delivered to you via SMS. To apply for the NIN, you must upload a scanned copy of your Emirates ID and take a selfie in the DFM app. You will also need to specify whether you prefer to receive dividends through an iVestor card or a bank account.
Option 2: Use Dubai CSD
If you prefer a traditional approach to documentation and lack a strong tech background, you can visit the Dubai CSD Investor Affairs Help Desk at the Dubai World Trade Centre, Sheikh Rashid Tower. There, you can submit a paper-based or electronic application form, and your NIN will be quickly verified and issued by SMS.
Option 3: Use a Registered Broker
The third option is to open an account with a broker who is authorized to act on your behalf. Ensure that the brokerage firm you choose is listed on DFM’s list of authorized brokerage firms. The application process and paperwork requirements are the same as before. You must fill out and submit the official NIN request form via your broker.
2. Open a Trading Account with a Broker
After obtaining your NIN, you can proceed to the next step and select a registered broker. It is critical to conduct thorough research before selecting a broker.
How to Choose the Best Broker for Trading in Dubai
DFM publishes and updates a list of authorized brokers with whom you can register for Dubai Stock Trading. DFM mandates that every trading member have a bank guarantee of at least AED 1 million (USD 272,000) and paid capital of at least AED 30 million (USD 8,168,000).
Consider the following when selecting your broker:
List of services: Some brokers offer a range of services, including equities trading, margin trading, and online trading. Others can provide more sophisticated trading options like margin trading, direct market access (DPA), and derivative trading. Choose a broker based on the level of service you require.
Technology: Not all brokers offer online trading platforms with real-time and historical pricing data or well-designed mobile apps. If you wish to trade independently without appointing someone to manage your portfolio, these are necessary.
Fee schedule: Broker fee schedules vary and can include transaction fees, account opening fees, account maintenance fees, and portfolio management fees. Check their individual websites before opening a trading account to understand all fees.
3. Start Trading in Dubai
After opening an account with a regulated broker, it’s time to begin trading. The DFM app or DFM e-services portal allow you to sign up for real-time data updates from DFM and receive pricing updates. The information includes instruments listed on Nasdaq Dubai as well as DFM.
Upon enrolling, you will have access to the following trading options:
Listed equities
You can choose from 116 listed stocks on DFM and Nasdaq Dubai. You can check and trade stocks on the DFM website using detailed market profiles and pricing information for each stock.
Derivatives
Experienced investors can diversify their portfolios and protect themselves against price changes by trading derivatives or futures with DFM. DFM has teamed up with eight brokers, three market makers, and four technology partners as derivative trading members. Contracts with 1-, 2-, or 3-month expiration dates are available for purchase at DFM.
Market-Traded Funds (ETFs)
DFM allows you to trade commodities, ETFs, and trading instruments with underlying assets. Trading ETFs offers several advantages such as low management costs, lower minimum investment requirements compared to mutual funds, and excellent liquidity.
Sukuk and bonds
Bonds and Sukuk are excellent choices if you are seeking a safe and risk-free return on your investment. Sukuk and bonds can yield returns of between 3% and 7%. At the time of writing, DFM had 175 Sukuk or Islamic bonds and 97 conventional bonds listed.
4. Keep Track of Your Portfolio While Trading Stocks in the UAE
Now that you understand how to use your trading account and a listed broker to buy and sell stocks, as well as other investment instruments in Dubai, always keep an eye on your investment portfolio.
Conclusion
Dubai offers a favorable trading environment, supported by the latest technologies and streamlined trading processes with the backing of local authorities. Apart from stock market trading, the UAE also provides unique investment opportunities, including web 3 technology investments for Dubai trade.
Are you interested in starting a business, obtaining a trade license, and engaging in commerce in Dubai? Contact us now to learn more.
