Did you know that Dubai is home to one of the world’s most potent and sophisticated stock markets? If you’re thinking about trading in Dubai, there are a few things to consider. Established in 2000, the Dubai Financial Market (DFM) is one of the most well-regulated markets in the Middle East and North Africa (MENA) region, with a strong commitment to international best practices.
In addition to a well-regulated and investor-friendly business climate, the UAE authority also supports potential investors to help them get started with documentation and trading accounts.
Today we will discuss all you need to know to commence trading transactions in the United Arabic Emirates for the first time, so you can start your business ventures on the DFM trading floor.
Why Trading in Dubai
Here are some key factors that might boost your confidence as an investor in Dubai and the Dubai Financial Market.
Unlike many other countries in the Middle East, the United Arabic Emirates is one of the world’s most diversified economies, with a non-oil GDP contribution of around 72%. The UAE also boasts one of the world’s highest per capita incomes and the country is quickly becoming an international business hub through substantial infrastructural development milestones.
The UAE stood 16th among 190 economies in the International Doing Business Index in 2020, a comparative and periodic study conducted by the World Bank to evaluate a country’s business climate and regulations.
In addition, the country has a very pro-business environment with almost zero taxes, easy company incorporation, and world-class infrastructure. The UAE also offers many opportunities to earn money online or offline, whatever your trading hours may be.
Welcoming Toward Foreign Investors
In recent years, the government of the UAE has been fostering investor-friendly policies to attract foreign investors to settle and open businesses in Dubai and the UAE. Here are a few points to consider:
- Ownership: The UAE Ministry of Economy now allows foreign investors to own 100% of their UAE business.
- Foreign nationals: At present, approximately 80% to 90% of the UAE’s workforce consists of foreign nationals.
- Work week: Starting from 2022, the UAE government has adopted a Monday to Friday work week for state-run offices from its previous Sunday to Thursday work week, aiming to align more with international business and trading.
- Taxation: The UAE has one of the most favourable tax regulations globally, as the country does not have any personal or business tax requirement, apart from a flat 5% value-added tax.
Dubai Stock Trading: An Overview
Now that we know that Dubai is a great place to start a business or grow as a professional, let’s focus on how trading and the stock market work in Dubai.
One of the best things about trading in Dubai is that the country allows both locals and foreign nationals to open trading accounts and start trading in the available stock exchanges.
Trading in Dubai: Who is the Regulator?
Who is the UAE Securities and Commodities Authority? The UAE Securities and Commodities Authority (SCA) oversees the stock and financial market in Dubai and the UAE. The commodities authority has implemented world-class technologies and regulations to manage trading operations in Dubai.
Trading in Dubai: Available Markets and Indices
You will find two financial markets where you can trade securities, equities, Sukuk or shariah-compliant bonds. The markets are:
- Dubai Financial Market (DFM), and
- Nasdaq Dubai
The Dubai Financial Market primarily deals with UAE-based companies and businesses. In contrast, the Nasdaq Dubai operates as an international financial and stock market, letting you trade global and regional instruments.
There are three key stock indices in Dubai composed of DFM-listed companies.
- The DFM General Index: A set of indices that represents the general market performance of the UAE share trading
- DFM Shariah Index (DFMSI): Includes only shariah-compliant companies from DFM
- S&P/Hawkamah UAE ESG Index (UAEESGI): Includes companies that are sustainable and top-performing
You will find detailed performance data of each of the indices on DFM’s website.
Market Data for UAE Share Trading
You will find transparent industry and pricing data while trading in Dubai through your preferred broker’s app or website. In addition, the DFM App, available on Google Play and the Apple App store, is the most reliable and updated data source for trading stocks in UAE.
DFM publishes and updates the brokers ranking based on trading volume and quantity each month so that you can always check how your broker has been performing compared to the market.
DFM and Nasdaq Dubai, both of the stock markets of the UAE, let you do trading transactions during UAE business hours. You can trade from Monday to Friday in the trading hours mentioned below (in UAE local time).
- Continuous trading session: 10:30 – 14:45
- Pre-opening session: 9:30 to 10:00
- Pre-closing session: 14:45 – 14:55
- Trading at last: 14:45 – 14:55
- Market close: 15:45
In addition, the future market operates from 10:00 to 15:00, Monday to Friday, with the pre-opening session between 9:30 to 10:00.
Basic Requirements for Trading in Dubai
To get started with Dubai Stock Trading, you will need to fulfil two basic requirements:
- First, you will have to obtain a National Investor Number (NIN).
- Second, you will need to open an account with one of the DFM-listed brokers.
You can access local and international equities through the DFM and Nasdaq Dubai exchanges. Applying for NIN is also extremely easy, you simply need to fill out an investor number request form and supply proof of identity documents through the Dubai Financial Market (DFN). Once your investor number request form has been approved by the DFN you will received your NIN. Your NIN will remain valid for both DFM and Nasdaq Dubai markets.
How to Start Trading in Dubai: Step by Step
Trading stocks in UAE is a fairly straightforward process that reflects the authority’s willingness to create and foster a highly favourable business environment. By following these simple steps, you will be able to start trading in Dubai in no time.
Step 1: Obtain your NIN or Investor Number
The NIN or Investor Number is a mandatory regulatory requirement and your identity for trading in Dubai. There are three simple ways to apply to DFM and obtain this number.
Option 1: Apply for a NIN through the DFM App (the easiest and fastest way)
DFM has recently revamped and added many functionalities to its mobile app. The app allows you to apply for your NIN, submit the required documents, and receive regulatory approval shortly.
The full application process takes as little as three minutes, and you will receive your NIN by SMS. To apply for the NIN via the DFM app, you will need to provide a scanned copy of your Emirates ID and take a selfie within the app.
You will also have to provide your preferred method of receiving dividends – a bank account or iVestor card.
Option 2: Apply for a NIN through Dubai CSD
What if you are not too tech-savvy and still prefer the old-school method of documentation? Dubai CSD Investor Affairs Help Desk of the DFM Trading Floor provides excellent services if you physically visit them at their office in the Dubai World Trade Centre, Sheikh Rashid Tower.
You can sign and submit the paper-based or electronic application form. The authority will promptly verify and issue your NIN via SMS.
Option 3: Apply for a NIN via a licensed broker
Your third option is to register with a licensed broker and let them handle the process on your behalf. Make sure that the brokerage firm you choose is included in this list of licensed brokerage firms by DFM.
The application process and documentation requirements are the same as before. You will have to complete the official NIN request form and submit it through your broker.
Step 2: Open a Trading Account with a Broker
Once you have obtained your NIN, you can proceed to the next step and appoint a licensed broker. Make sure you do your research before choosing your broker.
How to choose the right broker for trading in Dubai
DFM publishes and updates a list of licensed brokers with whom you can register for Dubai Stock Trading. DFM requires all trading members to have a paid capital of at least AED 3 million (USD 817,000) and a bank guarantee of at least AED 1 million (USD 272,000).
When choosing your broker, here are some factors you should check:
- List of services: Different brokers offer different services. Examples of standard services include equity trading, margin trading, and internet trading. Only a few brokers may offer you some advanced trading features like derivative trading, direct market access (DPA), and margin trading. So, choose your broker depending on your service requirements.
- Tech facilities: Not all brokers have well-developed mobile apps and online trading facilities with real-time and historical pricing data. These are essential if you want to trade on your own without appointing anyone to manage your portfolio.
- Fee structure: The brokers have varying fee structures, including account opening fees, maintenance fees, portfolio management fees, and transaction fees. Visit their individual websites and make sure you understand all the fees clearly before registering a trading account.
Required documents to open a trading account in Dubai
Each broker has a trading account registration system, which you can find on their website. Here is a typical checklist of required documents that you will need to provide when opening your trading account:
- Copy of your valid passport
- Copy of your Emirates ID (both sides)
- Copy of valid residency visa for UAE (foreign nationals) or copy of the family book (UAE nationals)
- Official bank letter or statement showing your valid local or international bank account number (IBAN).
Step 3: Start Trading in Dubai
Once you have registered your trading account with a licensed broker, it’s time to start trading. You can register for real-time data updates from DFM and get pricing updates from the DFM app or DFM eServices portal. The data covers instruments enlisted in both DFM and Nasdaq Dubai.
Once enrolled, you will get the following trading options:
There are at present 116 listed equities in DFM and Nasdaq Dubai for you to choose from. DFM’s website includes a detailed market profile and pricing data for each of the equities for you to check and trade.
The information you will get about the listed equities includes:
- News and disclosures
- Top shareholders
- Daily summary
- Historical data
- Financial reports
- General meeting information
- Key corporate actions and events
- Trading summary
Seasoned investors can trade with derivatives or futures with DFM to diversify their portfolios and hedge against price changes. DFM has partnered with eight brokers as derivative trading members, three market makers, and four technology partners. You can buy contracts at DFM with expiry dates of 1, 2, or 3 months.
Exchange Traded Funds (ETFs)
DFM also allows you to trade ETFs, trading instruments with underlying assets and commodities. Some benefits of trading ETFs include low management fees, lower minimum investment requirements compared to mutual funds, and excellent liquidity.
Bonds and Sukuk
Bonds and Sukuk are excellent investment options if you want a safe and risk-free return. You can expect returns of between 3% and 7% from Sukuk and bonds. DFM has listed 175 Sukuk or Islamic bonds and 97 conventional bonds at the time of this writing.
Step 4: Follow Your Portfolio when Trading Stocks in UAE
So, you know how to buy and sell stocks and other investment instruments in Dubai with your trading account through a listed broker. Your next task is always to keep an eye on your investment portfolio.
The DFM app is a comprehensive solution from DFM to help you with these activities. The app provides you with the following services:
- Market performance update
- Up-to-date pricing information
- iVestor card application, activation and management
- Portfolio view
- Access to eServices
- The market information of different financial instruments, including equity, futures, ETFs, bonds and Sukuk.
- Watchlist creation and management to stay updated about specific stocks
- Company information and details
While we discussed portfolio tracking of your Dubai Stock Trading account, there are quite a few crypto portfolio trackers that you can use to stay up to date about your crypto trading accounts.
What is an iVestor Card?
The iVestor card assists you with your trading transactions on the DFM trading floor. iVestor card can enrich your entire trading experience when trading in Dubai. It’s like a Visa-supported debit card that allows you to receive dividends and profits from a trading portfolio instantly.
You can then use the card balance to any Visa-supported merchants or withdraw money from ATMs in the United Arabic Emirates and abroad. You can also add funds to the iVestor card from the DFM app.
Wrap Up on Trading in Dubai
Once you start trading in Dubai, regardless of your trading hours, you will soon find a favourable and business-friendly environment. The local authorities have supported bringing in the latest technologies and streamlining the trading process as much as possible.
Apart from trading in the stock market, you will also find many other innovative investment opportunities in Dubai and the United Arabic Emirates, such as investment in web 3 technologies for Dubai trade.
Wondering how to get a trade licence, set up your business, and start trading in Dubai today? Shoot us a message right away.