Did you know that Dubai is home to one of the most advanced and powerful stock markets in the world? There are a few things to think about if you are thinking about trading in Dubai. The Dubai Financial Market (DFM), which was founded in 2000, is one of the Middle East and North Africa (MENA) region’s best-regulated markets and has a strong commitment to international best practises.
The UAE authority supports potential investors to help them get started with documentation and trading accounts in addition to a well-regulated and investor-friendly business climate.
Today, we will go over everything you need to know to start trading in the United Arab Emirates so you can launch your business endeavours on the DFM trading floor.
Reasons to Trade in Dubai
These significant elements may help you feel more confident as an investor in Dubai and the Dubai Financial Market.
A Robust Economy
United Arab Emirates has one of the most diversified economies in the world, with a non-oil GDP contribution of roughly 72%, unlike many other Middle Eastern nations. The UAE also has one of the highest per capita incomes in the world, and thanks to significant infrastructural development milestones, the nation is rapidly developing into an international business hub.
Pro-Business Climate
The International Doing Business Index, a comparative and ongoing study by the World Bank to assess a country’s business environment and regulations, ranked the UAE 16th out of 190 economies in 2020.
The nation also has a highly business-friendly environment with almost no taxes, simple company incorporation, and top-notch infrastructure. Whatever your trading hours may be, the UAE also provides a variety of opportunities to make money online or offline.
Attracting Foreign Investors with Open Arms
In order to entice foreign investors to settle and establish businesses in Dubai and the UAE, the UAE government has recently promoted investor-friendly policies. Here are some things to think about:
Ownership: The UAE Ministry of Economy now permits foreign investors to own a full 100% of their UAE companies.
Foreign nationals: Currently, between 80% and 90% of the UAE’s workforce is made up of people from other countries.
Workweek: To better align with global trade and business, the UAE government has changed the workweek for state-run offices from Sunday to Thursday to Monday to Friday as of 2024.
Taxation: The UAE has one of the most lenient tax laws in the world because it does not impose personal tax, with the exception of a flat 5% value-added tax.
Trading in Dubai: Markets and Indexes Available
There are two financial markets where you can trade securities, stocks, Sukuk, or bonds that adhere to shariah. Markets include:
- DFM (Dubai Financial Market)
- Nasdaq Dubai
Most of the businesses and companies traded on the Dubai Financial Market are based in the UAE. The Nasdaq Dubai, in contrast, functions as a global stock and financial market that enables you to trade both international and local instruments.
In Dubai, companies listed on the DFM are included in three important stock indices.
- The DFM General Index is a collection of indices that depicts the performance of the UAE stock market.
- Only shariah-compliant companies from DFM S&P/Hawkamah are included in the DFM Shariah Index (DFMSI).
- The UAE ESG Index (UAEESGI) includes top-performing, sustainable businesses.
Market Information for Trading UAE Shares
When trading in Dubai, you can access transparent pricing and industry data via the app or website of your preferred broker. Additionally, the most dependable and up-to-date data source for trading stocks in the UAE is the DFM App, which is accessible on Google Play and the Apple App store.
Each month, DFM publishes and updates the ranking of brokers based on trading volume and quantity so that you can always see how your broker is doing in relation to the market.
Dubai’s Basic Requirements for Trading
Basic requirements trading stocks in Dubai:
- You must first get a National Investor Number (NIN).
- The second step is to open an account with a broker on the DFM list.
The DFM and Nasdaq Dubai exchanges provide access to both domestic and foreign equities. Additionally, requesting a NIN through the Dubai Financial Market is very simple; all you need to do is complete an investor number request form and submit identification documents. You will receive your NIN as soon as the DFM has approved your investor number request form. Both the Nasdaq Dubai market and the DFM will continue to accept your NIN.
Step by Step: How to Start Trading in Dubai?
In the United Arab Emirates, trading stocks is a fairly straightforward process that shows the government’s desire to foster a highly favourable business environment. You can quickly begin trading in Dubai by adhering to these simple steps.
1. Get your NIN or Investor Number
The NIN, or Investor Number, serves as both your identity and a regulatory requirement for trading in Dubai. You can apply to DFM in one of three straightforward ways to get this number.
Option 1: Use the DFM App to apply for a NIN (the easiest and fastest way)
DFM recently updated and expanded the features of its mobile app. One can use the app to apply for your NIN, provide the necessary paperwork, and quickly get regulatory approval.
One can complete the entire application in as little as three minutes, and an SMS will deliver your NIN to you. You must upload a scanned copy of your Emirates ID and take a selfie in the DFM app in order to apply for the NIN.
One must also specify whether you want to receive dividends through an iVestor card or a bank account.
Option 2: Use Dubai CSD to apply for a NIN
What if you lack a strong tech background and still favour the traditional approach to documentation? If you physically visit the Dubai CSD Investor Affairs Help Desk at their location in the Dubai World Trade Centre, Sheikh Rashid Tower, they offer excellent services.
The paper-based or electronic application form can be signed and submitted. Your NIN will be quickly verified and issued by the authority via SMS.
Option 3: Use a registered broker to apply for a NIN
The third choice is to open an account with a broker who is authorised to act on your behalf. Verify that the brokerage firm you select is listed on DFM’s list of authorised brokerage firms.
The application procedure and paperwork requirements are unchanged from before. The official NIN request form must be filled out and submitted via your broker.
2. Open a trading account with a broker
Once you have your NIN, you can move on to the following step and select a registered broker. Make sure to conduct thorough research before selecting a broker.
How to pick the best broker in Dubai for trading
A list of authorised brokers with whom you can register for Dubai Stock Trading is published and updated by DFM. 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).
Here are some things to consider when selecting your broker:
List of services: Various brokers provide a range of services. Equities trading, margin trading, and online trading are a few examples of standard services. Few brokers may be able to provide you with 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 want to trade independently without appointing someone to manage your portfolio, you must have these.
Fee schedule: The brokers’ fee schedules vary and can include transaction fees, account opening fees, account maintenance fees, and portfolio management fees. Before opening a trading account, check out their individual websites and make sure you understand all the fees.
3. Start trading in Dubai
It’s time to begin trading after you have opened an account with a regulated broker. The DFM app or DFM eservices 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.
You will have access to the following trading options after enrolling:
Listed equities
You can currently choose from 116 listed stocks on DFM and Nasdaq Dubai. You can check and trade stocks on the DFM website using the 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. Eight brokers, three market makers, and four technology partners have joined forces with DFM as derivative trading members. Contracts with 1-, 2-, or 3-month expiration dates are available for purchase at DFM.
Market-Traded Funds (ETFs)
DFM also enables you to trade commodities, ETFs, and trading instruments with underlying assets. Low management costs, lower minimum investment requirements compared to mutual funds, and excellent liquidity are a few advantages of trading ETFs.
Sukuk and bonds
If you’re looking for a safe and risk-free return on your investment, bonds and Sukuk are great choices. Sukuk and bonds can yield returns of between 3% and 7%. At the time of this writing, DFM had 175 Sukuk or Islamic bonds and 97 conventional bonds listed.
4. Follow Your Portfolio When Trading Stocks in the UAE
You now 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 as your next task.
Conclusion
Regardless of your trading hours, you will quickly discover a favourable and business-friendly environment in Dubai once you begin trading. The latest technologies have been introduced, and the trading process has been as much as possible streamlined, with the support of the local authorities.
In addition to stock market trading, Dubai and the United Arab Emirates offer a variety of other innovative investment opportunities, such as investments in web 3 technologies for Dubai trade.
Interested in learning how to start a business, obtain a trade licence, and engage in commerce in Dubai right away? Send a message to us right away.
We are a core team of business consultants with in-depth knowledge of UAE company registration & business licensing. Investors coming into the UAE can also choose from a diverse range of company formation packages specially curated to suit your every need. Call us on +971 44081900, WhatsApp us on +971 507775554 or email us at [email protected].
