#How the globalization of financial markets has influenced forex trading in the UAE

The rise of globalization around the world has brought great economic freedom and prosperity to countries around the world and the United Arab Emirates has benefited greatly from this economic growth. 

While the country is rich in oil resources, this has not been the sole driver of the UAE economy, with the country emerging as one of the most business-friendly countries in the world.

Many forex and stock brokerage firms have set up offices in the UAE – tapping into a growing market and operating in a favorable environment. 

Brokers in UAE have seen major growth spurts in the past few years, which was further accelerated by the Covid-19 pandemic and remote workers trying their hand at trading during this period.

When discussing the effects of globalization on forex trading in the UAE, there are a few key dimensions that need to be considered, which we will discuss further in the following sections. 

Effects of globalization on the UAE forex market

Globalization has greatly simplified the access to capital markets, which also includes the foreign exchange market. 

Traders from different countries can now access forex brokers that are based overseas, which increases the amount of capital flowing into the market.

Forex brokers in the UAE can now offer their services to a large audience of traders around the world, which positively affects the bottom line of these companies. 

Technology and Innovation

As the world became more globalized and interconnected, forex brokers from developed countries could now bring their technological knowledge to emerging economies, which meant that the UAE could benefit greatly from the digital channels and services that were standard for brokerage firms based in other countries.

This exchange of technical knowledge allowed UAE firms to take advantage of existing know-how and accelerate their growth in the region. 

Collaboration between brokerage firms and tech companies, such as white labels, gives brokers the opportunity to adopt digital solutions at low costs, which also reduces the barriers to entry on the UAE market. 

Regulatory flexibility

The regulatory environment surrounding the global forex market is constantly evolving, which creates opportunities for firms in the UAE, as the country is generally business-friendly and not characterized by excessive regulation and licensing red tape.

This gives UAE firms a competitive advantage and the country an opportunity to attract international brokerages to move to the country and base their operations there. 

Many retail brokers have moved to the country to take advantage of the regulatory flexibility offered by the UAE. 

Diversification of instruments

Globalization has meant that people from any part of the world can trade major currencies, such as the USD, EUR, GBP, etc.

This gives traders in the UAE much more flexibility in terms of how they structure their strategies and what instruments they have access to. 

Energies, metals, currency pairs, and CFDs are now standard offerings for brokerage firms around the world, which gives traders a greater selection of instruments they can buy and sell.

Increased participation

While retail trading only amounts to about 5.5% of the global forex trading volume, it is nonetheless an important part of the global economy and globalization allows forex brokers in the UAE and beyond to tap into the increased accessibility from around the world.

For instance, a trader based in Saudi Arabia can open and verify a forex trading account offered by a UAE-based brokerage, as long as the firm is licensed by the Saudi Capital Market Authority. 

This accessibility is not limited just to Saudi Arabia – any country where UAE forex brokers hold valid licenses can access these firms and the instruments they offer. 

Future prospects of forex trading in the UAE

The global forex trading market is still growing at a steady pace and forex brokerage firms in the UAE are likely to have more growth opportunities in the future.

However, the pace of globalization has shown signs of slowing down in recent years and as the UAE economy tries to shift away from its hydrocarbon dependence, the financial sector is likely to receive even more attention from the country and prime UAE forex brokers for explosive growth in the coming years. 

by Tsiala Jobava

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