Dubai: Equiti became one of the first international brokerages to be licensed by the UAE regulator to offer OTC (over-the-counter) margin trading to clients here. Based in the United Arab Emirates, this means they can use the Equiti platform to trade internationally on stocks, commodities, currencies, and other financial instruments.
And it has the advantage that these transactions are within the regulated scope of the SEC. This license does not apply to trading on the UAE stock market.
For Equiti CEO Iskandar Najjar, the license acquisition fits well with the changing trading patterns that have taken place online over the past two years. “Today there is a huge wave of trading going on where such trading has become more of a lifestyle – a fact of everyday life,” Najar said. “It happened during the lockdown phase and then picked up with the cryptocurrency wave. Online trading of financial assets is no longer confined to a segment of the investor audience.”
The investor base in the United Arab Emirates has grown steadily during this period. Global stock markets have been strong for the better part of the last two years, with many private investors participating. Most of them were dominated by the fear of missing out on growth. Bitcoin, of course, had its role as well.
We want to be the vehicle for our clients to be able to trade and execute on a single platform for all aspects.
– Iskandar Najjar, Group CEO, Equiti
Equiti therefore wants to be “at the heart of the space at a critical time,” and the emergence of a new wave of legislation was another factor. (Across the world, many trading platforms, such as Robinhood, brought a wave of new investors online, which also helped drive stocks higher. At least some of them did.)
What is an OTC license?
On May 9, 2021, the SCA released a new, consolidated “rulebook”. This has brought significant changes to the UAE securities trading and brokerage regime. It provides the latest guidelines regarding licenses and requirements for SCA licensed companies. The move also consolidated existing regulations on financial activities on securities.
Traders in the region can thus bet on highly volatile commodities and are financially safe. Things are different in other regions where people want more stable options.
– Raed Hamed Alkhedr, Regional Head of Market Research
Similar to the DIFC and ADGM regulatory regimes, license categories from Class 1 (Broker) to Class 5 (Advice and Arrangements) were introduced to determine the across-the-board licensing and prudential requirements.
The SCA also brought for the first time monitoring of new activity in over-the-counter derivatives trading and spot foreign exchange, which falls into the Class 1 category. “Tighter” requirements set by the SCA include higher paid-in capital requirements for this activity.
Presence of DGCX
“It opens up trading opportunities to a broader set of assets such as equities, indices, commodities and currencies,” said Najjar. “To start trading, you can open an account locally and it will be protected by regulators.
“We have been active as a clearing member of the DGCX (Dubai Gold & Commodities Exchange) for many years in bullion and other commodity contracts. is very important.”
Equiti is licensed in Jordan, London and Kenya. For now, its focus is on the UAE, and it will be some time before similar capital market regulations become reality in the other GCC economies.
Recently, Abu Dhabi became the first city to set a regulatory framework for SPACs (Special Purpose Acquisition Companies). This should also facilitate more capital market exposure for companies and investors.
Mohamed Al-Ahmad, CEO of Equiti Securities Currencies Brokers and co-founder of Equiti Group, said: A regulated progressive broker in the Middle East. We are proud to operate in the UAE, a market committed to world-class regulation and global best practice implementation. “
Stay tuned for CA licenses
According to the CEO, Equiti will consider obtaining a crypto trading license from Dubai regulators. The Dubai World Trade Center Authority is the body responsible for the regulatory oversight of issues related to crypto-assets.
“For us, it will be the next evolution,” said Iskandar Najjar. “There is no denying that cryptocurrencies are having an impact on the growing investor base that trades online.”
To fill knowledge gaps, equities are working with government agencies to develop curricula to upgrade and upskill financial literacy across the sector.
– Iskandar Najjar, Group CEO, Equiti