1 October, AtoZForex.com, Lagos – The Dubai Financial Services Authority (DFSA) has taken steps to fortify its grip on the financial industry in its region. The watchdog published a report “DFSA in Action 2015”, explaining efforts taken thus far this year and the resulting effects of the steps.
Concerns over FX firms
A host of issues where addressed in this report, but of relevance to the FX industry is the organizations address of FX activities and other highly leveraged products and the rejection of further Dubai FX representative offices. According to the report, the DFSA identified an emerging trend in enquiries and applications from firms seeking to establish representative offices to market Foreign Exchange(“FX”) and other highly leveraged products (“HLPs”) in the region. This in itself is not a problem, but the specific concern is that marketing activities are likely to include retail clients, but without the relevant protections for retail customers.
In this report, the DFSA specified that it conduct a review, also reminding all AFs of their obligations relating to disclosure, dealing with conflicts of interest and suitability of advice and discretionary decisions for such products.
Speaking of licensing metrics, the DIFC specified that:
- 49 firms during the period from January to the end of August 2015, versus 37 in the corresponding period in 2014.
- 64 applications where received in 2015, as against 51 in 2014.
- As of the end of August, 58 firms are currently in the pipeline (applications plus “in principle” approvals)
The DFSA also specified that: “While the majority of these firms are for wealth managers, wealth advisors and representative offices, we are dealing with a number of insurance and banking applications.”
Rejection of Dubai FX representative offices
It has also adopted the position that in the meantime it will not generally accept any further representative office applications relating to these products, that is FX and other high leveraged products until the new policy has been formed. This will be bad news for FX brokerage houses as Dubai has become a particularly attractive hub for setting up operations in a bid to tap from the vast wealth of individuals in the region.
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