Exclusive: Dubai’s New Retail License Margin Limits and IG’s Expansion

Last month IG Group (LON:IGG) unveiled that it is launching an official Dubai-based subsidiary after obtaining a license from the Dubai Financial Services Authority (DFSA). The move is a first for a major retail broker in a regulatory environment considered by the majority of the industry to be quite difficult.

The office of IG Group (LON:IGG) was established in the Dubai International Financial Center (DIFC) which is a federal financial free zone. IG Dubai has 18 employees led by Senior Executive Officer of IG UAE and Head of the Dubai Office Kypros Zoumidou.

Instead of relying on the United Arab Emirates constitution, the DIFC has its own jurisdiction and civil and commercial laws which differ from the ones in place across the country. The initiative was established by the government in order to boost Dubai’s status as an international financial center.

DFSA’s Full Retail License Details

The main reason for IG Group (LON:IGG) establishing its presence in the region now, is that it has gained a full retail license issued by one of the strictest regulators, not only in the region, but globally - the DFSA. Finance Magnates has already reported exclusively regarding some of the details of the new retail license as well as with the first brokerage to obtain it. Our team has gathered more relevant information.

What stands out with the new license is that up until now, this type of registration has specifically addressed the targeting of retail clients, which hasn't existed up until recently. IG Group waited out until it was in place to establish its foothold in the region.

With the multitude of assets which the company is offering, previous licenses have not been sufficient for the company to provide and market its full suite to traders in the region. One of the main constraints has been the requirement for targetable clients to possess over $1 million in liquid assets.

Speaking to Finance Magnates, IG Group’s Head of Investor Relations, Kieran McKinney, said, “We like to do business the right way, which is with full regulatory authorization. It was impossible to achieve that in Dubai, and this is why we haven’t targeted the region before.”

“While negotiating with the DFSA, we have assisted them in establishing the rule structure which will govern the retail industry in Dubai,” he explained.

The company got its license in June and after holding off for the summer months and during Ramadan, IG Dubai officially launched its offering last month.

Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term Limits

The license allows the company to market across the UAE and onboard clients through its local subsidiary. It allows the company to market its services to the broader retail investors public with leverage limits on foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term amounting to 1:20 (5%) on major currency pairs and 1:5 (20%) on minor crosses.

The brokerage has chosen to offer lower than the maximum levels which the regulator allows - 1:50 on majors and 1:20 on minor pairs, as confirmed by a DFSA spokesperson to Finance Magnates reporters.

Looking at the CFD products the margin levels will be identical to the broker’s global offering, which are at 1:100 on indices and up to 1:10 on single share CFDs.

Commenting on the expansion of IG into a brand new region for the company, Mr. KcKinney added, “Ultimately we would like to establish Dubai as our Middle East hub, but for the time being the opportunity is big enough where we are.”