Forex portfolio trading dubai legal
Those interested in creating a portfolio of investments should include investment options that actually generate a significant return, while balancing the risk factor appropriately. In this piece, we will examine the opportunities within the Forex marketplace, as well as the general security and performance potential of creating a diverse portfolio of investments.
To begin with, let us define an investment portfolio. A portfolio generally refers to a collection of assets and holdings that are managed by either an individual investor or an investment manager. As an investment portfolio increases in size and scope, many investors will seek some type of management guidance — from a simple online tutorial or trading platform, to a fully managed, private client-type of experience.
Regardless of the management style, portfolios are often comprised of stocks, cash accounts or money market accounts, certificates of deposit, real estate, bonds, and precious metals.
This diversification is, on paper at least, a good thing. Putting all of your money in one type of investment is contrary to what highly successful investors have been doing for centuries. Forex is another investment option to consider. Forex refers to trading currency pairs through a specialised marketplace. To do so, an investor will generally partner with a broker who places actual currency trades through a specialised system.
Currency is bought and sold in pairs, with the investor playing the valuation of one investment off against the other to net a profit. In the meantime, the broker charges a small premium on the price of the currency, which then creates a potentially profitable situation for both parties involved. With Forex trading, there are several inherent features that make it ideally suited for those who like to trade quickly and often.
Moreover, it can be easily managed by a single investor without much oversight from the broker. Forex is certainly a dynamic and powerful investment option, but should it take the place of a traditional portfolio of investments? The answer is — no. Forex is incredibly lucrative, and it should be used in conjunction with a portfolio of other investments to yield a balanced investment portfolio, but most investors will be better off creating a portfolio of securities for long-term growth, tempered by Forex trades for short-term gains.
Here are some of the benefits of investing in Forex that translate into potentially better overall returns for your investment portfolio:. In fact, it is! Managing a profit-sharing investment account Operating an alternative trading system Providing Trust services Providing fund administration Acting as the trustee of a fund Operating a representative office.
There are also five different categories of licence. Both the types of activities and category of licence have implications for the initial application process including the obligation to prepare and agree a business plan with the DFSA in certain circumstances and for ongoing compliance requirements. In an effort to improve the efficiency of the application process, the DFSA is giving greater focus to the pre-application phase.
It has stressed the importance of engaging with the DFSA at the earliest opportunity after meeting with the BDD and has also clarified the pre-application steps that an applicant should follow discussed in more detail below. On a practical note, applicants should always obtain application forms direct from the DFSA as the documents available for download from the website may not always be up to date.
Such a branch could apply for any DFSA licence category and the DFSA would waive the prudential requirements for that foreign company, if it were subject to the financial regulations of the home jurisdiction. However, it would still have the discretion to require the applicant to establish a new legal entity in the DIFC if it considered this necessary. The DFSA has recently clarified that each applicant should undertake the following pre-application steps:. The DFSA should respond within two working days of the submission meeting to confirm whether the application meets the regulatory requirements and is materially complete.
The DIFC generates its application forms from the initial information provided by the applicant. While there is clearly a point at which a company will be operating outside the scope of its licence, this is often seen as a risk assessment point or management issue. DIFC firms have addressed these risks in a variety of ways, by:. We recommend that some form of risk investment appraisal is carried out before applying for a financial services licence from the DFSA.