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How To Invest in the Dubai Financial Market in 6 steps


  1. Pick a Broker: Brokers are the authorised intermediaries to trade financial assets on the Dubai Financial Market.

  2. Open a Trading Account with a local broker: The only requirement is to be of legal age and have a UAE residence. The broker will provide you with access to their investment platforms, allowing you to send purchase and sale orders to the Dubai Exchange's central system.

  3. Choose the Financial Asset to Invest in: The investor has to decide whether to invest in shares, sovereign bonds, or corporate bonds.

  4. After deciding, send a Buy order through the broker: This means that you have to submit a purchase order for a financial asset. It is possible to set a limit price or a market price of the selected asset.

  5. The financial transaction is effective when the buy and sell prices match: When the bidding price (the buyer) of a financial asset coincides with the asking price (the seller), the trade gets executed. The Brokers make the payment at the Stock Exchange in your name, and they deliver the transaction amount to the buyer/seller. You become the legal owner of the asset.

  6. The broker issues the transaction notification and charges fees: There is no fixed fee, which means that when choosing a broker to invest in the Dubai Financial Market, you will have to choose a broker that can better adapt to your investment strategy.



How does the Dubai Financial Market work?


Within a short period, the Dubai Financial Market (DFM) has fast developed into a leading financial market across the Gulf Coast. DFM operates as a secondary market for the trading of securities issued by public shareholding companies, bonds issued by federal or local governments, local public institutions and mutual funds, and other local or foreign DFM approved financial instruments.


In short, the stock exchange is the institution that facilitates the negotiation of financial instruments in the UAE. The supply of financial instruments such as stocks, bonds, currencies, and the demand for these instruments (i.e. investors) interact.


The Stock Exchange holds daily "Trading Sessions", for which it provides the physical, technological, human, and operational means that allow efficient communication between Brokers, Issuers, and Investors.



What is a Securities Issuer?


Issuers of securities are companies that seek to grow through raising capital at the Dubai Financial Market. These companies raise money by issuing debt (bonds) or capital (shares). Issuers of securities may be government-controlled entities or private companies, but no matter who owns the company, it is the issuer who backs the investment.


For example, if you invested in bonds from a private company, the company will be required to pay the principal and interests to the bond investors.

International Brokers operate easy-to-use apps that allow you to buy and trade financial assets (like US Stocks, Commodities, Indices) on any device.

International Brokers operate easy-to-use apps that allow you to buy and trade financial assets (like US Stocks, Commodities, Indices) on any device.

How is a Trade completed in the Stock Exchange?


A trade, or, in other words, the investment flow of any financial instrument, could be summarised as follows:


  1. Sellers (supply) offer to sell a financial instrument at a price, for example, a bond issued by a company. Sellers aim to make this price as high as possible (Price 1).

  2. Investors (demand) who wish to obtain the bond make an offer at a determined price level. They want this price to be as low as possible (Price 2). Then, Price 1 is higher than Price 2.

  3. Buyers interact with sellers until they are at the point where Price 1 equals Price 2. When this occurs, the trade occurs, and the bond exchanges hands between the seller and the buyer. A broker is needed to fulfil this transaction: A broker is a company that mediates between sellers and buyers, ordering prices and quantities of financial instruments. Below we explain the services that these companies provide.



What is a Stock Exchange Broker?


Financial Transactions should be fulfilled through a company that works as an intermediary between investors and sellers. These intermediaries are known as Brokers.


Through complex technological tools, brokers manage transactions between investors, ordering the purchase and sale orders of financial assets by price and by order of arrival. By performing this service, they obtain a commission when, for example, executing buying a share.


To invest in the Dubai Financial Market, an investor needs to open an account with a local Broker.



Investing in International Financial Assets [From the UAE]


As we have mentioned many times in this guide, financial assets have to be traded through a Broker. In the case that you decide to open an account with a broker who operates in the Emirate Exchanges, you will be allowed to trade assets listed locally only.


If you, in turn, decide to open an account with an international Broker, you may invest in countless global assets. In other words, you can invest in international financial assets such as stocks listed on the New York Stock Exchange from the UAE through an international Broker.


The job of an international Broker is to connect their clients with international Stock Exchanges. In other words, if a client intends to buy Apple shares (listed in the NYSE, New York Stock Exchange), the broker acquires the shares in the client's name and deposits the values in the client's trading account. In general, almost all International Brokers provide access to Exchanges from the United States, Canada, the UK, Japan, Switzerland, and Europe.


Opening an account with an international broker is usually an online process, and you can trade the financial markets from your phone in just a few days.

International Brokers available in UAE

This article will help you start investing, from the minimum amount of money required to open an account to some ideas to consider in your portfolio.

TRADING

INVESTING IN THE DUBAI FINANCIAL MARKET | HOW TO BUY STOCKS

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