Some international brokers have local offices and adhere to Islamic principles and Saudi regulators (the Capital Market Authority). However, a minority of the good ones have a local base due to the local market's complexity (Most of the ones with a local presence in the Middle East choose Dubai or Abu Dhabi as their regional HQ base). If you decide to open an Islamic FX Account, remember to inform your assigned account manager when registering with a Forex broker Saudis have been able to trade Forex with global brands without their physical presence in the country. Long story short, if you reside in Saudi Arabia, you can trade currencies legally.
Who supervises Financial Markets in Saudi Arabia?
The CMA (Capital Market Authority) is the government body that regulates the Saudi capital market. Its main goal is to raise investor awareness by running various programs. It also teaches investors the best practices available in the local markets.
Its main responsibility is to protect local investors from scams, improper conduct from unlicensed companies, and fraud.
Does the CMA regulate any FX Brokers?
Yes, there is one: the CMA granted the first official permit to Riyad Capital back in 2019. However, we must add that this company is a Riyad Bank subsidiary, where the Saudi state owns 51 pe cent of the stake. So, it might not be the top option if you decide to trade international FX pairs. Nevertheless, it is living proof that FX is legal. However, you might want to regularly check out CMA's list on 'Unlicensed FX Companies', where they warn investors against the listed companies.
It is important to note that the CMA, along with the Ministry of Interior, Ministry of Culture and Information, Ministry of Commerce and Investment, and The Saudi Arabian Monetary Authority (SAMA), have established a committee to monitor the FX activities in the country while warning the public to be cautious about the risks associated with investing and dealing in securities or foreign currencies with companies or websites without confirming they are legal entities and have the necessary authorisation approvals from the authorities in the Kingdom to exercise such activities.
And are there any options for Muslim Traders?
Yes, there are: Islamic Forex accounts are halal trading accounts, available to clients who respec the Quran and wish to invest while following Islamic finance principles. Islamic trading accounts differ in several ways from regular Forex accounts.
As Sharia law prohibits the accumulation of interest, traders with Islamic accounts do not pay or receive interest rates. Also, transactions in Islamic accounts have to be completed without delays, so currencies must be transferred from one account to another immediately, and transaction costs must also be paid simultaneously. Islamic accounts are also known as swap-free accounts because of this.
How do Islamic FX Accounts work?
Islamic FX accounts follow four basic principles to be considered Halal:
Prohibition of payment and receipt of any interest rate (Riba)
Immediate exchanges in the context of trading operations
Prohibition of gambling
Distribution of risks and benefits
How do I start Trading Forex in Saudi Arabia?
If you are a beginner, check out our article on how to start trading Forex. And, if you would like to check out the best FX Brokers for SA's traders, check out this article.
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Saudi Arabia recently opened its FX market to retail clients and allowed regulated brokers to conduct trading on behalf of clients. In other words, and to answer the question, yes, forex trading is legal in Saudi Arabia. Also, unlike some other countries, there are no legal limitations on the amount of profit you can withdraw. In this article, we describe the Forex scene.