Melbourne based CFD & forex broker Pepperstone announced this week that it had secured a DFSA (Dubai Financial Services Authority) license as part of the groups Middle East expansion.
Pepperstone (read Pepperstone reviews) will operate out of Dubai through a new entity Pepperstone Financial Services (DFIC) Limited which will be headed by Tarik Chebib who is no stranger to Dubai having helped to set up IG Group’s operations there back in 2015.
Pepperstone has been planning to expand its footprint into the gulf states and the wider Middle East for some time but rather than try to service this region from offshore it decided to have a physical presence in the region the DFIC or Dubai International Financial Centre was a logical choice for the company to base itself in.
In recent years Dubai has tried to establish a western-style model of regulation and authorisation to establish a dominant financial centre for the region something that the Middle East has not had before.
The new Pepperstone business will focus on attracting HNWIs from across the region offering them Forex and CFD brokerage services. Mr. Chebib who is head of the Middle East at Pepperstone flagged the importance of contracts that allow clients to speculate on the price of oil and trade gold, two commodities that are very much in focus for traders in the Persian Gulf.
Recent research from online consultancy Cpattern suggests that Middle Eastern clients are among the most enthusiastic depositors into trading accounts with clients in Kuwait and Qatar depositing funds just over 7 times per month on average.
The local population of Dubai is relatively small, but the Emirate has a large ex-pat community and business connections that span across the region and extend into India, Africa and the far east.
Margin trading involves the charging of interest something which is not compatible with Islamic teachings so it’s likely that Pepperstone will offer modified it’s Middle Eastern clients modified trading terms and contract specifications via Islamic accounts one of a number of nuances that are important if the business is to succeed in the region.
Pepperstone’s new business will join a highly competitive environment a quick google search and a look at the DFSA register shows that many of its peers from both Europe and Australia are vying for margin trading business as are several local/regional brokerages.
Dubai and the wider region are markets in which personal relationships are more likely to secure valuable client accounts than online advertising which in this instance will be more about raising brand awareness.
It will be interesting to see if Pepperstone can replicate the success it has had in its European expansion in the Middle East the timing of the launch is not ideal however Pepperstone itself was founded in the wake of the Global Financial Crisis and subsequent recession so perhaps that timing is actually a good omen.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.