Trading places

There is huge potential in Dubai's financial market, according to Arthur Tang, director of GFS Investments, one of the latest multinational firms to be given a licence to operate in the Dubai International Financial Centre.

A global leader in online foreign exchange trading the firm, whose parent company GFS Forex and Futures Inc is based in the US, allows traders from across the world to trade 24 hours a day online.

The company, which already has offices in the US and Hong Kong, now hopes to establish 500 client accounts within the next six months in the Gulf region.

And according to Tang, who visited Dubai from Hong Kong last month, the online trading market is set for unprecedented growth in the UAE.

Can you explain exactly how GFS Investments operates?

At GFS Investments we deal in contract currencies that are traded online.

The company speculates on the market by buying and selling currencies and clients exit the market by liquidating their position and then trying to realise the profit or loss. It's actually similar to futures market trading. It is all done online - but we also provide trading by telephone.

This is actually in case the online internet connections fail and online trading isn't available: we still have services in place whereby customers can trade by telephone. The standard currency contract is worth US$100,000.

In order for clients to buy a contract we have a margin system where you do not have to pay the full value of the contract. But you are paying a deposit, which is in the region of 1 to 2% of the total value of the contract.

Our parent company is in the United States - we are registered in the US and regulated by the CFTC (Commodity Futures Trading Commission).

We are also a member of the National Futures Association, and we have offices in the US in San Francisco, Hong Kong and now in the UAE.

What are the strongest currencies you are dealing in at the moment?

We deal in contract currencies where instead of buying a physical currency, you buy a contract currency.

The contract is to buy some currency at a certain price then at a later date, you can sell the currency and you can realise the difference between the two prices. You can buy the contract then sell it at any time. You can do it the same day or over the next three days or it can roll over indefinitely.

We are trading mainly in the major currencies: the British pound, the euro, the Japanese yen, the Swiss franc and the US dollar.

In fact, the market movement is not really concentrating on dollars at the moment.

How long have you been established with an office in the UAE?

Although our business was incorporated in the US in 2000 and registered in 2001, we have actually only been in business in the UAE for two months now.

We will eventually move to the DIFC. But at the moment we are in offices in Deira because they do not have enough offices for members, and we are on the waiting list.

How do you think the DIFC will boost investor confidence in the UAE?

The DIFC is very well-regulated and is regulated on the same lines as the financial authority in the UK.

Having this jurisdiction will definitely increase investor confidence in the UAE and in general investors in the Middle East. In the DIFC investors find they have a strong and confident financial authority. That will definitely encourage them to put their investments here.