DUBAI (Reuters) – Dubai opened its arms to the Middle East’s first trading arcade on Saturday, aimed at luring savvy cash-rich investors to trade the world’s financial markets, Dubai Professional Trading Group said.
The group hopes to help traders keep pace with the rapidly changing global trading environment and boost liquidity in Middle Eastern markets by ushering the digital age into the prosperous United Arab Emirates city.
“The idea stemmed from the understanding that the new exchanges lacked one important factor,” said Benedict Floyd, executive director of Dubai PTG, a firm where self-employed traders can rent a desk and a screen and start trading any financial market and asset of their choice.
“They needed experienced traders who could add liquidity into the region’s markets… and we had numerous requests from traders abroad looking for the right infrastructure here.”
Trading arcades or boutiques, where market pros trade their own accounts, became popular in the late 1990s when global exchanges went electronic and so had no need for floor traders.
“It’s a one stop-shop for traders,” said James Hume, chairman of Dubai PTG. “What we essentially supply is premises, excellent connectivity, access to different markets over the world, plus risk management.”
With the promise of a tax-free income and convenient time zone, the arcade hopes many tech savvy traders will be attracted to relocate their dealing career to Dubai.
“The benefits you get from Dubai are tax-exemption, a time zone that allows you to trade on all global financial markets and an unrivalled life style,” said Floyd, who originated the concept of a Dubai arcade.
Traders pay a monthly seat charge and in return get the latest connectivity and order routing technology, market data, analytic package and vastly reduced trading fees, he said.
Trading arcades are liquidity providers to markets and their traders represent mini buyside institutions.
Arcades worldwide now rival the likes of Deutsche Bank and Goldman Sachs as liquidity providers, analysts and industry experts said.
Dubai, the trade and tourism hub of the oil-rich region, is determined its residents, investors and tourists get everything they want in the hope of becoming a global icon.
The city launched the region’s first gold futures exchange in 2005, and Oman sour crude futures in June, part of the emirate’s ambition to attract foreign cash and investment into an economy that is weaning itself off rapidly dwindling crude oil reserves.
Dubai PTG, a partnership with state-run Dubai Multi Commodities Centre (DMCC), says the arcade will recreate the bonding dealers usually get on the trading floor.
“You work in an environment with other people trading the market, you can share your ideas and have a camaraderie atmosphere,” Floyd said.
Dubai PTG can initially bring in 37 traders in 2007, and house additional 100 dealers in 2008.
“The region needs arcades to help typical traders have a better understanding of risk and money management,” said a trader at Sucden brokerage, one of several energy trading arcades that have been set up since the IPE’s closure of London’s last open-outcry flInternational Commodities DMCC and a veteran gold trader.