Kuwait may be a small, Islamic state located on the tip of the Persian Gulf, but it is also one of the richest countries in the world. Although its economy is based primarily on petroleum, it also has a well-developed financial sector. Trading on the foreign exchange market is a perfectly legal activity and due to the loose regulation on traders, it is extremely popular among locals.
And locals are quite well-off people who see the Forex market as one of the most attractive ways to invest their money. To understand the specifics of the Forex industry in Kuwait, we need to take into account a few essential facts about this country. It has a population of around 4.6 million people but most of them, around 3.2 million, are expatriates who arrive in the country for better job opportunities. Kuwaitis, on the other hand, although being a minority, are cared for by the state and are among the wealthiest people in the world.
With a GDP per capita of $69,669, Kuwait is the world’s 8th richest country, according to 2018 estimates. Moreover, the Kuwaiti dinar may not be traded on the Forex market but it is the highest-valued unit of currency in the world. Traders in the country prefer major pairs such as EUR/USD, GBP/USD, and AUD/USD.
Kuwait Forex Legislation
Kuwait is an Islamic state but unlike other GCC countries (Gulf Cooperation Council), it largely follows a civil law system, while Sharia law governs family law and it applies only to Muslim residents. As a result, it does not pose the same severe restrictions on financial services as other Islamic countries. There are, of course, Islamic banks in Kuwait but there are also conventional banks, as well. Moreover, traders can take advantage of the regular trading accounts offered by Forex brokers rather than sticking to only Islamic accounts.
Brokers in Kuwait offer Islamic accounts to religious Muslims. Islamic accounts, also known as swap-free accounts, have no rollover interest on overnight positions to comply with the Muslim faith. However, holders of Islamic trading accounts may be charged other fees and commissions. Of course, before registering at an online Forex broker, traders need to make sure they understand the local law and take Kuwait’s financial legislation into account. Moreover, they should open an account only with a licensed broker that is regulated in the country. This may be a local brokerage firm or a foreign company that needs to register as a financial and monetary intermediary in the country.
The current legislation requires all offshore brokers to be licensed and authorized in the countries they are based in, however. This is why many of the online Forex brokers available in Kuwait also hold licensed from the FCA in the UK, CySEK in Cyprus, Australia’s ASIC, etc. Overall, the requirements and regulations brokers need to comply with are very similar to those across Europe, Australia, and the United States.
Although the local regulatory bodies seem very liberal, they do impose severe penalties on those who have been found in violation of any law or code of conduct. Illegal and unethical practices such as financial fraud, various scams, insider trading, etc., are penalized and often, Government authorities may get involved in the more serious cases.
Along with Forex, brokers in Kuwait usually offer their clients a variety of other financial instruments, including futures and CFDs. These are financial derivatives that allow investors to trade on the price movements of different assets without actually owning them. This could be currency pairs, indices, commodities, energy products, equities, and more. Usually, brokers in Kuwait offer their clients leverage up to 100:1 – there is no restriction on the leverage that can be used by traders in the country.
Kuwait’s Financial Regulators
There are several authorities in Kuwait that are responsible for the monitoring and regulation of the financial sector and the financial markets, in particular. Brokers that offer their services in the country are licensed and regulated by the Ministry of Commerce and Industry. Another important body that controls the sector is the Kuwait Chamber of Commerce and Industry (KCCI).
The main regulatory body, however, is the Central Bank of Kuwait, which was established in 1969. It issues the national currency on behalf of the state and serves as a banker to the Kuwaiti government. It is responsible for determining the financial and credit policy of the country and for maintaining the dinar stable and convertible to other currencies. However, the Central Bank also has a large number of supervisory functions.
The bank is responsible for supervising the entire financial sector in the country. It researches and analyzes all new entrants, including foreign Forex brokers, who wish to operate in Kuwait. The bank also conducts inspections of all regulated bodies and companies.
Kuwait Forex Payment Methods
The vast majority of Forex brokers available in Kuwait process payments through traditional bank transfers and credit cards. Traders in the country can also use plenty of other options when making a deposit or withdrawal from their trading account. These include e-wallets such as PayPal, Neteller, Skrill, although digital wallets have not yet become very popular in Kuwait.
Another great alternative is using the prepaid solutions by Paysafe, including the Paysafecard, which launched in 2015 in Kuwait. Still, local investors prefer more traditional payment options since practically everyone has a banking account and a card linked to it. It is hardly a surprise, then, that the most popular payment method in Kuwait remains the debit card.
Local traders have access to a wide variety of cards, including Mastercard and Visa-branded cards. Most of them, however, have KNET cards. KNET is a Kuwaiti payment service and gateway by the Shared Electronic Banking Services Company (K.S.C.C.), a company established in 1992 by eight Kuwaiti banks. The idea was to connect all banking systems in the country to provide clients with faster, more secure and more efficient payments.
Today, most Kuwaiti residents have KNET debit cards (credit cards are also available but less popular) and they can be used for digital and in-store payments almost anywhere in the country. Kuwaiti Forex brokers also accept KNET payments. Traders should also consider the currencies available at the broker’s website – allowing Kuwaiti dinars as a base account currency is an obvious advantage.
Popular Trading Software in Kuwait
There are dozens of options when it comes to the different types and brands of trading software available. Often, traders struggle to choose a trading platform simply because they all look too similar to them. Indeed, nowadays, trading platforms are more or less standardized. What Forex traders should look for, however, is whether the software they are reviewing offers Forex trading at all.
Some platforms have been designed to offer traders analysis and access to the stock exchanges where the trade is quite different from the foreign exchange market. Forex is a global and decentralized market and trading occurs 24 hours a day at hundreds of brokers’ websites – to access it, retail traders need to use a specific type of software. Often, the difference between long-term success and failure in trading depends on the effectiveness and overall performance of the platform.
Good trading platforms provide fast, real-time execution of orders, great charting tools, market analysis, and educational features. Moreover, they give clients access to economic news, expert advice, and various professional functions. Traders in Kuwait, in particular, should look for software available in Arabic – Islamic accounts are, of course, mandatory.
The most popular platform for trading Forex, MetaTrader 4, is also available to Kuwaiti investors. It can be opened in the Arabic language, although many local traders will also be comfortable with the English version, too. The key advantage of MT 4, as it is also known, is its user-friendliness – it is perfectly suitable to novices and it offers a wide variety of technical indicators, automated trading, extensive tutorials, and customization options. Of course, MT 4 and MT5, which is targeted towards stock traders, are available for mobiles.
Other platforms, suitable for Forex are cTrader, ZuluTrade, and NinjaTrader. One of the very few Arabic platforms, on the other hand, is the Dubai-based AX1. It is offered by several Kuwaiti brokers and supports mobile trading, as well.
Mobile Trading in Kuwait
As one of the wealthiest countries in the world, Kuwait focuses on the development and implementation of modern technologies. Mobile technologies, in particular, have slipped into every aspect of Kuwaitis’ life and business. The country has one of the highest mobile penetration rates in the world – everyone has a smartphone, while 4G networks are available 88.4% of the time. Moreover, Kuwaitis now prefer to do most of their shopping and browsing directly from their phones – the Government is also offering mobile versions of various services.
Of course, most traders in Kuwait also tend to open their trading accounts from their mobile device, whether that is an iPhone, an iPad, or an Android device. More importantly, the vast majority of Forex brokers in the country also offer mobile trading through native apps, developed especially for their offering. These apps can be downloaded for free directly from the broker’s website or from Apple’s App Store or Google Play. Once again, traders should look for apps available in Arabic and offering Islamic accounts.
It should be noted, however, that Kuwait still has not built modern infrastructure to provide its residents with fast Internet. There are four major service providers that pay to use the fixed-line broadband infrastructure of the Ministry of Communication, which is quite slow. This slow connection, however, is usually the base of the newer 4G and 5G networks. As you can probably guess, these mobile connections are also quite slow.