Trading platform eToro receives ADGM approval to operate in the UAE

Users can open an account free of charge and start trading with a minimum of $200

There are more than 34 million registered users of eToro, which operates in over 100 countries. AFP

Digital trading and investment platform eToro has received approval for a financial services permission from the Abu Dhabi Global Markets’ Financial Services Regulatory Authority to operate as a broker for securities, derivatives and crypto assets in the UAE.

The company, which has more than 34 million registered users and operates in more than 100 countries, allows users to open an account free of charge and start trading with a minimum of $200, which can be funded by either a debit card, bank account or PayPal.

“The approval of our operating licence by ADGM is a key milestone in our continued global expansion,” Yoni Assia, founder and chief executive of eToro, said.

eToro was founded in Israel in 2007 and has developed a platform in which users can buy and sell traditional assets such as stocks, currencies, exchange-traded funds or commodities alongside newer ones such as cryptocurrencies and other emerging digital assets.

The online trading platform is regulated in Europe, Australia, the UK and the US.

Retail investors are increasingly seeking access to markets with the help of technology, leading to a surge in popularity for zero-commission trading apps such as Robinhood and eToro.

Demand for trading platforms soared during the Covid-19 pandemic as monetary easing by the US Federal Reserve and other central banks around the world gave novice day traders more money to invest in stocks and other assets during lockdowns, according to a report by Finra Investor Education Foundation and the National Opinion Research Centre at the University of Chicago.

In March, eToro raised $250 million from investors including SoftBank Vision Fund 2 and Velvet Sea Ventures that valued the company at $3.5 billion.

Copy trader is one of eToro’s most popular features, which allows new investors to mimic the trading strategies of more experienced users.

“We believe this will help retail investors be as successful as hedge fund managers,” Mr Assia said.

“We have created self-regulation when it comes to copy trading and we offer clarity on not only the returns generated by popular investors but also the risk and volatility they faced over time.”

The platform automatically blocks investors from copying someone with a high risk score. Users will only be allowed to copy investors with a moderate risk score, according to Mr Assia.

Yoni Assia, founder and chef executive of eToro, believes the platform's copy trading strategy will help retail investors be as successful as hedge fund managers. Photo: eToro

High risk, high leverage and irresponsible trading are not tolerated, according to eToro.

“We have more than 3,000 popular investors being copied. We know who they are, they write their biography, and if they have more users copying their strategy, they must go through a certification in investment management,” the chief executive said.

“They have to adhere to the safety guidelines and risk parameters set by eToro.”

Novice investors can also use the educational videos on investment strategies and discussions with industry leaders on eToro Academy, which was formed to empower people to grow their knowledge and wealth.

Available in 10 languages, including Arabic, it is a free platform to help eToro users and the general public increase their financial literacy and education, according to Mr Assia.

“A team of more than a dozen analysts in our key markets provide customers with updated information on market trends,” he said.

Mr Assia also recommended new investors to learn how to trade and invest on the eToro demo platform using virtual money.

Artificial intelligence was the most popular investment theme among eToro users in 2023, he said.

“Our investors were investing in companies like Tesla, Nvidia and in AI thematic portfolios,” he added.

In 2021, customers were interested in meme stocks including AMC and GameStop and meme coins such as Dogecoin.

“We see these cycles circulating around different assets. Now, we are seeing a lot of our customers shifting into lower-risk fixed-income ETFs,” Mr Assia said.

“Customers are learning about the benefits of both yield and dividend stocks. Tech stocks, especially the Magnificent 7 [Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla], will continue to play a significant role in the market.”

Meanwhile, Arvind Ramamurthy, chief of market development at ADGM, said that the financial hub’s “dynamic ecosystem and progressive regulations” would enable eToro’s vision.