Hundreds of amateur stockmarket dabblers in the UAE have been told their trading accounts with the online dealing company E*Trade will be closed.
Closure hits home for UAE's E*Trade stockmarket dabblers
DUBAI // Hundreds of amateur stockmarket dabblers in the UAE have been told their trading accounts with the online dealing company E*Trade will be closed.
The move follows the closure last year of the company's Dubai office - which served the entire Middle East - three months after the company was fined Dh1.1 million for a lack of money-laundering controls.
Customers were told at the time the Dubai closure would not affect them and they would be able to continue trading as before. Now, however, E*Trade has shut down its UK operation, which administers accounts in the UAE and the rest of the region.
An email sent to clients a few weeks ago says: "We write to inform you that a decision has been made by E*Trade Financial Corporation to close its UK affiliate, E*Trade Securities Limited.
"This closure affects you and your account and as a result, you must take one of [ ...] two actions no later than January 7, 2013."
The options are to either transfer shares and other securities to another financial firm and close the E*Trade account, or sell off all the assets and close the account. Those who take no action before the January deadline will no longer be able to deposit additional funds or buy new shares.
A Dubai-based financial adviser said: "It should be possible to transfer onto another trading platform, and there are other [investment] vehicles that they could trade into.
"It will be a case-by-case scenario because the other platforms will have minimum [financial] requirements, so if they don't meet those requirements they would potentially be stuck. But if they could meet those requirements they would be eligible to transfer onto another platform."
However he said those with more specialist investments such as exchange-traded funds may have difficulty finding a company that will take them on. And, because E*Trade's fees are lower than those of some other firms, investors may face increased costs.
New York-based E*Trade was founded in 1991 and runs 2.9 million accounts worldwide. It decided to close its UK operation so it could concentrate on its core US business.
Customers can buy and sell shares, bonds and funds listed on major US markets, including the New York Stock Exchange and Nasdaq.
The Dh1.1m fine was imposed in April last year by the Dubai Financial Services Authority, which said E*Trade Securities had failed to obtain enough proof of the sources of clients' wealth.