UAE low-cost robotics advisory platform Sarwa has introduced a commission-free, transfer-fee stock trading service to tap the demand for online trading that has increased since the outbreak of the Covid pandemic -19 last year.
The Sarwa Trade app will give retail investors access to more than 4,000 stocks and exchange-traded funds listed on US stock exchanges, the company’s co-founder and chief executive officer Mark Chahwan said on Wednesday.
“Options for stock trading in the Mena region are scarce – traditional brokerage houses have high fees, the technology is outdated, and the experience is not exactly user-friendly,” Chahwan said.
Retail investors are increasingly looking to access markets using technology, which has led to an increase in the popularity of commission-free trading apps such as Robinhood, eToro, and Interactive Brokers.
Demand for trading apps has skyrocketed during the pandemic as monetary easing from the US Federal Reserve and other central banks around the world has given novice day traders more money to invest during pandemic lockdowns, according to a report by the US-based Finra Investor Education Foundation and the National Opinion Research Center at the University of Chicago.
“Market declines that made stocks cheaper to buy and the ability to invest with small amounts were among the main reasons younger and inexperienced investors reported going public,” said the ‘study, Investing in 2020: new accounts and the people who opened them.
Trading venues traditionally generate income in a number of ways, including charging trading commissions, keeping interest on cash deposits, and receiving payment from the order flow by channeling orders to market makers. Mr. Chahwan said.
However, Sarwa will not charge any commission, transaction fees, or administration fees on the Sarwa Trade platform when users buy or sell stocks. Local transfer fees from UAE bank accounts will also be waived.
“We saw an opportunity to take the simple, human approach we are known for and apply it to the trading experience,” said Mr. Chahwan.
“We always have our customers and our community at the center of what we do and that’s why our product is localized for transfers. This way, UAE residents with a local account can avoid the high international transfer fees.
“We make money in different ways. We have some margin on our very competitive exchange rates and because we have different products we are also able to generate income streams from them such as Sarwa Invest as well as keep our costs very low using technology.
In the future, the company could generate similar revenue to other online trading platforms, he said.
“These will relate to specific future offerings and may include interest on cash deposits, margin funding and a subscription model to receive additional benefits. “
Founded in 2017, Sarwa Invest uses artificial intelligence to assess an investor’s risk tolerance and assigns them a tailor-made investment portfolio of ETFs, charging them lower advisory fees than financial advisors and managers. of traditional heritage.
In August, Sarwa, which is regulated by the Financial Services Regulatory Authority ADGM, raised $ 15 million in a funding round led by Mubadala Investment Company of Abu Dhabi.
The Series B round brings the total funding for the trading platform from regional and international investors to around $ 25 million since its inception, the company said at the time.
In July, Sarwa also launched Sarwa Crypto Wallets to meet investor demand for digital currencies despite price volatility.
Cryptocurrencies are not licensed by the UAE Central Bank, although a number of cryptocurrency exchanges have been licensed to operate within ADGM. The UAE dirham is the only legal tender in the country to be recognized by the Central Bank.
“Our approach to investing has not changed: the most effective way to grow your money over the long term is to have a low-cost, diverse portfolio that follows the market,” said Mr. Chahwan.
“Contribute regularly to your portfolio and stay the course. But that doesn’t mean there isn’t a place to buy and sell individual stocks as part of an overall financial plan.
The Sarwa Trade app is available on iOS and Android operating systems.
Update: November 10, 2021, 2:00 a.m.