If you’re launching a financial firm or brokerage in the UAE, understanding the difference between SCA Category 1 and Category 5 licenses is critical. In this guide, we’ll break down what each license means, how they compare, and which one is right for your business model.
What Is an SCA License?
The Securities and Commodities Authority (SCA) is the UAE’s primary financial regulator. Any firm offering investment, brokerage, or advisory services must operate under an SCA license to be legally compliant.
There are multiple license categories—but Category 1 and Category 5 are the most relevant for forex brokers and financial service providers.
Category 1 vs Category 5: Quick Overview
| Feature | Category 1 License | Category 5 License |
|---|---|---|
| Purpose | Full dealing, market making | Promotion & financial advisory |
| Client Type | Retail & Institutional | Institutional or lead-gen only |
| Capital Requirement | AED 5M+ | AED 250K-500K |
| License Scope | Execute trades, hold client funds | Advise or promote only |
| Regulation Level | High | Moderate |
| Ideal For | Full-service brokers | Introducing brokers (IBs), marketing firms |
What Is an SCA Category 1 License?
An SCA Category 1 license allows firms to:
- Act as market makers or dealers
- Execute client trades directly
- Hold and manage client funds and accounts
- Offer a full suite of financial products, including forex, securities, and derivatives
Who is it for?
- Forex brokers
- Asset managers
- Market-making firms
- Full-service investment companies
Pros:
- Full access to UAE retail and institutional market
- Maximum revenue potential
- Regulatory trust & brand strength
Cons:
- High capital + operational requirements
- Longer approval process
- Needs full in-country infrastructure
What Is an SCA Category 5 License?
An SCA Category 5 license allows firms to:
- Promote or advise on investment products
- Operate as an introducing broker (IB) or lead generator
- Earn commission-based or referral-based revenue
- Assist client in onboarding for licensed third-party brokers
Who is it for?
- Financial marketing firms
- IB networks
- Advisory or educational platforms
- Startups not ready for full operations
Pros:
- Lower capital requirement
- Quicker licensing process
- Less compliance burden
Cons:
- Cannot execute trades or hold funds
- Dependent on third-party broker partnerships
Which License Is Right for You?
| Business Model | Best License |
|---|---|
| Full forex broker | Category 1 |
| Financial education platform | Category 5 |
| Marketing agency for brokers | Category 5 |
| Proprietary trading firm | Category 1 |
| Signal provider (non-execution) | Category 5 |
Application Process for Both Licenses
The process is similar, but Category 1 has stricter vetting:
- Entity setup (mainland or financial free zone)
- Business plan + financial projections
- Office lease + local compliance officer
- SCA portal registration
- Document submission & background checks
- Final approval + license issuance
Timeframe:
- Category 1: 3–6 months
- Category 5: 1.5–3 months
FAQ: SCA License Categories
Can I upgrade from Category 5 to Category 1 later?
Yes. You’ll need to meet the financial, compliance, and operational requirements for Category 1.
Is Category 5 enough to run paid ads?
Yes, if your ad content is compliant and you’re not executing trades—but always include disclaimers.
Can I open bank accounts with a Category 5 license?
Yes, but it may be limited to operational accounts, not client fund custody.
Need Help Choosing or Applying?
WBG helps forex brokers, advisory firms, and fintech startups identify the right license, handle all SCA documentation, and secure approvals quickly and efficiently.
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