Investors watching Gulf financial flows learned this week that DIFC OTC market growth reached $13 trillion in over-the-counter (OTC) transactions in the fourth quarter of 2025, more than doubling both the value and volume recorded a year earlier. The figure comes from the Dubai Financial Services Authority’s (DFSA) annual report, published Thursday, and marks a third consecutive year of double-digit growth across the Dubai International Financial Centre (DIFC) ecosystem.
Most of that $13 trillion sits in derivatives, concentrated in foreign exchange (FX) and interest rate products. The DFSA tied the surge to a larger pool of participant firms, rising client demand, and Dubai’s geographic position bridging trading hours across Asia, Europe and the Americas.
FX and Rates Are Driving the DIFC OTC Market Growth
Institutional broking is the engine. TP ICAP tripled its Dubai footprint last year, citing the DIFC as a bridge between Asian markets and the MENA region, and operating as a Category 3A firm under DFSA rules.
Banking expanded in step. Combined balance sheets of DIFC-based banks reached $251 billion at year-end, up 19% on the prior year, according to the annual report.
Retail brokers and liquidity providers followed the institutional flow. Fortrade, a retail FX and CFD broker, picked up a DIFC licence in November. B2PRIME secured DFSA authorisation in August through its B2B Prime Services MENA unit, with an endorsement to hold client assets. One draw is leverage: the DFSA permits up to 50:1 on major currency pairs for retail clients, compared with 30:1 caps applied by regulators in the European Union and the United Kingdom. That gap has made DIFC entities a distribution route for firms serving customers across the region. Capital.com reported that more than half of its first-half 2025 volume, around $800 billion, originated from MENA.
The asset management picture added another layer. DIFC said it now ranks as a top-five global hub for hedge funds, with the number registered doubling to 87. The report put assets under management (AUM, meaning the total value of assets managed on behalf of clients) across the 321-firm wealth and asset management sector at $176 billion. That figure covers the whole sector, including non-fund managers, rather than the 121 fund managers alone, a distinction worth holding in mind when comparing it with peer hub figures.
Scam Alerts and Cyber Breaches Rise Alongside the Expansion
Scale brings supervisory pressure. The DFSA issued 49 consumer alerts in 2025, up 69% from 29 a year earlier, and fielded 705 complaints, a 5% increase. More than half of those complaints concerned firms or individuals operating outside the regulator’s jurisdiction.
One pattern that drew enforcement attention was bait-and-switch activity, in which DIFC-based firms referred investors to related entities in less tightly regulated jurisdictions. The DFSA worked on 17 investigations and concluded seven, taking action against one individual. The regulator also pointed to a recent ban on a former SVS Securities chief executive who had taken up a role at a DIFC firm despite an earlier UK prohibition as an example of cross-border conduct risk.
Cyber incidents kept pace with overall activity. The DFSA recorded a 91% increase in notifications of cyber-related incidents and a 153% increase in cyber risk breaches identified through targeted assessments. ‘We try to encourage firms to look forward and be proactive,’ Enforcement Managing Director Alan Linning said in the report.
The DIFC OTC market growth story sits within a broader registration surge. The DFSA licensed 182 new firms in 2025, a 16% increase that brought regulated entities to 1,050. The centre’s total active registered companies, including non-regulated businesses, surpassed 8,000 as of October 2025. Dubai also climbed to seventh in the Global Financial Centres Index, up from eleventh, the highest position the emirate has held in that ranking. The registration pace followed the rollout of DFSA Connect, a digital authorisation platform, which coincided with an 18% rise in licence applications.
The annual report is the first under Chief Executive Mark Steward, who joined in May. Steward’s career spans three major regulatory postings: Executive Director of Enforcement and then International Division at the Financial Conduct Authority (FCA), and before that an Executive Director at the Hong Kong Securities and Futures Commission. ‘This momentum has continued into 2026 against a backdrop of ongoing global uncertainty,’ Steward said.
On crypto, updated token rules finalised in December took effect in January 2026. The framework shifts responsibility for assessing token suitability onto authorised firms, backed by new governance and disclosure requirements. The DFSA recognised three stablecoins for use in financial services during 2025: Circle’s USDC and EURC, and Ripple’s RLUSD.
The binary for UK investors tracking DIFC OTC market growth is whether the regulatory tightening, particularly on bait-and-switch conduct and cyber risk, keeps pace with the volume numbers. If the supervisory framework holds, the DIFC’s time-zone advantages and leverage flexibility make a fourth consecutive year of double-digit growth a realistic baseline. If conduct failures accumulate, the FCA has precedent for restricting UK firms from using DIFC-licensed entities as distribution arms.
