From the type of market they trade in (equity options vs index options) to the volumes their strategies require, and even whether or not they’re trading on margin.
With all these variables at play, it’s no wonder that choosing an exchange can be very difficult for beginner traders.
We’ve done the work for you by making a list of questions that will help you choose which exchange is best suited for your options trading goals here!
Questions that will help
Does the exchange have high liquidity?
Liquidity refers to how easy it is to buy and sell securities without affecting the price drastically.
If you notice delays in orders filling or the bid and ask prices moving too much, you might want to reconsider that particular exchange.
What’s the exchange fee structure?
It’s tempting to go with the cheapest fee possible. You have to consider a few things before going for an ultra-low fee exchange.
How easy is it to get your money in and out of the exchange, what type of volume does it have, and what do other traders using this specific platform think about its features?
Is there a settlement guarantee
Is there a Settlement Guarantee in case of poor counterparty performance?
When picking an exchange, one critical aspect you should consider is the counterparty’s performance you’re trading with.
When trading options, your counterparty’s creditworthiness plays a massive role in determining which exchanges are best suited for your needs.
It means that you should consider exchanges whose clearinghouses have strict margin requirements for traders who want to use their platforms so that any eventual poor-performing counterparty doesn’t affect you much in terms of losses.
What are the transaction costs?
Transaction costs are fees charged when purchasing or selling an option contract on an exchange, including brokerage commissions and margins.
The costs might seem small at first glance, but they add up over time, especially if you’re using low priced contracts in your strategy!
What’s the international reach of the exchange?
With globalization being a prominent force nowadays, most exchanges have expanded their international reach.
A lot has multiple branches across different regions around the world – this means that you can choose from a plethora of options depending on your needs and where you’re trading from.
Mena Exchanges with low trading fees
- Emaar Misr (Egypt): 0.3% trading fees for the first six months, then 1.65% after that.
- JazzCash (Jordan): Fees range between 0-0.75% depending on the volume traded over 30 days.
- Dukascopy (Switzerland): There are no setup fees and low commission rates at 0.20%; this increases depending on the volume of trades made in one month.
- The Stock Exchange Of Mauritius Limited (Mauritius): $19.99 flat fee with a minimum fee of 5 cents per order – these are some pretty great fees.
- Abu Dhabi Securities Market(UAE): Apart from the initial brokerage fee, no additional fees.
- The Bahrain Stock Exchange (Bahrain): $10 annual fee and a 1% flat fee on all transactions – this is another one that offers low fees compared to the rest.
- Dubai Financial Market (UAE): No setup, custody, or withdrawal charges; low commission rates at 0.20% for the first year and 0.40% after that.
- Emirates NBD (Dubai): No other brokerage or setup fees.
- Tadawul (Saudi Arabia): Fees range between 0 and 0.25%, depending on trading volume over 30 days.
- Kuwait Stock Exchange(Kuwait): $150 initial subscription charge plus $5 annual membership fee; monthly transaction costs range from $1-$15 depending on local market activity.
- The Bahrain Bourse(Bahrain): Fixed fee of 5 BHD per order and a brokerage of 1%.
- Nasdaq Dubai (UAE): 0.275% trading commissions + a monthly subscription fee, which is waived if you’re an active trader.
There are many different factors investors need to consider when it comes to options trading, but considering all the questions that have been answered, it is up to you now to choose an exchange that works the best.
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