Dubai'smain financial free zone handled $13 trillion in over-the-counter transactionsin the fourth quarter of 2025, more than double the value and volume of a yearearlier. Most ofthat growth came from derivatives, with the activity concentrated in foreignexchange and interest rates, the Dubai Financial Services Authority said in itsannual report published Thursday.The OTCfigure is the standout data point for trading firms, though the regulator choseto lead its announcement with registration growth and a jump in Dubai's globalranking. The DIFClicensed 182 new firms in 2025, a 16% increase that brought the total to 1,050regulated entities, and Dubai climbed to seventh in the Global FinancialCentres Index published in March, up from 11th. Theregistration pace follows the rollout of DFSA Connect, a digital authorization platformthat coincided with an 18% rise in applications.FX and Rates Drive aDoubling in OTC FlowsThe DFSAtied the OTC growth to a wider pool of participant firms and rising clientdemand, alongside Dubai's position connecting trading windows across Asia,Europe and the Americas. The reportnoted that recent OTC growth has sat largely in derivatives, with aconcentration in foreign exchange and interest rate products.That mixreflects the institutional broking and dealing activity migrating to thecentre. TP ICAP tripled its Dubai footprint last year, citing the DIFC as abridge between Asian markets and the MENA region, and operating as a Category3A firm under DFSA rules.Bankingtold a similar story of scale. Combined balance sheets of DIFC banks reached$251 billion at year-end, up 19% on the year, according to the report.The reportis the first annual filing under Chief Executive Mark Steward, the former FCAenforcement director who took over in May. "Thismomentum has continued into 2026 against a backdrop of ongoing globaluncertainty," Steward said.Brokers and LiquidityProviders Keep Choosing DubaiThe firmsarriving in 2025 cut across retail brokerage, prime services and payments.Retail FX and CFD broker Fortrade picked up a DIFC license in November, whileinstitutional liquidity provider B2PRIME secured DFSA authorization in August through its B2B PrimeServices MENA unit, with an endorsement to hold client assets.Part of thedraw is leverage. The DFSA permits up to 50:1 on major currency pairs forretail clients, against 30:1 caps in the European Union and the United Kingdom,which has made DIFC entities a distribution route for firms serving customersacross the region. Capital.comreported that more than half of its first-half 2025 volume, around$800 billion, came from MENA.Assetmanagers added to the inflow. DIFC said it now ranks as a top-five global hubfor hedge funds, with the number registered doubling to 87, a trend tracked across the Gulf as managers weigh full fundsagainst representative offices. The reportput assets under management across the 321-firm wealth and asset managementsector at $176 billion, a figure the regulator attributes to the whole sectorrather than to the 121 fund managers alone, a distinction the press releasedoes not draw.Scam Alerts Climb 69% asGrowth Brings New RisksTheexpansion carried a heavier supervisory load. The DFSA issued 49 consumeralerts in 2025, up 69% from 29 a year earlier, and fielded 705 complaints, a 5%increase. More than half concerned firms, individuals or scams outside itsjurisdiction.Enforcementworked on 17 investigations and concluded seven, but took action against onlyone individual. One focus was so-called bait-and-switch activity, in whichDIFC-based firms referred investors to related firms in poorly regulatedjurisdictions. The patternechoes a recent DFSA ban on a former SVSSecurities chief executive who had taken up a role at a DIFC firm despite an earlier UKprohibition.Cyber riskalso rose with the activity. The DFSA recorded a 91% increase in notifications ofcyber-related incidents and a 153% increase in cyber risk breaches identifiedthrough targeted assessments. "Wetry to encourage firms to look forward and be proactive," EnforcementManaging Director Alan Linning said in the report.Crypto Rules ShiftSuitability Onto FirmsUpdated crypto token rules were finalized in December and tookeffect in January 2026. The changes move responsibility for assessing whetherindividual tokens are suitable onto authorized firms themselves, supported byadded governance and disclosure requirements, the regulator said.The DFSAalso recognized three stablecoins for use in financial services during 2025:Circle's USDC and EURC, and Ripple's RLUSD. This article was written by Damian Chmiel at www.financemagnates.com.