1) The market landscape in Iraq

Iraq’s securities market is centered on the Iraq Stock Exchange (ISX), which is organized as a non-profit entity owned by its member brokers and is regulated by the Iraqi Securities Commission (ISC).
For anyone dealing with brokerage activity (investors, banks, fintechs, or foreign counterparties), the starting point is always the ISC/ISX framework and the licensing status of the broker.

2) What a “brokerage company” does (and how Iraq classifies activities)

Under Iraqi regulatory practice, “brokerage” is not one single activity licenses can cover different functions (e.g., executing trades, portfolio management, introducing clients, investment advisory). In Regulatory Bylaw No. (35) of 2025, the ISC sets out categories for brokerage firms that want to trade in foreign securities and foreign commodities markets, and requires an ISC license before conducting any of these activities.

Key activity categories mentioned in the bylaw include (Arabic terms used by the regulation):

• Financial broker

• Broker for own account

• Introducing broker

• Investment management

• Investment trustee/custodian function (alongside separate “custodian” concepts in the rules)

• Financial/investment advisory

3) Minimum capital requirements (foreign markets license track)

The 2025 bylaw sets minimum capital thresholds (IQD) depending on the activity the brokerage firm seeks to perform in foreign markets.

• Financial broker: IQD 1,000,000,000

• Broker for own account : IQD 250,000,000

• Introducing broker : IQD 30,000,000

• Investment management : IQD 1,000,000,000

• Investment trustee/custodian role : IQD 100,000,000

• Financial advisory : IQD 75,000,000

The bylaw also ties capital adequacy to ongoing compliance (e.g., maintaining ownership/equity thresholds and providing acceptable guarantees if ratios drop).

4) What a licensed broker must put in place (governance + controls)

For brokers seeking authorization to access foreign markets, the bylaw emphasizes “financial-services style” controls, including:

• Organizational structure, written operating procedures, and internal controls

• A designated compliance function and compliance manual

• A risk management role and risk procedures

• AML/CFT policies aligned with Iraq’s AML framework (the bylaw references AML Law No. 39 of 2015)

5) Additional conditions before starting foreign market trading

Even after licensing, the bylaw requires additional ISC steps before a firm begins direct dealing in foreign securities/commodities markets, including:

• Paying ISC fees

• Providing an unconditional financial guarantee (minimum values are specified by activity)

• Providing ISC with contract templates and agreements, staffing/CVs, accredited representatives, and a tech/trading platform plan (including backup plans).

6) Major prohibited practices (important for investors + compliance teams)

The bylaw contains a detailed set of prohibitions aimed at protecting investors and preventing “high risk offshore style” offerings being marketed locally. Examples include prohibitions on:

• Executing client purchases without ensuring sufficient cash in the client account; and granting client financing from the broker’s funds or other clients’ funds

• Trading without documented client authorization (written/recorded/email) and record retention requirements

• Dealing with unlicensed foreign brokers

• Handling cash with clients

• Trading in digital/crypto currencies, FX/forex, CFDs-like instruments, or other unapproved instruments

• Stock lending (often used for short selling) and short selling-style activity

• Pooling client investments

• Leverage/margin structures that create synthetic exposures

• Omnibus account structures that merge multiple client accounts under a single foreign broker account, and executing trades under the brokerage’s name instead of client identification.

This direction aligns with ISC public messaging warning investors about unlicensed firms trying to attract Iraq-based customers

7) Client protection obligations (contracts, reporting, segregation)

For investor protection, the bylaw requires:

• A written client agreement covering risks, order routing, ownership registration, settlement mechanics, fees/commissions, and dispute resolution (Iraqi law/courts are referenced in the bylaw structure)

• Same-day trade notifications and a right to object under specified mechanisms

• Monthly statements

• Segregation of broker funds vs. client funds, with dedicated bank accounts and restrictions on using client funds

• Recordkeeping, including AML related record retention (the bylaw references a 5-year retention period).

Penalties include administrative fines (the bylaw references up to IQD 50,000,000) and referral to courts if the conduct is suspected to be criminal

8) How to identify brokerage companies operating on the ISX

For practical verification and due diligence:

• Use the ISC’s brokerage firms listing pages (official regulator source).

• Use the ISX broker list (market source).

The ISX broker list includes many Iraq-based brokerage companies (e.g., “Rabee / , “Al-Rafidain / , “Dijla / , etc.), but you should always confirm a firm’s licensing/standing through official ISC/ISX sources as part of onboarding or KYC

Sources:

Regulatory Bylaw No. (35) of 2025 – ISC rules on brokerage firms seeking to trade in foreign securities and foreign commodities markets