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Dubai Financial Services Authority (DFSA): Contents

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  Versions
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Jul 11 2010 - Aug 20 2014Aug 21 2014 onwards

CIR 13.6.3

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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

Past version: effective from Jul 11 2010 - Aug 20 2014.
To view other versions open the versions tab on the right.

To view past versions of this module in PDF format, please visit the Archive.

A Fund ManagerG of a Hedge FundG may only grant to a prime broker authority to combine the assets of the FundG with any other assets held by or available to the prime broker as collateral for any financing activities to be undertaken by the prime broker where, and so long as, all the following conditions are met:

(a) the FundG is a Private FundG or an Exempt FundG ;
(b) the ProspectusG of the FundG contains, in addition to the disclosure required under CIR chapter 14, the following mandatory disclosure and warnings:
(i) the identity and profile of the prime broker, including where it is located and how it is regulated;
(ii) the services which the prime broker provides to the FundG and the nature and extent to which the prime broker has the power and authority to combine the assets of the FundG with any other assets held by or available to the prime broker as collateral for any financing activities undertaken by the prime broker; and
(iii) a prominent health warning in the ProspectusG to alert prospective UnitholdersG to the facts that:
(A) the Fund'sG appointed prime broker has the power and authority to use as collateral the assets of the FundG in conjunction with any other assets held by or available to the prime broker; and
(B) where the prime broker uses FundG assets as collateral pursuant to the above power, the UnitholdersG may lose all the assets of the FundG in the event of the insolvency of the prime broker;
(c) the PersonG appointed as the prime broker qualifies as an Eligible CustodianG ;
(d) the agreement between the prime broker and the Fund ManagerG contains mandatory contractual provisions that:
(i) prohibit the prime broker from using as collateral the assets of the FundG to an extent exceeding 140% of the Fund'sG indebtedness to the prime broker at any given time; and
(ii) create an irrevocable right in favour of the FundG that enables any indebtedness of the FundG to the prime broker to be set off against any amounts that are owing by the prime broker to the FundG , including in the event of the insolvency of the prime broker; and
(e) the Fund ManagerG has in place adequate valuation procedures to mark positions to market daily in order to meet on an ongoing basis the restriction referred to in (d)(i) relating to the limit to which the prime broker may use as collateral the assets of the FundG .
Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]