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  • Authorised Market Institutions (AMI) [VER18/02-17]

    • Part 1 Introduction

      • AMI 1 Application, Interpretation and Overview

        • AMI 1.1 Application

          • AMI 1.1.1

            (1) This module applies to:
            (a) every PersonG who carries on, or intends to carry on, either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG in or from the DIFCG ;
            (b) a Key IndividualG , or a PersonG intending to be a Key IndividualG , of a PersonG referred to in (a); and
            (c) a ControllerG , or a PersonG intending to be a ControllerG , of a PersonG referred to in (a).
            (2) This module also applies to an Authorised Market InstitutionG where it:
            (a) carries on, or intends to carry on, the Financial ServiceG of Operating an Alternative Trading SystemG to the extent that such activities constitute operating a Multilateral Trading FacilityG ; or
            (b) acts as a Trade RepositoryG .
            (3) This module does not apply to a Recognised BodyG .
            Derived from RM118/2013 [VER15/07-13]

        • AMI 1.2 Overview of the Module

          • AMI 1.2 Guidance

            The regulatory framework

            1. The Regulatory LawG 2004 ("the Regulatory Law") and the Markets LawG 2012 ("the Markets Law ") provide the framework for the licensing and supervision of Authorised Market InstitutionsG and for taking regulatory action against those licensed institutions.
            2. In particular, while Article 41 of the Regulatory LawG prohibits a PersonG from carrying on Financial ServicesG in or from the DIFCG , Article 42 of that Law permits PersonsG duly authorised and Licensed to conduct Financial ServicesG in providing their services.
            3. The Markets LawG establishes a framework in relation to how an Official List of SecuritiesG is maintained and administered by the Listing AuthorityG . Either the DFSAG , or an Authorised Market InstitutionG where it has been granted an endorsement on its LicenceG to do so, may maintain an Official List of SecuritiesG .
            4. The GENG module prescribes the Financial ServicesG which may be carried on by an Authorised FirmG or Authorised Market InstitutionG and the detailed requirements that must be met by such firms. In addition, the GENG module also sets out the circumstances under which an Authorised Market InstitutionG may be authorised to carry out certain functions by way of an endorsement on its LicenceG .
            5. The RPP SourcebookG contains, amongst other things, the detailed policies and procedures relating to how the DFSAG exercises its licensing and supervisory functions relating to Authorised Market InstitutionsG .

            The AMI module

            6. The AMI Module is comprised of four Parts containing 12 chapters and three Appendices.
            7. Part 1 contains chapter 1, which sets out the application provisions and the overview of the AMI module.
            8. Part 2 contains chapters 2 and 3. Chapter 2 sets out the requirements relating to application for a LicenceG to Operate an ExchangeG or Clearing HouseG (or both) and an endorsement to operate a Multilateral Trading FacilityG or to maintain an Official List of SecuritiesG . Chapter 3 sets out the assessment of application related requirements, including application to obtain Key IndividualG status of an Authorised Market InstitutionG .
            9. Part 3 contains chapters 4, 5, 6 and 7. These chapters set out the substantive requirements (called the "Licensing RequirementsG ") that must be met by a PersonG at the point of grant of a LicenceG to be an Authorised Market InstitutionG and thereafter on an on-going basis. Chapter 4 contains the provisions which prescribe what the Licensing RequirementsG are, and the procedures an Authorised Market InstitutionG must follow in order to make any material changes to the arrangements it has in place to meet the Licensing RequirementsG . Chapter 5 contains the Licensing RequirementsG that are common to both ExchangesG and Clearing HousesG . Chapter 6 contains the additional Licensing RequirementsG that are specific to ExchangesG and chapter 7 contains the additional Licensing RequirementsG that are specific to Clearing HousesG .
            10. Part 4 contains chapters 8, 9, 10, 11 and 12. These chapters set out a range of miscellaneous provisions covering the requirements relating to the approval of ControllersG of Authorised Market InstitutionsG (chapter 8), the provisions governing the supervision of Authorised Market InstitutionsG (chapter 9), the procedures for withdrawal of a LicenceG or endorsement (chapter 10), appeal procedures from the decisions of the DFSAG (chapter 11) and the transitional provisions (chapter 12).
            11. There are three Appendices, Appendix 1 contains the requirements relevant to testing of technology systems, Appendix 2 contains the requirements relating to the use of price information providers and Appendix 3 contains the contract delivery specifications applicable to Derivative contracts which require physical delivery.G
            Derived from RM118/2013 [VER15/07-13]

    • Part 2 Application and Authorisation

      • AMI 2 Application for a Licence or Endorsement

        • AMI 2.1 Application

          • AMI 2.1.1

            (1) This chapter applies to a PersonG who intends to carry on either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG in or from the DIFCG .
            (2) This chapter also applies to a PersonG referred to in (1), who intends to obtain an endorsement on its LicenceG to:
            (a) carry on the Financial ServiceG of Operating an Alternative Trading SystemG to the extent that such activities constitute operating a Multilateral Trading FacilityG ; or
            (b) act as a Trade RepositoryG .
            (3) A PersonG who intends to carry on the Financial ServicesG and activities referred to in (1) and (2) is referred to in this chapter as an "applicant" unless the context otherwise provides.
            (4) This chapter also applies to an Authorised Market InstitutionG applying to change the scope of its LicenceG , or where a condition or restriction has previously been imposed on its LicenceG , to have such a condition or restriction varied or withdrawn. Such an Authorised Market InstitutionG may be referred to as an "applicant" in this chapter.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 2.1.1 Guidance

              1. The activity of operating a Multilateral Trading FacilityG ("MTF") is an activity that falls within the definition of the Financial ServiceG of Operating an Alternative Trading SystemG (see GEN Rule 2.22.1). A PersonG needs to be LicensedG as an Authorised FirmG to carry on that Financial ServiceG . However, pursuant to GEN Rule 2.2.12, a holder of a LicenceG to Operate an ExchangeG may also operate an MTFG if it has obtained an endorsement on its LicenceG permitting it to do so.
              2. Acting as a Trade RepositoryG is not a Financial ServiceG , and may be carried on by an Authorised FirmG or Authorised Market InstitutionG with an endorsement on its LicenceG permitting it to do so (see GEN Rule 2.2.13).
              3. A new applicant for a LicenceG or an existing holder of a LicenceG may apply to have an endorsement on its LicenceG to operate a Multilateral Trading FacilityG or to maintain a Trade RepositoryG .
              Derived from RM118/2013 [VER15/07-13]

        • AMI 2.2 Application for a Licence

          • AMI 2.2.1

            An applicant who intends to carry on either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG must apply to the DFSAG for a LicenceG in accordance with the Rules in this section and chapter 3.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 2.2.2

            The DFSAG will only consider an application for a LicenceG to Operate an ExchangeG or Operate a Clearing HouseG from a PersonG :

            (a) who is a Body CorporateG ; and
            (b) who is not an Authorised FirmG or an applicant to be an Authorised FirmG .
            Derived from RM118/2013 [VER15/07-13]

          • AMI 2.2.3

            A PersonG applying for a LicenceG must submit a written application to the DFSAG :

            (a) demonstrating how the applicant intends to satisfy the Licensing RequirementsG specified in Part 3 and any other applicable requirements; and
            (b) with copies of any relevant agreements or other information in relation to the application.
            Derived from RM118/2013' [VER15/07-13]

        • AMI 2.3 Application for an Endorsement

          • AMI 2.3.1

            The following requirements must be met by an applicant for the grant of an endorsement to operate a Multilateral Trading FacilityG :

            (a) it must hold a LicenceG with an authorisation to OperateG an ExchangeG ; and
            (b) it must be able to demonstrate that it can satisfy the requirement in Rule 4.2.1(3).
            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 2.3.1 Guidance

              1. Under GEN Rule 2.2.11(c) and GEN Rule 2.2.12, an Authorised Market InstitutionG Licensed to Operate an ExchangeG may obtain an endorsement to carry on the activity of operating a Multilateral Trading FacilityG .
              2. An ExchangeG with an endorsement to operate an MTFG needs to meet, on an on-going basis, the applicable Licensing RequirementsG under Rule 4.2.1(3). Accordingly, when an ExchangeG wishes to obtain such an endorsement, it needs to be able to demonstrate to the DFSAG that it can meet each of the Licensing Requirements with respect to the proposed MTFG . For example, it should demonstrate how the IT systems and human resources available to it would be utilised for the purposes of operating the MTFG .
              [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 2.3.2

            The requirements in App 5 to GEN must be met by an Authorised Market InstitutionG for the grant of an endorsement to act as a Trade RepositoryG .

            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 2.3.2 Guidance [Deleted]

              [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 2.3.3 [Deleted]

            [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 2.3.4 [Deleted]

            [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 2.4 Application for a Change of Scope of a Licence

          • AMI 2.4.1

            An Authorised Market InstitutionG applying to change the scope of its LicenceG , or to have a condition or restriction varied or withdrawn, must provide the DFSAG with written details of the proposed changes including an assessment of how it intends to satisfy the Licensing RequirementsG in relation to the new LicenceG scope.

            Derived from RM118/2013 [VER15/07-13]

            • AMI 2.4.1 Guidance

              1. Where an Authorised Market InstitutionG applies to change the scope of its LicenceG , it should provide at least the following information:
              a. particulars of the new activities requiring a variation to the scope of LicenceG , and the date of the proposed commencement of such activities;
              b. a revised business plan as appropriate, describing the basis of, and rationale for, the proposed change;
              c. details of the extent to which existing documentation, procedures, systems and controls will be amended to take into account any additional activities, and how the Authorised Market InstitutionG will be able to comply with any additional regulatory requirements including the applicable Licensing RequirementsG ; and
              d. if the Authorised Market InstitutionG is reducing its activities and it has existing MembersG who may be affected by the cessation of a Financial ServiceG , details of any transitional arrangements.
              2. If an application for a change of scope of LicenceG involves carrying on a new Financial ServiceG , the application will be assessed against all the requirements applicable to the relevant Financial ServiceG .
              Derived from RM118/2013 [VER15/07-13]

      • AMI 3 Authorisation

        • AMI 3.1 Application

          • AMI 3.1.1

            This chapter applies to every PersonG who is an applicant for:

            (a) a LicenceG to be an Authorised Market InstitutionG ;
            (b) an endorsement to:
            (i) maintain an Official List of SecuritiesG ;
            (ii) operate a Multilateral Trading FacilityG ; or
            (iii) act as a Trade RepositoryG ; or
            (c) Key IndividualG status.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 3.1.1 Guidance

              1. This chapter outlines the DFSA'sG authorisation requirements for an Authorised Market InstitutionG and its Key IndividualsG , as well as the process for an Authorised Market InstitutionG to obtain an endorsement on its LicenceG to maintain an Official List of SecuritiesG , operate a Multilateral Trading FacilityG or act as a Trade RepositoryG .
              2. This chapter should be read in conjunction with the RPP SourcebookG , which sets out the DFSA'sG general regulatory policy and processes. See chapter 2 of the RPP sourcebookG .
              Derived from RM118/2013 [VER15/07-13]

        • AMI 3.2 Assessment

          • AMI 3.2.1

            (1) In order to become authorised to carry on one or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG , the applicant must demonstrate to the satisfaction of the DFSAG that it can meet the relevant Licensing RequirementsG specified in chapters 5, 6 and 7, as appropriate to the Financial ServicesG it proposes to carry on, both at the point of the grant of the LicenceG and thereafter on an on-going basis.
            (2) In order to obtain an endorsement on its LicenceG to:
            (a) maintain an Official List of SecuritiesG ;
            (b) operate a Multilateral Trading FacilityG ; or
            (c) act as a Trade RepositoryG ,
            the applicant must demonstrate to the satisfaction of the DFSAG that it can meet the requirements applicable to PersonsG undertaking the relevant activities, both at the point of the grant of the endorsement and thereafter on an on-going basis.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 3.2.1 Guidance

              1. The Licensing RequirementsG are specified in chapters 5, 6 and 7 of Part 3 of this module. These include the general requirements applicable to all Authorised Market InstitutionsG (chapter 5), and the additional requirements applicable to specific types of activities of Authorised Market InstitutionsG (chapters 6 and 7).
              2. Where an Authorised Market InstitutionG (or an applicant for a LicenceG ) seeks to obtain an endorsement on its LicenceG , additional requirements relevant to the type of endorsement need to be satisfied (see, for example, App 5 of GEN for the requirements relating to Trade RepositoriesG ).
              3. Currently, the function of maintaining an Official List of SecuritiesG is performed by the DFSAG . However, the DFSAG has the power, pursuant to Article 29 of the Markets LawG , to grant an Authorised Market InstitutionG an endorsement on its LicenceG permitting it to maintain an Official List of SecuritiesG .
              4. Section 3.6 of the RPP SourcebookG sets out the matters which the DFSAG takes into consideration when making an assessment under Rule 3.2.1.
              Derived from RM118/2013 [VER15/07-13]

          • Inquiries and Information

            • AMI 3.2.2

              In assessing an application for a LicenceG or an endorsement on a LicenceG , the DFSAG may:

              (a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;
              (b) require the applicant to provide additional information;
              (c) require the applicant to have information on how it intends to ensure compliance with a particular requirement;
              (d) require any information provided by the applicant to be verified in any way that the DFSAG specifies; and
              (e) take into account any information which it considers relevant.
              Derived from RM118/2013 [VER15/07-13]

            • AMI 3.2.3

              (1) In assessing an application for a LicenceG , the DFSAG may, by means of written notice, indicate the legal form that the applicant may adopt to enable authorisation to be granted.
              (2) Where the DFSAG thinks it appropriate, it may treat an application made by one legal form or PersonG as having been made by the new legal form or PersonG .
              Derived from RM118/2013 [VER15/07-13]

        • AMI 3.3 Obtaining Key Individual Status

          • AMI 3.3 Guidance

            Under Article 43 of the Regulatory LawG , every Authorised Market InstitutionG must have Key IndividualsG appointed to perform Licensed FunctionsG . Key IndividualsG appointed by an Authorised Market InstitutionG to perform Licensed FunctionsG must be approved by the DFSAG before they are permitted to carry on such functions. This section sets out the matters that will be considered by the DFSAG in approving such Key Individuals. The list of Licensed FunctionG s for an Authorised Market InstitutionG is in section 5.3 of this module.

            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 3.3.1

            (1) In regard to an application for approval for an individual to be granted Key IndividualG status, both the Authorised Market InstitutionG and the individual must complete the appropriate form in AFNG .
            (2) An Authorised Market InstitutionG must be satisfied that the individual with respect to whom an application is submitted:
            (a) is competent in his proposed role;
            (b) has kept abreast of relevant market, product, technology, legislative and regulatory developments; and
            (c) is able to apply his knowledge.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 3.3.1 Guidance

              See paragraph 2.2.16(j) and section 2-3 of the RPP sourcebook for the details of the assessment which an Authorised Market InstitutionG is expected to undertake.

              Derived from RM118/2013 [VER15/07-13]

          • AMI 3.3.2 [Deleted]

            [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 3.3.2 Guidance [Deleted]

              [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • Requirements for Key Individuals

            • AMI 3.3.2

              (1) To be authorised as a Key IndividualG an individual must demonstrate that he is fit and proper to perform the Licensed FunctionG .
              (2) In assessing whether an individual is fit and proper to perform a Licensed FunctionG under (1) the DFSAG will consider:
              (a) the individual's integrity;
              (b) the individual's competence and capability;
              (c) the individual's financial soundness;
              (d) the individual's proposed role within the Authorised Market InstitutionG ; and
              (e) any other relevant matters.
              [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 3.3.3

              Without limiting Rule 3.3.2, an individual shall not be considered fit and proper for the the purposes of that Rule if he:

              (a) is bankrupt;
              (b) has been convicted of a serious criminal offence; or
              (c) is incapable, through mental or physical incapacity, of managing his affairs.
              [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 3.3.4

              In assessing whether an individual is fit and proper to be granted Key IndividualG Status to carry out a Licensed FunctionG , the DFSAG may:

              (a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;
              (b) require the Authorised Market InstitutionG or the individual to provide additional information;
              (c) require any information provided by the Authorised Market InstitutionG or the individual to be verified in any way specified by the DFSAG ; and
              (d) take into account any information which it considers appropriate.
              [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 3.3.4 Guidance

                Section 2.3 of the RPP Sourcebook sets out the matters which the DFSAG takes into consideration when making an assessment referred to in this section.

                [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

    • Part 3 Licensing Requirements

      • AMI 4 General

        • AMI 4.1 Application

          • AMI 4.1.1

            This chapter applies to a PersonG who is an Authorised Market InstitutionG or an applicant for such a LicenceG .

            Derived from RM118/2013 [VER15/07-13]

        • AMI 4.2 Licensing Requirements

          • AMI 4.2.1

            (1) An Authorised Market InstitutionG must have adequate arrangements both at the time a LicenceG is granted and at all times thereafter to meet the applicable Licensing RequirementsG as specified in (2).
            (2) The Licensing RequirementsG are:
            (a) the general requirements specified in chapter 5, which are applicable to all Authorised Market InstitutionsG ;
            (b) the additional requirements specified in chapter 6, which are applicable to an Authorised Market InstitutionG Operating an ExchangeG ; and
            (c) the additional requirements specified in chapter 7, which are applicable to an Authorised Market InstitutionG Operating a Clearing HouseG .
            (3) Where an Authorised Market InstitutionG operates a Multilateral Trading FacilityG pursuant to an endorsement on its LicenceG , the Licensing RequirementsG specified in (2)(a) and (b) apply with respect to the operation of such a facility as if that facility is an ExchangeG .
            Derived from RM118/2013 [VER15/07-13]

        • AMI 4.3 Approval of Material Changes

          • AMI 4.3.1

            (1) An Authorised Market InstitutionG may, subject to (2), only make material changes to its existing arrangements to meet the Licensing RequirementsG where it has obtained the DFSA'sG prior approval to do so in accordance with the requirements in this section.
            (2) In the case of any changes to the Business RulesG of an Authorised Market InstitutionG , such changes must be made in accordance with the requirements in section 5.6.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 4.3.1 Guidance

              1. Existing arrangements to meet the Licensing RequirementsG are those arrangements which an Authorised Market InstitutionG has in place at the time it is initially granted a LicenceG , and includes any subsequent changes made to such arrangements in accordance with the requirements in this Rule.
              2. If an Authorised Market InstitutionG is unsure, it may seek the DFSAG views on whether a proposed change to its existing arrangements constitutes a material change. Such clarification should be sought as soon as possible when it becomes reasonably apparent to the Authorised Market InstitutionG that some changes to its existing arrangements are needed.
              Derived from RM118/2013 [VER15/07-13]

          • AMI 4.3.2

            (1) An Authorised Market InstitutionG proposing to make material changes to its existing arrangements to meet the Licensing RequirementsG must provide to the DFSAG a notice setting out:
            (a) the proposed change;
            (b) the reasons for the proposed change; and
            (c) what impact the proposed change might have on its ability to discharge its Regulatory FunctionsG .
            (2) The notice referred to in (1) must, subject to (3), be submitted to the DFSAG at least 30 days before the proposed change is expected to come into effect.
            (3) The DFSAG may, in circumstances where a material change to existing arrangements is shown on reasonable grounds to be urgently needed, accept an application for approval of such a change on shorter notice than the 30 days referred to in (2).
            Derived from RM118/2013 [VER15/07-13]

          • AMI 4.3.3

            The DFSAG must, upon receipt of a notice referred to in Rule 4.3.2, approve or reject the proposed change as soon as practicable and in any event within 30 days of the receipt of the notice, unless that period has been extended by notification to the applicant.

            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 4.3.4

            (1) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under Rule 4.3.3 to reject a proposed change.
            (2) If the DFSAG decides to exercise its power under Rule 4.3.3 to reject a proposed change, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
            Derived from RM118/2013
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14] [VER15/07-13]

            • AMI 4.3.4 Guidance

              1. The period of 30 days will commence from the time the DFSAG has received all the relevant information to assess the application.
              2. An Authorised Market InstitutionG should consider submitting its application for DFSAG approval well in advance of the date on which the proposed change is expected to come into effect, especially in the case of significant material changes to its existing arrangements, to allow the DFSAG sufficient time to consider the application. Such timely submission would generally tend to avoid any extension of time being sought by the DFSAG to assess properly the impact of a proposed change, due to its nature, scale and complexity. Such an extension would be made in consultation with the applicant.
              3. If a proposed material change is not approved by the DFSAG within the 30 day period and the DFSAG has not expressly extended the period beyond 30 days, an Authorised Market InstitutionG may treat the proposed change as being rejected by the DFSAG , and on that basis, may refer the decision to the FMTG .
              4. An Authorised Market InstitutionG may use the results of consultation with its user committees to identify the impact the proposed change would have on its ability to meet the Licensing RequirementsG , including any impact such a change would have on its MembersG and other stakeholders. See GEN App 3 — Guidance No. 9–12 for best practice relating to user committees.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 4.4 Definition of Regulatory Functions

          • AMI 4.4.1

            Pursuant to Article 23(2)(f)(ii) and (iii) of the Regulatory LawG , the DFSAG prescribes the Regulatory FunctionG s of an Authorised Market InstitutionG as those functions which directly contribute to the satisfaction by the Authorised Market InstitutionG of its Licensing RequirementsG .

            [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

      • AMI 5 General Licensing Requirements Applicable to all Authorised Market Institutions

        • AMI 5.1 Application

          • AMI 5.1.1

            This chapter applies to an Authorised Market InstitutionG and its Key IndividualsG .

            Derived from RM118/2013 [VER15/07-13]

        • AMI 5.2 Organisational Requirements

          • AMI 5.2 Guidance

            Every Authorised Market InstitutionG must comply with the requirements in GEN chapter 5, which relate to the management and systems and controls, which form an essential part of the organisational requirements of an Authorised Market InstitutionG . The requirements set out below augment the organisational requirements applicable to an Authorised Market Institution set out in GEN chapter 5.

            Derived from RM118/2013 [VER15/07-13]

          • Fitness and Propriety

            • AMI 5.2.1

              An Authorised Market InstitutionG must:

              (a) be fit and proper;
              (b) be appropriately constituted; and
              (c) take appropriate measures to:
              (i) satisfy the Licensing RequirementsG ; and
              (ii) perform its Regulatory FunctionsG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.2.1 Guidance

                See Chapter 5 of GEN and paragraphs 2-2-16 to 2-2-18 of the RPP SourcebookG which set out matters which the DFSAG takes into consideration when making an assessment under Rule 5.2.1.

                Derived from RM118/2013 [VER15/07-13]

          • Human Resources

            • AMI 5.2.2

              (1) An Authorised Market InstitutionG must have and maintain sufficient human resources to operate and supervise its facilities.
              (2) An Authorised Market InstitutionG must ensure, as far as reasonably practicable, that its EmployeesG are:
              (a) fit and proper;
              (b) appropriately trained for the duties they perform; and
              (c) trained in the requirements of the legislation applicable in the DIFCG .
              (3) An Authorised Market InstitutionG must:
              (a) have appropriate arrangements in place to ensure that its EmployeesG maintain their fitness and propriety; and
              (b) keep records of the assessment process undertaken for each EmployeeG for a minimum of six years from the date on which an individual ceases to be an EmployeeG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.2.2 Guidance

                1. In assessing whether an Authorised Market Institution'sG systems and controls are adequate to ensure the on-going maintenance of fitness and propriety of its EmployeesG , the DFSAG will take into account:
                a. the distribution of duties and responsibilities among its Key IndividualsG and the departments of the Authorised Market InstitutionG responsible for performing its Regulatory FunctionsG ;
                b. the staffing and resources of the departments of the Authorised Market InstitutionG responsible for performing its Regulatory FunctionsG ;
                c. the arrangements made to enable Key IndividualsG to supervise the departments for which they are responsible;
                d. the arrangements for supervising the performance of Key IndividualsG and their departments; and
                e. the arrangements by which the Governing BodyG is able to keep the allocation of responsibilities between, and the appointment, supervision and remuneration of, Key Individuals under review.
                2. See also GEN Rule 5.3.18 which sets out the requirements relating to the suitability of EmployeesG and section 2.3 of the RPP Sourcebook which sets out in more detail the matters which the DFSAG takes into consideration when making its assessment under GEN Rule 5.3.18 and Rule 5.2.2 above.
                Derived from RM118/2013 [VER15/07-13]

          • Governance

            • AMI 5.2.3

              (1) An Authorised Market InstitutionG must have:
              (a) a corporate governance framework appropriate to the nature, scale and complexity of its business and structure, which is adequate to promote the sound and prudent management and oversight of the Authorised Market Institution'sG business and to protect the interests of its stakeholders; and
              (b) a remuneration structure and strategies which are well aligned with the long term interests of the Authorised Market InstitutionG , and appropriate to the nature, scale and complexity of its business.
              (2) Without limiting the generality of the requirements in GEN chapter 5, an Authorised Market InstitutionG must ensure that its Governing BodyG has a sufficient number of independent members at all times.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.2.3 Guidance

                1. Detailed corporate governance and remuneration related requirements applicable to an Authorised Market InstitutionG are contained in GEN Rules 5.3.30 and 5.3.31. See the best practice standards relating to corporate governance and remuneration set out under those Rules and App 3 of GEN. These are designed to promote sound governance and remuneration practices whilst providing flexibility for application taking into account the nature, scale and complexity of operations of an Authorised Market InstitutionG .
                2. The independence criteria for the members of the Governing Body are set out in paragraphs 2.2.16 to 2.2.18 of the RPP sourcebook.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.3 Licensed Functions and Key Individuals

          • Licensed Functions and Key Individuals

            • AMI 5.3.1

              (1) An Authorised Market InstitutionG must, for the purpose of proper discharge of its Regulatory FunctionsG , have at all times individuals appointed to carry out the functions of the:
              (a) Governing BodyG ;
              (b) Senior Executive OfficerG ;
              (c) Finance OfficerG ;
              (d) Compliance OfficerG ;
              (e) Risk OfficerG ;
              (f) Money Laundering Reporting OfficerG ; and
              (g) Internal AuditorG .
              (2) Each of the functions of an Authorised Market InstitutionG specified in (1)(a) to (g) are Licensed FunctionsG for the purposes of Article 43(1) of the Regulatory LawG .
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 5.3.2

              (1) An Authorised Market InstitutionG must not permit a Key IndividualG to carry on any Licensed FunctionG for or on behalf of the Authorised Market InstitutionG unless the particular individual has been assessed by the Authorised Market InstitutionG to be competent to perform the relevant Licensed FunctionG .
              (2) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function performed by a registered insolvency practitioner (subject to the restrictions in Article 88 of the Insolvency Law 2009) if the practitioner is:
              (a) acting as a nominee in relation to a company voluntary arrangement within the meaning of Article 8 of the Insolvency Law 2009;
              (b) appointed as a receiver or administrative receiver within the meaning of Article 14 of the Insolvency Law 2009;
              (c) appointed as a liquidator in relation to a members' voluntary winding up within the meaning of Article 32 of the Insolvency Law 2009;
              (d) appointed as a liquidator in relation to a creditors' voluntary winding up within the meaning of Article 32 of the Insolvency Law 2009; or
              (e) appointed as a liquidator or provisional liquidator in relation to a compulsory winding up within the meanings of Articles 58 and 59 of the Insolvency Law 2009.
              (3) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function performed by an insolvency practitioner in accordance with the applicable requirements equivalent to those specified in (2)(a)–(e) in another jurisdiction.
              (4) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function of an individual appointed to act as a manager of the business of an Authorised Market InstitutionG as directed by the DFSAG under Article 88 of the Regulatory LawG .
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 5.3.2 Guidance

                1. See section 2.3 of the RPP sourcebook for details of the assessment that the Authorised Market InstitutionG and the DFSAG undertake to assess whether an individual is fit and proper to undertake Key IndividualG functions.
                2. An Authorised Market InstitutionG may apply for the DFSA'sG in-principle approval of an individual as soon as the individual is identified as a potential appointee to avoid any delays in formalising the appointment. However, an Authorised Market InstitutionG should submit to the DFSAG , as far as reasonably practicable, all the relevant information, including the results of its own assessment, when seeking such in-principle approval.
                Derived from RM118/2013 [VER15/07-13]

          • Members of the Governing Body

            • AMI 5.3.3

              Every member of the Governing BodyG of an Authorised Market InstitutionG carries on the function of a Key IndividualG .

              Derived from RM118/2013 [VER15/07-13]

          • Senior Executive Officer

            • AMI 5.3.4

              The Senior Executive OfficerG function is carried out by an individual who:

              (a) has, either alone or jointly with the other Key IndividualsG , the ultimate responsibility for the day-to-day management, supervision and control of one or more (or all) parts of an Authorised Market Institution'sG Financial ServicesG carried on in or from the DIFCG ; and
              (b) is either a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • Finance Officer

            • AMI 5.3.5

              The Finance OfficerG function is carried out by an individual who:

              (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the financial resources requirements in Rule 5.5.4; and
              (b) is either a MemberG of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Compliance Officer

            • AMI 5.3.6

              The Compliance OfficerG function is carried out by an individual who:

              (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the Licensing RequirementsG and other applicable requirements in carrying out Financial ServicesG ; and
              (b) is either a MemberG of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Risk Officer

            • AMI 5.3.7

              The Risk OfficerG function is carried out by an individual who:

              (a) has the overall responsibility for the risk management function in relation to the Financial ServicesG carried on by the Authorised Market InstitutionG ; and
              (b) is a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Money Laundering Reporting Officer

            • AMI 5.3.8

              The Money Laundering Reporting OfficerG function is carried out by an individual who:

              (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the requirements in Rule 5.11.2, AMLG and any other relevant anti money laundering legislation applicable in the DIFCG ; and
              (b) is either a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Internal Auditor

            • AMI 5.3.9

              The Internal AuditorG function is carried out by an individual who is responsible for the internal audit matters in relation to the Financial ServicesG carried on by the Authorised Market InstitutionG .

              Derived from RM118/2013 [VER15/07-13]

          • Residency of Key Individuals

            • AMI 5.3.10

              The Key IndividualG functions of a Senior Executive OfficerG , Compliance OfficerG and Money Laundering Reporting OfficerG must be carried out by an individual resident in the U.A.E.G

              Derived from RM118/2013 [VER15/07-13]

          • Combining Roles

            • AMI 5.3.11

              (1) To the extent practicable, an Authorised Market InstitutionG must not assign to its Key IndividualsG any commercial functions which conflict with their Key IndividualG functions or which impair, or are likely to impair, their ability to perform the relevant functions.
              (2) Before an Authorised Market InstitutionG assigns to a Key IndividualG any commercial functions, the Authorised Market InstitutionG must:
              (a) form a view on a reasonable basis that the commercial functions to be assigned to any Key IndividualG do not, as far as reasonably practicable, conflict with the relevant Key IndividualG functions or impair his ability to discharge those functions effectively; and
              (b) to the extent there are such conflicts inherent in the relevant functions, there are adequate procedures and controls to mitigate such conflicts.
              (3) The Authorised Market InstitutionG must maintain records of its decisions and procedures as applicable under (2) above.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.3.11 Guidance

                The DFSAG does not expect Key IndividualsG who are PersonsG undertaking control functions such as those relating to risk, compliance and audit to be assigned any functions or roles which are to further the Authorised Market Institution'sG commercial interests or objectives (such as business promotional activities) .

                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.4 Conflicts of Interests

          • AMI 5.4.1

            Without limiting the generality of the obligations under section 5.2 of GEN, an Authorised Market InstitutionG must take all reasonable steps to ensure that any conflicts of interest, including those:

            (a) between itself and its shareholders, MembersG or other users of its facilities; and
            (b) between its MembersG and other users of its facilities, and, among themselves,

            are promptly identified and then prevented or managed, or disclosed, in a manner that does not adversely affect the sound functioning and operation of the Authorised Market InstitutionG .

            Derived from RM118/2013 [VER15/07-13]

          • AMI 5.4.2

            Without limiting the generality of the requirement in Rule 5.4.1, an Authorised Market InstitutionG must establish and maintain adequate policies and procedures to ensure that its EmployeesG do not undertake personal account transactions in InvestmentsG in a manner that creates or has the potential to create conflicts of interest.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 5.4.3

            An Authorised Market InstitutionG must establish a code of conduct that sets out the expected standards of behaviour for its EmployeesG , including clear procedures for addressing conflicts of interest. Such a code must be:

            (a) binding on EmployeesG ; and
            (b) to the extent appropriate and practicable, made publicly available.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 5.4.3 Guidance

              1. In assessing whether an Authorised Market Institution'sG policies and procedures are adequate to address conflicts of interests, the DFSAG will consider whether those include:
              a. policies on the use of confidential information received in carrying out its Regulatory FunctionsG to ensure it is only used for proper purposes;
              b. arrangements for transferring decisions or responsibilities to alternates in individual cases;
              c. arrangements made to ensure that individuals who may have a permanent conflict of interest in certain circumstances are excluded from the process of taking decisions (or receiving information) about matters to which the conflict is relevant; and
              d. requirements and procedures included in contracts of employment, staff rules, letters of appointment for members of the Governing BodyG and other Key IndividualsG and other guidance given to individuals on handling conflicts of interest relating to:
              i. the need for prompt disclosure of a conflict of interest to enable others who are not affected by the conflict to assist in deciding how it may need to be addressed;
              ii. the circumstances in which a general disclosure of a conflict of interest in advance may be sufficient;
              iii. the circumstances in which a general advance disclosure may not be adequate;
              iv. the circumstances in which it would be appropriate for a conflicted individual to withdraw from any involvement in the matter concerned, without disclosing the interests; and
              v. the circumstances in which safeguards in addition to disclosure would be required, such as the withdrawal of the individual from the decision-making process or from access to relevant information.
              2. See also the best practice standards relating to corporate governance and remuneration standards set out under in GEN Rules 5.3.30 and 5.3.31 and GEN App 3, which cover conflicts of interest issues that need to be addressed in order to promote sound governance and remuneration practices within an Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Performance of Regulatory Functions

            • AMI 5.4.4

              An Authorised Market InstitutionG must take all reasonable steps to ensure that the performance of its Regulatory FunctionsG is not adversely affected by its commercial interests.

              Derived from RM118/2013 [VER15/07-13]

            • AMI 5.4.5

              For the purposes of the requirement in Rule 5.4.4, an Authorised Market InstitutionG must have adequate systems and controls, including policies and procedures, to ensure that the pursuit of its commercial interests (including its profitability) does not adversely impact on the performance of its Regulatory FunctionsG .

              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.4.5 Guidance

                An Authorised Market InstitutionG should have systems for identifying, and drawing to the attention of its senior management, situations where its commercial interests conflict, or may potentially conflict, with the proper performance of its Regulatory FunctionsG . This would enable its senior management to take appropriate steps to ensure that such conflicts do not adversely affect the proper performance by the Authorised Market InstitutionG of its Regulatory FunctionsG . In particular, senior management should ensure that adequate human, financial and other resources (both in quantity and quality) are provided for risk management, regulatory, compliance and other similar functions.

                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.5 Operational Efficiency and Resilience

          • Systems and Controls

            • AMI 5.5.1

              (1) Without limiting the generality of the obligations relating to systems and controls in section 5.3 of GEN, an Authorised Market InstitutionG must ensure that its systems and controls are:
              (a) adequate to ensure that its operations are conducted at all times in accordance with the applicable requirements, including legislation;
              (b) sufficiently flexible and robust to ensure continuity and regularity in the performance of its functions relating to the operation of its facilities; and
              (c) appropriate to the nature, scale and complexity of its operations.
              (2) For the purposes of (1), the systems and controls of an Authorised Market InstitutionG must be adequate to enable it to meet the Licensing RequirementsG on an on-going basis. In particular, they must include adequate arrangements in relation to:
              (a) the assessment and management of all risks;
              (b) financial and technology resources;
              (c) the fitness and propriety of its EmployeesG ;
              (d) the operation of its functions;
              (e) outsourcing;
              (f) the safeguarding and administration of assets belonging to its MembersG and other participants on its facilities;
              (g) the transmission of information to MembersG and other participants on its facilities; and
              (h) the supervision and monitoring of transactions on its facilities.
              (3) An Authorised Market InstitutionG must undertake regular reviews of its systems and controls to ensure that they remain adequate and operate as intended.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.5.1 Guidance

                The systems and controls requirements in Rule 5.5.1 augment the systems and controls requirements in GEN chapter 5.

                Derived from RM118/2013 [VER15/07-13]

          • AMI 5.5.2 Risk Management

            • AMI 5.5.2 Guidance

              1. An Authorised Market InstitutionG is subject to the risk management requirements in GEN Rules 5.3.55.3.7. Additional risk management requirements are prescribed for Authorised Market InstitutionG Operating a Clearing House in sections 7.2 and 7.3.
              2. The individual appointed pursuant to GEN Rule 5.3.7(1) to advise the Governing BodyG and the senior management of the Authorised Market InstitutionG relating to risks and management of such risks is the Key IndividualG performing the function of the Risk OfficerG pursuant to Rule 5.3.7; Key IndividualsG .
              3. In assessing the adequacy of an Authorised Market Institution'sG systems and controls for identifying, assessing and managing risks, the DFSAG may also have regard to the extent to which such systems and controls enable the Authorised Market InstitutionG to:
              a. identify all the general, operational, legal and market risks wherever they arise in its activities;
              b. measure and control the different types of risk;
              c. allocate responsibility for risk management to persons with appropriate levels of knowledge and expertise; and
              d. provide sufficient and reliable information to Key IndividualsG and, where relevant, the Governing BodyG of the Authorised Market InstitutionG .
              4. As part of assessing the adequacy of risk controls, the DFSAG will also consider how internal and external audits operate in the context of systems and controls. In doing so the following factors may be considered:
              a. the size, composition and terms of reference of any audit committee of the Authorised Market InstitutionG ;
              b. the frequency and scope of external audit;
              c. the provision and scope of internal audit;
              d. the staffing and resources of the Authorised Market Institution'sG internal audit department;
              e. the internal audit department's access to the Authorised Market Institution'sG records and other relevant information; and
              f. the position, responsibilities and reporting lines of the internal audit department and its relationship with other departments of the Authorised Market InstitutionG .
              5. In addition, the DFSAG will also consider the adequacy of the risk management function, in particular:
              a. the access which the individuals performing risk management function have to the Authorised Market Institution'sG records and other relevant information; and
              b. the position, responsibilities and reporting lines of the risk management department and its relationship with other departments of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

          • Outsourcing

            • AMI 5.5.3

              (1) Without limiting the generality of the requirements in GEN Rules 5.3.21 and 5.3.22, an Authorised Market InstitutionG must, before entering into any material outsourcing arrangements with a service provider, obtain the DFSA'sG prior approval to do so.
              (2) For avoidance of doubt, the requirement in (1) applies to any outsourcing arrangements which were not in existence at the time the Authorised Market InstitutionG was granted its LicenceG .
              (3) In order to obtain the DFSA'sG prior approval for outsourcing arrangements referred to in (1), an Authorised Market InstitutionG must follow those procedures for obtaining the DFSA'sG prior approval for material changes specified in Rule 4.3.1(1).
              (4) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under this Rule to refuse to approve an outsourcing arrangement.
              (5) If the DFSAG decides to exercise its power under this Rule to refuse to approve an outsourcing arrangement, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 5.5.3 Guidance

                1. The requirements in GEN Rules 5.3.22 and 5.3.23 set out the requirements applicable when an Authorised Market InstitutionG outsources its functions and activities.
                2. In assessing the adequacy of an Authorised Market Institution'sG systems and controls for identifying, assessing, and managing risks arising from functions which are outsourced, the DFSAG will have regard to:
                a. due diligence procedures for selecting service providers and monitoring the performance of the relevant functions by them;
                b. whether the Authorised Market InstitutionG has in place legally binding contracts with its service providers;
                c. the business continuity and disaster recovery arrangements of the Authorised Market Institution'sG service provider;
                d. whether the security and confidentiality of information provided to the service provider of the Authorised Market InstitutionG is guaranteed in accordance with the applicable legislation;
                e. the concentration of outsourcing functions with one or more service providers;
                f. the agreed procedures for terminating the outsourcing arrangements; and
                g. whether the access to books and records of the service providers is granted to the Authorised Market InstitutionG and the DFSAG , including rights of inspection.
                3. If an Authorised Market InstitutionG wishes to make any material changes to its outsourcing arrangements which were in existence at the time of the grant of its LicenceG , or any subsequent outsourcing arrangements made in accordance with the requirements in Rule 5.5.3, such changes require the DFSA'sG prior written approval pursuant to Rule 4.3.1(1).
                Derived from RM118/2013 [VER15/07-13]

          • Financial Resources

            • AMI 5.5.4

              (1) An Authorised Market InstitutionG must, subject to (3) and (4), have and maintain at all times:
              (a) the minimum financial resource requirement in (2); and
              (b) additional financial resources of a type acceptable to the DFSAG which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due.
              (2) The minimum financial resource requirement referred to in (1)(a) is:
              (a) an amount equal to one half of the estimated gross operating costs of the Authorised Market InstitutionG for the next twelvemonth period; or
              (b) such other capital amount as may be specified by the DFSAG .
              (3) The assets held by an Authorised Market InstitutionG for the purposes of meeting the financial resources requirements in (1):
              (a) must be of high quality and sufficiently liquid in order to allow the Authorised Market InstitutionG to meet its current and projected operating expenses under a range of adverse scenarios, including in adverse market conditions; and
              (b) must be held, where it comprises cash, by an entity which is a BankG , or a financial institution authorised and supervised by a Financial Services RegulatorG acceptable to the DFSAG with respect to the activity of deposit taking.
              (4) An Authorised Market InstitutionG must have systems and controls to enable it to determine and monitor whether its financial resources are sufficient for the purposes of the requirement in (1). For this purpose, the systems and controls of an Authorised Market InstitutionG must address the following factors, with any other factors that are relevant and appropriate to its operations model:
              (a) the nature, scale, and complexity of the activities and risks associated with its operations;
              (b) the operational, counterparty, market and settlement risks to which it is exposed;
              (c) the amount, composition and legal position of its available financial resources; and
              (d) its ability to access additional financial resources if required.
              (5) An Authorised Market InstitutionG must monitor and manage the concentration of credit and liquidity exposures to commercial banks and clearing MembersG .
              (6) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under (2)(b) to specify a capital amount after a LicenceG has been granted.
              (7) If the DFSAG decides to exercise its power under (2)(b) to specify a capital amount after a LicenceG has been granted, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 5.5.4 Guidance

                1. The minimum financial resource requirement under Rule 5.5.4(1) is designed to ensure that an Authorised Market InstitutionG not only has sufficient financial resources to meet its liabilities as they fall due, but also to allow, if circumstances require, for the orderly wind-down of the Authorised Market InstitutionG 's business, while still allowing the institution to meet the applicable requirements, including conditions on its LicenceG .
                2. The systems and controls should enable the Authorised Market InstitutionG to assess whether the financial resources required for it to conduct its affairs are in place at all times. Such assessments should be made periodically or after any significant change or event, whether internal or external, that would have an impact on the operations of the Authorised Market InstitutionG . These assessments are necessary to demonstrate to the DFSAG that the Licensing RequirementsG are being satisfied on an on-going basis.
                3. In determining whether to set a minimum capital amount pursuant to Rule 5.5.4(2)(b), the DFSAG will take into account the risks that the Authorised Market InstitutionG poses to the DIFCG market and the products which are, or are intended to be, traded, cleared or settled.
                Derived from RM118/2013 [VER15/07-13]

          • Technology Resources

            • AMI 5.5.5

              (1) An Authorised Market InstitutionG must have sufficient technology resources to operate, maintain and supervise its facilities.
              (2) The Authorised Market InstitutionG must be able to satisfy the DFSAG that its technology resources are established and maintained in such a way as to ensure that they are secure and maintain the confidentiality of the data they contain.
              (3) An Authorised Market InstitutionG must ensure that its MembersG and other participants on its facilities have sufficient technology resources which are compatible with its own.
              (4) For the purposes of meeting the requirement in (1), an Authorised Market InstitutionG must have adequate procedures and arrangements for the evaluation, selection and on-going monitoring of information technology systems. Such procedures and arrangements must, at a minimum, provide for:
              (a) problem management and system change;
              (b) testing information technology systems before live operations in accordance with the requirements in Rule 5.5.6;
              (c) monitoring and reporting on system performance, availability and integrity; and
              (d) adequate measures to ensure:
              (i) the information technology systems are resilient and not prone to failure;
              (ii). business continuity in the event that an information technology system fails;
              (iii) protection of the information technology systems from damage, tampering, misuse or unauthorised access; and
              (iv) the integrity of data forming part of, or being processed through, information technology systems.
              (5) An Authorised Market InstitutionG must meet the applicable requirements in App 1 for the purposes of:
              (a) testing the adequacy and effectiveness of its own information technology systems; and
              (b) assessing the adequacy and effectiveness of information technology systems of its MembersG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.5.5 Guidance

                1. In assessing an Authorised Market InstitutionG 's systems and controls used to operate and carry on its functions, the DFSAG recognises that an Authorised Market InstitutionG is likely to have significant reliance on its information technology systems. In assessing the adequacy of these systems, the DFSAG will consider:
                a. the organisation, management and resources of the information technology department of the Authorised Market InstitutionG ;
                b. the arrangements for controlling and documenting the design, development, implementation and use of technology systems; and
                c. the performance, capacity and reliability of information technology systems.
                2. In particular, when assessing whether an Authorised Market InstitutionG has adequate information technology resourcing, the DFSAG will consider:
                a. whether its systems have sufficient electronic capacity to accommodate reasonably foreseeable volumes of messaging and orders, and
                b. whether such systems are adequately scalable in emergency conditions that might threaten the orderly and proper operations of its facility.
                Derived from RM118/2013 [VER15/07-13]

          • Regular Review of Systems and Controls

            • AMI 5.5.6

              (1) An Authorised Market InstitutionG must undertake regular review and updates of its information technology systems and controls as appropriate to the nature, scale and complexity of its operations.
              (2) For the purposes of (1), an Authorised Market InstitutionG must adopt well defined and clearly documented development and testing methodologies which are in line with internationally accepted testing standards.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.5.6 Guidance

                Through the use of such testing methodologies, the Authorised Market InstitutionG should be able to ensure, amongst other things, that:

                a. its systems and controls are compatible with its operations and functions;
                b. compliance and risk management controls embedded in its system operate as intended (for example, by generating error reports automatically); and
                c. it can continue to work effectively in stressed market conditions.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.6 Business Rules

          • Content of Business Rules

            • AMI 5.6.1

              (1) An Authorised Market InstitutionG must establish and maintain Business RulesG in accordance with the requirements in this section. Such rules must include:
              (a) criteria governing the admission of MembersG and any other PersonsG to whom access to its facilities is provided;
              (b) criteria governing the admission of Investments to trading, or clearing and settlement, as appropriate to its facilities;
              (c) Default RulesG ; and
              (d) any other matters necessary for the proper functioning of the Authorised Market InstitutionG and the facilities operated by it.
              (2) An Authorised Market Institution'sG Business RulesG must:
              (a) be based on objective criteria and non-discriminatory;
              (b) be clear and fair;
              (c) set out the Members' and other participants' obligations:
              (i) arising from the Authorised Market Institution'sG constitution and other administrative arrangements;
              (ii) when undertaking transactions on its facilities; and
              (iii) relating to professional standards that must be imposed on staff and agents of the MembersG and other participants when undertaking transactions on its facilities;
              (d) be legally binding and enforceable against the MembersG and other participants;
              (e) be made publicly available free of charge;
              (f) contain provisions for the resolution of Members'G and other participants' disputes and an appeal process from the decisions of the Authorised Market InstitutionG ; and
              (g) contain disciplinary proceedings, including any sanctions that may be imposed by the Authorised Market InstitutionG against its MembersG and other participants.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.6.1 Guidance

                1. The DFSAG assesses, at the point of grant of a LicenceG to an Authorised Market InstitutionG , the adequacy of its Business RulesG and its systems and controls to ensure effective monitoring of compliance with such rules. Thereafter, any amendment to the Business RuleG s can only be made in accordance with the requirements set out in Rules 5.6.4 to 5.6.7 in this section.
                2. Persons other than MembersG may have access to an Authorised Market InstitutionG 's facilities. See Rule 6.9.1(1)(a)(ii).
                Derived from RM118/2013 [VER15/07-13]

          • Default Rules

            • AMI 5.6.2

              An Authorised Market InstitutionG must have Default RulesG which, in the event of a MemberG or other participant on its facilities being, or appearing to be, unable to meet its obligations in respect of one or more contracts, enable action to be taken in respect of unsettled market contracts to which the MemberG or that other participant is a party.

              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.6.2 Guidance

                The DFSAG requires all Authorised Market InstitutionG to have Default RulesG under Article 28 of the Markets Law. Default RulesG allow an Authorised Market InstitutionG to close-out open positions by discharging the appropriate rights and liabilities of transactions which a MemberG or any other PersonG granted access to its facilities cannot, or may not be able to, fulfil.

                Derived from RM118/2013 [VER15/07-13]

          • Monitoring Compliance with Business Rules

            • AMI 5.6.3

              An Authorised Market InstitutionG must have adequate compliance procedures in place to ensure that:

              (a) its Business RulesG are monitored and enforced;
              (b) any complaints relating to its operations or regarding MembersG and other participants on its facilities are promptly investigated;
              (c) where appropriate, disciplinary action resulting in financial and other types of penalties can be taken;
              (d) appeal procedures are in place; and
              (e) referrals can be made to the DFSAG in appropriate circumstances.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.6.3 Guidance

                1. In determining whether an Authorised Market InstitutionG can effectively monitor its Business RulesG , the DFSAG will consider:
                a. the oversight of activity conducted on its facilities;
                b. the range of powers it retains over MembersG and other PersonsG granted access to its facilities, which should include the ability to modify, revoke or suspend access; and
                c. the disciplinary procedures which have been established to take disciplinary action, including a fair and clear policy on any financial penalties which may be imposed, and the appeal processes.
                2. In determining whether an Authorised Market InstitutionG can effectively oversee the activities conducted on its facilities, the DFSAG will consider how non-compliance is identified and how the significance of any non-compliance is assessed.
                Derived from RM118/2013 [VER15/07-13]

          • Amendments to Business Rules

            • AMI 5.6.4

              (1) An Authorised Market InstitutionG may only adopt new Business RulesG or make any amendments to existing Business RulesG in accordance with the requirements in Rules 5.6.5, 5.6.6 and 5.6.7.
              (2) A reference to an amendment in Rules 5.6.5, 5.6.6 and 5.6.7 includes the introduction of a new Business RuleG or a change to an existing Business RuleG or a proposal to do so.
              Derived from RM118/2013 [VER15/07-13]

          • Public Consultation

            • AMI 5.6.5

              (1) An Authorised Market InstitutionG must, subject to Rule 5.6.6, before making any amendment to its Business RulesG , undertake public consultation on the proposed amendment in accordance with the requirements in this Rule.
              (2) For the purposes of (1), an Authorised Market InstitutionG must:
              (a) publish a consultation paper setting out:
              (i) the text of both the proposed amendment and the Business RulesG that are to be amended;
              (ii) the reasons for proposing the amendment; and
              (iii) a reasonable consultation period, which must not be less than 30 days from the date of publication, within which MembersG and other stakeholders may provide comments; and
              (b) lodge with the DFSAG the consultation paper referred to in (a) no later than the time at which it is released for public comment.
              (3) The DFSAG may, where it considers on reasonable grounds that it is appropriate to do so, require the Authorised Market InstitutionG to extend its proposed period of public consultation specified in the consultation paper. An Authorised Market InstitutionG must comply with such a requirement.
              (4) An Authorised Market InstitutionG must:
              (a) facilitate, as appropriate, informal discussions on the proposed amendment with MembersG and other stakeholders including any appropriate representative bodies of such PersonsG ;
              (b) consider the impact the proposed amendment has on the interests of its MembersG and other stakeholders;
              (c) have proper regard to any public comments received.
              (5) Following public consultation, an Authorised Market InstitutionG must, before the date on which the proposed amendment comes into effect, lodge with the DFSAG :
              (a) a summary of any public comments received, and how any issues raised by those comments have been addressed; and
              (b) any changes made to the initial proposals as a result of the public comments, and if no changes have been made, a statement to that effect.
              Derived from RM118/2013 [VER15/07-13]

          • Dispensation of Public Consultation

            • AMI 5.6.6

              (1) The DFSAG may, on written application by an Authorised Market InstitutionG , dispense with the requirement in Rule 5.6.5 for public consultation where:
              (a) any delay resulting from public consultation is likely to be detrimental to the interests of the DIFCG markets; or
              (b) either the proposed amendment:
              (i) is purely administrative or immaterial; or
              (ii) the Authorised Market InstitutionG can demonstrate to the satisfaction of the DFSAG that it had taken into account the views and interests of its MembersG and other stakeholders as appropriate in developing the proposed amendment; and
              (c) the Authorised Market InstitutionG complies with the requirements in (2) or (3) as applicable.
              (2) An Authorised Market InstitutionG which seeks to dispense with public consultation on the ground referred to in (1)(a) must lodge with the DFSAG a statement setting out:
              (a) the text of both the proposed amendment and the Business RulesG that are to be amended:
              (b) the reasons for proposing the amendment;
              (c) the grounds on which it believes that a delay resulting from public consultation is likely to be detrimental to the DIFCG markets; and
              (d) whether any rights or obligations of any MembersG of the Authorised Market InstitutionG or other participants on its facilities are to be materially adversely affected by the proposed amendment, and if so, what measures are proposed to address such concerns.
              (3) An Authorised Market InstitutionG which seeks to dispense with public consultation on the ground referred to in (1)(b) must lodge with the DFSAG a statement setting out:
              (a) the text of both the proposed amendment and the Business RulesG that are to be amended; and
              (b) either:
              (i) the reasons it believes that the proposed amendment is purely administrative or immaterial; or.
              (ii) that it had taken into account the views and interests of its MembersG and other stakeholders as appropriate in developing the proposed amendment.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.6.6 Guidance

                For the purposes of demonstrating to the DFSAG that the Authorised Market InstitutionG had taken into account the views and interests of its MembersG and other relevant stakeholders, an Authorised Market InstitutionG may rely on the input provided by its user committees where the user committees meet best practice set out in GEN App3, Guidance No. 9–12.

                Derived from RM118/2013 [VER15/07-13]

          • DFSA Approval

            • AMI 5.6.7

              (1) An Authorised Market InstitutionG must seek the DFSA'sG approval of any proposed amendment to the Business RulesG before the rules are to come into effect.
              (2) The DFSAG will approve the proposed amendment to the Business RulesG unless it has reasonable grounds to believe that the proposed amendment is reasonably likely to be detrimental to the interests of the DIFCG markets.
              (3) Where the DFSAG has any concerns about the proposed amendment, it may:
              (a) either reject the proposed amendment or request the Authorised Market InstitutionG to withdraw the proposed amendments; or
              (b) require the Authorised Market InstitutionG to make appropriate changes to the proposed amendment, with or without public consultation.
              (4) The DFSAG must give to the Authorised Market InstitutionG reasons for its decisions under (3)(a) or (b) as applicable.
              (5) An Authorised Market InstitutionG must, as soon as practicable after receiving the DFSAG approval, notify the MembersG and the public of the amendment to its Business RulesG and the date on which the amendment becomes effective.
              (6) If the DFSAG decides to exercise its power under (3)(a) or (b), the Authorised Market InstitutionG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 5.6.7 Guidance

                1. The DFSAG does not formally approve the proposed amendments at the point of release of the proposed amendment for public consultation; instead that approval occurs at the end of the public consultation period because the DFSAG can properly take into account any public comments and changes resulting from public comments only at the end of the public consultation period.
                2. However, the DFSAG may, upon receipt of the proposed amendment, request an extension of the public consultation period if it considers on reasonable grounds that such an extension is appropriate. The circumstances in which the DFSAG may require an extended period of public consultation beyond 30 days include where the proposed amendment is likely to have a significant adverse impact on the Members'G rights and obligations or the interests of other participants in the DIFCG markets. An Authorised Market InstitutionG may rely on the results of soft consultation with Members and other stakeholders, or with any user committees it has established, to demonstrate that the proposed amendment does not warrant public consultation.
                3. Generally, the DFSAG expects to have a quick turnaround time in granting formal approval where no public comments have been received on public consultation or the proposed amendment are not extensive.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.7 Access to Facilities

          • Member Criteria

            • AMI 5.7.1

              (1) An Authorised Market InstitutionG must not grant access to its facilities to a PersonG except in accordance with the requirements in this module and its Business RulesG .
              (2) A PersonG who has been granted access to the facilities of an Authorised Market InstitutionG pursuant to its Business RulesG is a MemberG of the Authorised Market InstitutionG , except where otherwise provided.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.7.1 Guidance

                1. Generally only PersonsG admitted as MembersG in accordance with the Business RulesG will have access to the facilities of an Authorised Market InstitutionG .
                2. However, in certain circumstances, an Authorised Market InstitutionG may permit access to its facilities to PersonsG other than MembersG (see Rules 5.7.3). Such access would generally be provided through a MemberG and subject to adequate controls put into place by the Member.
                Derived from RM118/2013 [VER15/07-13]

              • AMI 5.7.2

                (1) An Authorised Market InstitutionG may only, subject to (2) and (3), admit as a MemberG a PersonG which is:
                (a) an Authorised PersonG ;
                (b) a PersonG who is admitted to the list of Recognised PersonsG pursuant to Article 37 of the Markets Law 2012; or
                (c) a PersonG who meets the criteria in GEN Rule 2.3.2(2).
                (2) An Authorised Market InstitutionG must not admit as a MemberG a PersonG referred to in (1)(c) unless such PersonG :
                (a) agrees in writing to submit unconditionally to the jurisdiction of the DFSAG in relation to any matters which arise out of or which relate to its use of the facilities of the Authorised Market InstitutionG ;
                (b) agrees in writing to submit unconditionally to the jurisdiction of the DIFCG Courts in relation to any proceedings in the DIFCG , which arise out of or relate to its use of the facilities of the Authorised Market InstitutionG ;
                (c) agrees in writing to subject itself to the DIFCG laws and the jurisdiction of the DIFCG Courts in relation to its use of the facilities of the Authorised Market InstitutionG ; and
                (d) appoints and maintains at all times, an agent for service of process in the DIFCG and requires such agent to accept its appointment for service of process.
                (3) Prior to admitting a PersonG referred to in (1) as a MemberG , an Authorised Market InstitutionG must undertake due diligence to ensure that such a PersonG :
                (a) is of sufficient good repute;
                (b) has a sufficient level of competence and experience, including appropriate standards of conduct for its staff who will be permitted to use its order entry system; and
                (c) has organisational arrangements, including financial and technological resources, which are no less than those of an Authorised FirmG carrying out similar Financial ServicesG .
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.7.2 Guidance

                  1. A PersonG who can be admitted under the criterion in Rule 5.7.2(1)(c) (i.e. a PersonG referred to in GEN Rule 2.3.2(2)) is a PersonG undertaking Commodity DerivativeG transactions on the relevant Authorised Market InstitutionG only on its own behalf or on behalf of a wholly owned holding company or subsidiary of such company.
                  2. In assessing the membership criteria used by an Authorised Market InstitutionG to permit access to its facilities, the DFSAG will consider:
                  a. whether the Business RulesG can be enforced contractually against MembersG ;
                  b. whether the criteria are objective and applied in a non-discriminatory manner; and
                  c. the financial resource requirements for those not authorised by the DFSAG .
                  3. Pursuant to Rule 5.7.2(3)(c), an Authorised Market InstitutionG is required to assess the adequacy of the organisational arrangements of a candidate to become a MemberG , if it is not an Authorised FirmG , against the organisational requirements that would apply to such a PersonG had it been an Authorised FirmG undertaking similar activities. For example, a PersonG which is not an Authorised FirmG should have organisational resources that are equivalent to a firm LicensedG to carry on the Financial ServiceG of Dealing as AgentG and/or Dealing as PrincipalG .
                  Derived from RM118/2013 [VER15/07-13]

          • Direct Electronic Access

            • AMI 5.7.3

              (1) An Authorised Market InstitutionG may only permit a MemberG to provide its clients Direct Electronic AccessG to the Authorised Market Institution'sG trading facilities where:
              (a) the clients meet the suitability criteria established by the MemberG in order to meet the requirements in (2):
              (b) the MemberG retains responsibility for the orders and trades executed by the clients who are using Direct Electronic AccessG ; and
              (c) the MemberG has adequate mechanisms to prevent the clients placing or executing orders using Direct Electronic AccessG in a manner that would result in the MemberG exceeding its position or margin limits.
              (2) An Authorised Market InstitutionG which permits its MembersG to allow their clients to have Direct Electronic AccessG to its trading facilities must:
              (a) set appropriate standards regarding risk controls and thresholds on trading through Direct Electronic AccessG ;
              (b) be able to identify orders and trades made through Direct Electronic AccessG ; and
              (c) if necessary, be able to stop orders or trades made by a client using Direct Electronic AccessG provided by the MemberG without affecting the other orders or trades made or executed by that MemberG .
              (3) For the purposes of this Rule and elsewhere in the RulebookG , Direct Electronic AccessG means any arrangement, such as the use of the Member'sG trading code, through which a MemberG or the clients of that MemberG are able to transmit orders relating to InvestmentsG directly to the facility provided by the Authorised Market InstitutionG .
              (4) For avoidance of doubt, a PersonG who is permitted to have Direct Electronic AccessG to an Authorised Market InstitutionG 's facilities through a MemberG is not, by virtue of such permission, a MemberG of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.7.3 Guidance

                In assessing the adequacy of the criteria used by an Authorised Market InstitutionG to permit its MembersG to allow their clients to have Direct Electronic AccessG to Authorised Market InstitutionG 's facilities, the DFSAG will consider:

                a. whether such criteria include contractually binding arrangements between the MemberG and the clients;
                b. whether such clients are subject to adequate training, competence and experience requirements and checks;
                c. how electronic access is approved and secured and the measures taken to prevent or resolve problems which would arise from the failure of such access;
                d. the rules and guidance governing the Person'sG , procedures, controls and security arrangements for inputting instructions into the system;
                e. the rules and guidance governing facilities offered to Person'sG permitted for inputting instructions into the system and restrictions placed on the use of those systems;
                f. the rules and practices to detect, identify and halt or remove instructions breaching any relevant instructions;
                g. the quality and completeness of the audit trail of any transaction processed through an electronic connection system; and
                h the procedures to determine whether to suspend trading by those systems or access to them by or through individual MembersG .
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.8 Admission of Investments to Trading or Clearing

          • Investment Criteria

            • AMI 5.8.1

              (1) An Authorised Market InstitutionG must have clear and objective criteria ("investment criteria") included in its Business RulesG according to which InvestmentsG can be admitted to trading, or traded, on its facilities, or cleared and settled on its facilities, or both, as relevant to its operations. The investment criteria must include the requirements in (2) and (3) as relevant.
              (2) An Authorised Market InstitutionG must ensure that InvestmentsG are admitted to trading or traded on an ExchangeG it operates only if:
              (a) in the case of SecuritiesG , the SecuritiesG are admitted to the Official List of SecuritiesG ; and
              (b) in the case of DerivativeG contracts, the contracts meet the contract design specifications in Rule 6.3.2.
              (3) An Authorised Market InstitutionG must ensure that InvestmentsG are traded on an MTFG it operates only if:
              (a) in the case of SecuritiesG , the SecuritiesG are admitted to trading on a Regulated ExchangeG in a jurisdiction acceptable to the DFSAG ; and
              (b) in the case of DerivativeG contracts, the contracts meet the contract design specifications in Rule 6.3.2.
              (4) Where an Authorised Market InstitutionG admits to trading or clearing or trades on its facilities InvestmentsG the value of which is determined by reference to an underlying benchmark or index provided by a Price Information ProviderG , it must only do so in accordance with the requirements in App 2.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM170/2016 (Made 10th February 2016). [VER17/04-16]

              • AMI 5.8.1 Guidance

                1. Investment criteria are only one aspect of requirements applicable to an Authorised Market InstitutionG when trading or clearing and settling InvestmentsG on its facilities. There are other requirements applicable to such activities, which are contained in this module.
                2. Any SecuritiesG that are admitted to the Official List of SecuritiesG maintained by the DFSAG meet the requirement in Rule 5.8.1(2)(a).
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM170/2016 (Made 10th February 2016). [VER17/04-16]

        • AMI 5.9 Integrity and Transparency

          • Integrity and Fair Dealing

            • AMI 5.9.1

              An Authorised Market InstitutionG must be able and willing to:

              (a) promote and maintain high standards of integrity and fair dealing in the carrying on of business on or through its facilities; and
              (b) co-operate with the DFSAG or other appropriate regulatory authorities with regard to regulatory matters when required.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.9.1 Guidance

                1. In determining whether an Authorised Market InstitutionG is able and willing to promote high standards of integrity and fair dealing, the DFSAG will consider:
                a. the extent to which an Authorised Market InstitutionG seeks to promote and encourage such standards through its rules, policies, procedures and practices;
                b. the extent to which MembersG are required to, and do, adhere to such standards; and
                c. any other Rules and principles which apply to the carrying on of business on or through its facilities.
                2. In assessing the ability and willingness of an Authorised Market InstitutionG to cooperate with the DFSAG and other regulatory authorities, the DFSAG will consider:
                a. the agreements in place, including those between MembersG and other participants granted access to the facilities and the relevant Authorised Market InstitutionG , for sharing information, such as information regarding large open positions; and
                b. how diligently the Authorised Market InstitutionG responds to enquiries from the DFSAG or other regulatory authorities.
                Derived from RM118/2013 [VER15/07-13]

          • Transparency

            • AMI 5.9.2

              (1) An Authorised Market InstitutionG must have clear and comprehensive policies and procedures for providing sufficient information to enable MembersG and other participants on its facilities to have an accurate understanding of the risks, fees, and other material costs of using its facilities.
              (2) An Authorised Market InstitutionG must make the policies and procedures referred to in (1) publicly available.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.9.2 Guidance

                In assessing whether an Authorised Market InstitutionG has adequate policies and procedures for disclosing sufficient information to enable its Members and other participants to fully understand the risks, fees and other material costs in using its facilities, the DFSAG will consider whether such information:

                a. includes explanatory material relating to the system's design and operations, to the rights and obligations of MembersG and other participants, and to any risks in participating in such facilities;
                b. includes its fees at the level of individual services it offers as well as its policies on any available discounts;
                c. is provided in a clear and easy to understand manner and is accurate, up-to-date, and readily available to all current and prospective MembersG and other participants on its facilities; and
                d. is made public, through placing such information on its website and other appropriate means.
                Derived from RM118/2013 [VER15/07-13]

          • Transaction Recording

            • AMI 5.9.3

              Without limiting the requirements in GEN Rules 5.3.24 to 5.3.27, an Authorised Market InstitutionG must ensure that satisfactory arrangements are made for:

              (a) recording the activities and transactions, including orders and order audit trails, effected on or through its facilities;
              (b) maintaining the activity and transaction records for at least 6 years from the date of the transaction or order entry;
              (c) providing the DFSAG with these records in a timely manner if required by the DFSAG ; and
              (d) due observance of the applicable data protection and associated requirements.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.9.3 Guidance

                1. The type of information that requires recording will vary according to the activity and type of transactions conducted on or through the facilities of the Authorised Market InstitutionG .
                2. In general, for an Authorised Market InstitutionG Licensed to Operate an ExchangeG , the type of information which should be recorded will include:
                a. the name of the relevant InvestmentG and the price, quantity and date of the transaction, including the order audit trail (i.e. orders entered into the system and subsequently amended or cancelled);
                b. the order type, time of instruction and expiry date;
                c. the identities and, where appropriate, the roles of the counterparties to the transaction;
                d. the facilities on which the transaction was effected and is to be cleared and settled; and
                e. the date and manner of settlement of the transaction.
                3. In general, for an Authorised Market InstitutionG LicensedG to Operate a Clearing HouseG , the type of information which should be recorded will include:
                a. the name of the relevant InvestmentG and the price, quantity and date of the transaction;
                b. the identities and, where appropriate, the roles of the counterparties to the transaction;
                c. the facilities on which the transaction was effected and is to be cleared;
                d. where applicable, the time novation takes place; and
                e. the date and manner of settlement of the transaction.
                4. In addition to the DFSAG requirements in this module and in GEN, the requirements in the Data Protection Law 2007, DIFC Law No 1 of 2007, apply to an Authorised Market InstitutionG . Therefore, in complying with the DFSAG requirements relating to record keeping, an Authorised Market InstitutionG should consider its obligations under the Data Protection Law 2007.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.10 Safeguarding and Administration of Assets

          • AMI 5.10.1

            An Authorised Market InstitutionG must ensure that, where its obligations include making provision for the safeguarding and administration of assets belonging to MembersG and other participants on its facilities:

            (a) satisfactory arrangements ("safe custody arrangements") are made for that purpose in accordance with Rules 5.10.2 and 5.10.3; and
            (b) are provided on clear terms of agreement between the MembersG and other participants on the facility and the Authorised Market InstitutionG .
            Derived from RM118/2013 [VER15/07-13]

            • AMI 5.10.1 Guidance

              1. In determining whether an Authorised Market InstitutionG has satisfactory arrangements for safeguarding and administering assets, the DFSAG will consider:
              a. the terms of the agreement under which safe custody arrangements are made and whether they adequately provide for the matters specified in Rule 5.10.2;
              b. the level of protection provided to MembersG and other participants on its facilities against the risk of theft, fraud, defalcation or other types of loss through such arrangements; and
              c. the degree of monitoring the Authorised Market InstitutionG would be undertaking relating to custodians, and if relevant, sub-custodians.
              2. At the point of granting a LicenceG to an Authorised Market InstitutionG , the DFSAG assesses the adequacy of an applicant's safe custody arrangements. Any subsequent changes to the safe custody arrangements that have been in place at the time of granting the LicenceG , where they are material changes, would require the DFSA'sG prior approval in accordance with the requirements in Rule 4.3.2.
              Derived from RM118/2013 [VER15/07-13]

          • AMI 5.10.2

            An Authorised Market InstitutionG must ensure that the safe custody arrangements, at a minimum, provide for:

            (a) the segregation of assets belonging to every MemberG and other participant on its facilities from the assets belonging to the Authorised Market InstitutionG and the other MembersG and participants on its facilities;
            (b) the prompt access by the Authorised Market InstitutionG to the assets held under the safe custody arrangements;
            (c) the use or transfer of asset belonging to the MembersG and other participants on its facilities to be made only in accordance with the instructions of the relevant owners of those assets or in accordance with the terms of the agreement referred to in Rule 5.10.1(b) and any applicable legislation;
            (d) the reconciliation at appropriate intervals and frequency between the assets and accounts held under the safe custody arrangements; and
            (e) accurate records relating to the assets held under the safe custody arrangements to be kept, including:
            (i) the identity of the legal and beneficial owners of the relevant assets, and where appropriate, any PersonsG who have charges over, or other interests in, those assets;
            (ii) records of any additions, reductions and transfers in each individual account of assets; and
            (iii) the identity of the assets owned by (or where appropriate on behalf of) different PersonsG , including, where appropriate, the assets owned by MembersG and other participants on its facilities.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 5.10.2 Guidance

              In assessing whether an Authorised Market InstitutionG 's safe custody arrangements meet the requirements in Rule 5.10.2, the DFSAG would particularly look at:

              a. the frequency with which statements of the holdings are provided to the MembersG and other participants on its facilities whose assets are held under the safe custody arrangements;
              b. the records of the assets held and the identity of the beneficial and legal owners and any other persons with rights over such assets, and whether the Authorised Market InstitutionG maintains a register of charges over Investments traded or cleared on its facility;
              c. the records of any instructions given in relation to those assets;
              d. the records of the carrying out of those instructions;
              e. the records of any movements in those assets (or any corporate actions or other events in relation to those assets); and
              f. how the Authorised Market InstitutionG reconciles its records of assets held with the records of any custodian or sub-custodian used to hold those assets, and with the record of beneficial or legal ownership of those assets.
              Derived from RM118/2013 [VER15/07-13]

          • AMI 5.10.3

            An Authorised Market InstitutionG must not appoint any PersonG as a third party custodian unless that PersonG :

            (a) is appropriately authorised under its LicenceG or subject to regulation and supervision by a Financial Services RegulatorG acceptable to the DFSAG for the activity of deposit taking or providing custody and depository services; and
            (b) is prohibited from appointing sub-custodians except where the subcustodians meet the requirements in (a).
            Derived from RM118/2013 [VER15/07-13]

            • AMI 5.10.3 Guidance

              1. An Authorised Market InstitutionG should undertake due diligence to ensure, in the case of any custodians or sub-custodians which are not regulated by the DFSAG , that they are appropriately licensed and supervised for the activity of deposit taking or custody and depository services by a Financial Services RegulatorG in their home jurisdiction.
              2. In order to meet the requirements relating to sub-custody arrangements, an Authorised Market InstitutionG should include clear provisions in the contract with its appointed custodians whether or not sub-custodians may be appointed and if so, the procedures for appointing the sub-custodians, in accordance with the requirements in Rule 5.10.3(b). There should also be contractual requirements for advance notification to the Authorised Market InstitutionG of any changes to the sub-custodians.
              3. If an Authorised Market InstitutionG proposes to make new custody arrangements or make any material changes to its existing custody arrangements, such changes trigger the prior DFSAG approval requirements in Rule 4.3.2. This requirement would be triggered, for example, if the appointed custodians at the time of the grant of the LicenceG had not used sub-custodians but subsequently propose to do so.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 5.11 Promotion and Maintenance of Standards

          • Orderly conduct on facilities

            • AMI 5.11.1

              An Authorised Market InstitutionG must have an effective market surveillance program to:

              (a) ensure that business conducted on or through its facilities is conducted in an orderly manner and in accordance with the applicable Business RulesG and other applicable requirements so as to afford proper protection to investors; and
              (b) monitor for conduct which may amount to Market AbuseG , financial crime or money laundering.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.11.1 Guidance

                1. To satisfy the DFSAG that Rule 5.11.1(a) is met, an Authorised Market InstitutionG should have rules and procedures in place for:
                a. preventing and detecting the use of its facilities for abusive, improper or fraudulent purposes; and
                b. preventing the improper, reckless or negligent use of its facilities.
                2. In determining whether an Authorised Market InstitutionG is ensuring that business conducted on its facilities is conducted in an orderly manner, the DFSAG will consider:
                a. arrangements for pre and post trade transparency, taking into account the nature and liquidity of the Investments traded; and
                b. the need to provide anonymity for trading participants.
                3. An Authorised Market InstitutionG Operating an ExchangeG will also have appropriate procedures allowing it to influence trading conditions, impose a trading halt promptly when required, and to support or encourage liquidity when necessary to maintain an orderly market. The DFSAG will consider the transparency of such procedures and the fairness of their application and potential application.
                4. In addition, MembersG who are Authorised Firms should be able to satisfy any other legal obligations they may have, including those to ClientsG that may exist under COBG .
                5. AMLG module contains AML obligations of an Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

          • Prevention of Market Abuse, Money Laundering and Financial Crime

            • AMI 5.11.2

              (1) Without limiting the generality of Rule 5.11.1, an Authorised Market InstitutionG must:
              (a) operate appropriate measures to identify, deter and prevent Market AbuseG , money laundering and financial crime on and through the Authorised Market Institution'sG facilities; and
              (b) report promptly to the DFSAG any Market AbuseG , money laundering and financial crime, as required.
              (2) For the purposes of (1)(a), an Authorised Market InstitutionG must:
              (a) include in its Business RulesG a regime to prevent Market AbuseG , money laundering and financial crime that meets the requirements in (3), which is applicable to its Members; and
              (b) implement adequate measures to ensure that its MembersG comply with that regime.
              (3) The regime referred to in (2)(a) must, at a minimum, include rules and procedures in relation to:
              (a) compliance arrangements to prevent Market AbuseG , money laundering and financial crime;
              (b) transaction monitoring;
              (c) risk assessment; and
              (d) training.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] RM193/2016 (Made 7th December 2016). [VER18/02-17]

              • AMI 5.11.2 Guidance

                1. Abusive, improper and fraudulent purposes include:
                a. trades intended to create a false appearance of trading activity;
                b trades which one party does not intend to close out or settle;
                c. conduct which is likely to result in disorderly trading in the market; and
                d. any contravention of the provisions in Part 6: Prevention of Market AbuseG in the Markets LawG .
                2. An Authorised Market InstitutionG must have an effective surveillance system in place for:
                a. the coordinated surveillance of all activity on or through its facilities and activity in related Investments conducted elsewhere; and
                b. communicating information about Market AbuseG and financial crime to the DFSAG or appropriate regulatory authorities.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] RM193/2016 (Made 7th December 2016). [VER18/02-17]

            • AMI 5.11.3

              (1) An Authorised Market InstitutionG must:
              (a) before accepting a prospective MemberG , ensure that the applicant has in place adequate arrangements including systems and controls to comply with the Authorised Market InstitutionG 's regime for preventing Market AbuseG , money laundering and financial crime referred to in Rule 5.11.2(2)(a);
              (b) monitor and regularly review compliance by its MembersG with that regime; and
              (c) take appropriate measures to ensure that its MembersG rectify any contraventions without delay.
              (2) An Authorised Market InstitutionG must promptly notify the DFSAG of any:
              (a) material breach of its regime by a MemberG ; and
              (b) circumstances in which a MemberG will not or cannot rectify a breach of its regime.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.11.3 Guidance

                1. An Authorised Market InstitutionG is subject to the requirements in the DFSA'sG AMLG module. MembersG of an Authorised Market InstitutionG which are Authorised FirmsG are also subject, by virtue of being Authorised FirmsG , to the requirements in the DFSA'sG AMLG module.
                2. In determining whether an Authorised Market InstitutionG 's measures are adequate and appropriate to reduce the extent to which its facilities can be used for Market AbuseG , money laundering and financial crime, the DFSAG will consider:
                a. whether the Authorised Market InstitutionG has appropriate staff, surveillance systems, resources and procedures for this purpose;
                b. the monitoring conducted for possible patterns of normal, abnormal or improper use of those facilities;
                c. how promptly and accurately information is communicated about Market AbuseG , financial crime and money laundering to the DFSAG and other appropriate organisations; and
                d. how the Authorised Market InstitutionG co-operates with relevant bodies in the prevention, investigation and pursuit of Market AbuseG , money laundering and financial crime.
                3. An Authorised Market InstitutionG shall have regard to Part 8 of the Markets Law in relation to Market AbuseG and the relevant provisions of the Regulatory LawG . Examples of practices that amount to market manipulation (which is one form of Market AbuseG ) in an automated trading environment that should be identified and prevented by an Authorised Market InstitutionG to promote Proper MarketsG include the following:
                a. entering small orders in order to ascertain the level of hidden orders, particularly used to assess what is resting on a dark platform, known as Ping OrdersG ;
                b. entering large numbers of orders and/or cancellations/updates to orders to create uncertainty for other market participants, slowing down their process and to camouflage its own strategy, known as Quote StuffingG ;
                c. entry of orders or a series of orders intended to start or exacerbate a trend, and to encourage other participants to accelerate or extend the trend in order to create an opportunity to unwind/open a position at a favourable price, known as Moment IgnitionG ; and
                d. submitting multiple orders often away from one side of the order book with the intention of executing a trade on the other side of the order book, where once that trade has taken place, the manipulative orders will be removed, known as Layering and SpoofingG .
                Derived from RM118/2013 [VER15/07-13]

        • AMI 5.12 Miscellaneous Requirements

          • Whistleblowing

            • AMI 5.12.1

              An Authorised Market InstitutionG must have appropriate procedures and protections for enabling EmployeesG to disclose any information to the DFSAG or to other appropriate bodies involved in the prevention of Market AbuseG , money laundering or other financial crime or any other breaches of relevant legislation.

              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.12.1 Guidance

                An Authorised Market Institution'sG policies and procedures should enable EmployeesG to make protected disclosures, in good faith, of information which, in the reasonable belief of the EmployeeG making the disclosure, tends to show that one or more of the following has been, is being, or is likely to be, committed:

                a. a criminal offence;
                b. a failure to comply with any legal obligation;
                c. a miscarriage of justice;
                d. the putting of the health and safety of any individual in danger; or
                e. a deliberate concealment relating to any of (a) to (d),

                irrespective of whether the relevant conduct or failure occurred, occurs or would occur.

                Derived from RM118/2013 [VER15/07-13]

          • Handling of Complaints

            • AMI 5.12.2

              (1) An Authorised Market InstitutionG must have effective arrangements in place for the investigation and resolution of complaints made against it.
              (2) An Authorised Market InstitutionG must establish and maintain a register of complaints made against it and their resolution. Records of the complaints must be maintained for a minimum of six years.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.12.2 Guidance

                1. Procedures should be in place to acknowledge a complaint promptly, for making an objective consideration of the complaint and for a timely response to be sent to the complainant. The response should inform the complainant that, if he is not satisfied with the response, he should contact the DFSAG .
                2. Complaints should be fairly and impartially investigated by a person not involved in the conduct about which the complaint has been made. At the conclusion of the investigation, a report should be prepared and provided to the relevant Key IndividualsG .
                Derived from RM118/2013 [VER15/07-13]

      • AMI 6 Additional Licensing Requirements for Operating an Exchange

        • AMI 6.1 Application

          • AMI 6.1.1

            (1) This chapter applies to an Authorised Market InstitutionG Operating an ExchangeG or an applicant for such a Licence.
            (2) In this chapter, a reference to an "ExchangeG " is a reference to a PersonG referred to in (1).
            Derived from RM118/2013 [VER15/07-13]

        • AMI 6.2 Proper Markets

          • AMI 6.2.1

            (1) An ExchangeG must have rules and procedures for fair, orderly and efficient operation of trading of Investments on its facilities. For this purpose, an ExchangeG must ensure that only Investments in which there is a Proper MarketG are traded on its facilities.
            (2) For a Proper MarketG to exist in Investments:
            (a) DerivativesG traded on its facilities must meet the contract design specifications in Rule 6.3.2;
            (b) relevant market information must be made available to PersonsG engaged in dealing on an equitable basis, including pre-trade and post-trade disclosure of orders, in accordance with the requirements in section 6.4.
            (c) there must be adequate mechanisms to discontinue, suspend or remove from trading on its facilities any Investments in circumstances where the requirements relating to Proper MarketsG are not met;
            (d) there must be in place controls to prevent volatility in the markets that is not the result of market forces, in accordance with the requirements in section 6.5;
            (e) error trades must be managed, in accordance with the requirements in section 6.6;
            (f) short selling and position concentration must be monitored and managed, in accordance with the requirements in section 6.7;
            (g) there must be a fair and non-discretionary algorithm operating in respect of the matching of orders on its facilities;
            (h) there must be in place adequate controls, to monitor and manage any foreign ownership restrictions applying to Investments traded on its facilities, in accordance with the requirements in section 6.8; and
            (i) any liquidity incentive schemes must be offered only in accordance with the requirements in section 6.9.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.2.1 Guidance

              Rules and procedures referred to in Rule 6.2.1(2) should generally form part of the Business Rules of an Authorised Market InstitutionG (see the content of Business RulesG in Rule 5.6.1).

              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.3 Specifications Relating to Design and Trading of Derivatives

          • AMI 6.3.1

            (1) An ExchangeG which trades DerivativeG contracts on its facilities must:
            (a) have clear and transparent rules and procedures for the trading of DerivativeG contracts, which are made publicly available; and
            (b) ensure that the trading in DerivativeG contracts on its facilities is undertaken in a fair, orderly and efficient manner.
            (2) The rules and procedures must promote transparency by ensuring that there is sufficient information made available to the markets relating to the terms and conditions of the DerivativeG contracts traded on its facilities. Such information must include, where relevant, information relating to delivery and pricing of DerivativeG contracts.
            Derived from RM118/2013 [VER15/07-13]

          • Contract Design Specifications

            • AMI 6.3.2

              (1) An ExchangeG must ensure that the DerivativeG contracts traded on its facilities:
              (a) have a design that enables the orderly pricing and effective settlement of the obligations arising under the contract; and
              (b) where they are Commodity DerivativeG contracts which require physical delivery, have terms and conditions which:
              (i) promote price discovery of the underlying commodity;
              (ii) ensure, to the extent possible, that there is a correlation to the operation of the physical market in the underlying commodity;
              (iii) include contract delivery specifications which address matters specified in App 3; and
              (iv) provide for legally enforceable settlement and delivery procedures.
              (2) For the purposes of meeting the requirement in (1)(a), an ExchangeG must include in its Business RulesG contract design specifications relating to DerivativeG contracts traded on its facilities which, at a minimum, include:
              (a) minimum price fluctuations (price ticks);
              (b) maximum price fluctuations (daily price limits), if any;
              (c) last trading day;
              (d) settlement or delivery procedures as applicable;
              (e) trading months;
              (f) position limits, if any;
              (g) reportable levels; and
              (h) trading hours.
              Derived from RM118/2013 [VER15/07-13]

          • On-going Review

            • AMI 6.3.3

              An Exchange must:

              (a) establish and implement clear procedures relating to the development and review of contract design for DerivativeG contracts traded on its facilities;
              (b) have adequate process through which the views of potential users of DerivativeG contracts can be taken into account when developing and reviewing contract design for DerivativeG contracts;
              (c) have adequate powers which enable it to eliminate contractual terms which produce, or are likely to produce, manipulative or disorderly conditions in the markets generally, or in relation to the particular class or type of DerivativeG contracts; and
              (d) have adequate mechanisms to monitor and evaluate whether the settlement and delivery procedures reflect the underlying physical market and promote reliable pricing relationship between the two markets.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.3.3 Guidance

                1. When assessing whether an Exchange'sG rules and procedures are adequate, the DFSAG will consider, among other things:
                a. the criteria adopted by the ExchangeG for DerivativeG contracts to be traded on its facilities;
                b. what powers the ExchangeG has in order to eliminate manipulative or disorderly conduct, including powers to vary, remove or rescind conditions of any DerivativeG contracts already traded where these are found to cause manipulative or disorderly conditions; and
                c. what mechanisms are established by the ExchangeG to monitor and review market activities relating to DerivativeG contracts traded on its facilities.
                2. When designing and reviewing the design of Commodity DerivativeG contracts, an ExchangeG should consider the following physical market characteristics, including differences within a commodity market with regard to the commodity in question:
                a. size and structure of the physical market;
                b. commodity characteristics (such as grade, quality, weight, class, growth, origin, source etc.);
                c. historical patterns of production, consumption and supply, including seasonality, growth, market concentration in the production chain, domestic or international export focus and logistics;
                d. extent of distribution or dispersal of production and consumption of the underlying physical commodity among producers, merchants and consumers;
                e. accepted market practice at the physical commodity market in question, including loading tolerances and delivery of alternative supply under the contract terms;
                f. adequacy, nature and availability of supply of the underlying physical commodity, including an estimate of the deliverable supplies for the delivery month specified in the relevant commodity contract;
                g. movement or flow of the underlying physical commodity;
                h. the liquidity of the underlying physical market;
                i. the spot market pricing system including transparency, availability, reliability and frequency of cash pricing;
                j. price volatility; and
                k. the existence of price controls, embargoes, export restrictions or other regulation or controls affecting the price or supply of the underlying physical commodity.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 6.4 Transparency and Disclosure

          • AMI 6.4.1

            An ExchangeG must have adequate arrangements for providing to the markets adequate information about Investments traded on its facilities, and its trading activities, for the purposes of promoting:

            (a) pre-trade transparency; and
            (b) post-trade transparency.
            Derived from RM118/2013 [VER15/07-13]

          • Pre-trade Transparency

            • AMI 6.4.2

              (1) An ExchangeG must disclose the information specified in (2) relating to trading of Investments on its facilities in the manner specified in (3).
              (2) The information required to be disclosed pursuant to (1) is:
              (a) the current bid and offer prices and volume;
              (b) the depth of trading interest shown at the prices and volumes advertised through its systems for the InvestmentsG ; and
              (c) any other information relating to InvestmentsG which would promote transparency relating to trading.
              (3) The information referred to in (2) must be made available to the public on a continuous basis during normal trading.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.4.2 Guidance

                1. When making disclosure, an ExchangeG should adopt a technical mechanism by which the public can differentiate between transactions that have been transacted in the central order book and transactions that have been reported to the ExchangeG as off-order book transactions. Any transactions that have been cancelled pursuant to its rules should also be identifiable.
                2. The reference to trading interest in Rule 6.4.2(2)(b) includes any actionable indications of interests. Actionable interests are messages from one MemberG to another in a trading system about available trading interest that contains all necessary information to agree on a trade.
                3. An ExchangeG should use adequate mechanisms so that pre-trade information is available to the public in an easy to access and uninterrupted manner at least during business hours. An ExchangeG may charge a reasonable fee for the information which it makes available to the public.
                4. An ExchangeG will be able to withhold pre-trade disclosure only if it has obtained a waiver or modification to Rule 6.4.2. An ExchangeG may seek a waiver or modification from the disclosure requirement in Rule 6.4.2(1) in relation to certain transaction orders where:
                a. the order size is pre-determined and exceeds a pre-set and published threshold level; and
                b. the details of the exemption are included in its Business RulesG .
                5. In assessing whether an exemption from pre-trade disclosure should be allowed, the DFSAG will take into account factors such as:
                a. the level of order threshold compared with normal market size for the InvestmentG ;
                b. the impact such an exemption would have on price discovery, fragmentation, fairness and overall market quality;
                c. whether there is sufficient transparency relating to trades executed without pre-trade disclosure as a result of dark orders whether or not they are entered in transparent markets;
                d. whether the ExchangeG supports transparent orders by giving priority to transparent orders over dark orders, for example, by executing such orders at the same price as transparent orders; and
                e. whether there is adequate disclosure of details relating to dark orders available to MembersG and other participants on the facilities of the ExchangeG to enable them to understand the manner in which their orders will be handled and executed on those facilities.
                6. Dark orders are orders executed on execution platforms without pre-trade transparency.
                Derived from RM118/2013 [VER15/07-13]

          • Post-trade Transparency

            • AMI 6.4.3

              (1) An ExchangeG must disclose the post-trade information specified in (2) relating to trading of Investments on its facilities in the manner specified in (3).
              (2) The post-trade information required to be disclosed pursuant to (1) is the price, volume and time of the transactions executed in respect of the InvestmentsG traded on its facilities.
              (3) The information referred to in (2) must be:
              (a) made available in real-time on reasonable commercial terms and on a non-discriminatory basis; and
              (b) made available, as soon as practicable thereafter, to the public.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.4.3 Guidance

                An ExchangeG should use appropriate mechanisms to enable post-trade information to be made available to the public in an easy to access and uninterrupted manner at least during business hours. An ExchangeG may charge a reasonable fee for the information which it makes available to the public.

                Derived from RM118/2013 [VER15/07-13]

        • AMI 6.5 Volatility Controls

          • AMI 6.5.1

            (1) An ExchangeG must have in place effective systems, controls and procedures to ensure that its trading systems:
            (a) are resilient;
            (b) have adequate capacity to deal with peak orders and message volumes; and
            (c) are able to operate in an orderly manner under conditions of market stress.
            (2) Without limiting the generality of its obligations arising under (1) or any other Rule, an Exchange'sG rules, systems, controls and procedures must enable it to:
            (a) reject orders that exceed its pre-determined volume and price thresholds, or that are clearly erroneous;
            (b) temporarily halt trading of InvestmentsG traded on its facility if there is a significant price movement in relation to those InvestmentsG on its facility or a related market during a short period; and
            (c) where appropriate, cancel, vary or correct any transaction.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.5.1 Guidance

              An ExchangeG should test its trading systems to ensure that they are resilient and capable of operating orderly trading under conditions of market stress and other contingencies.

              Derived from RM118/2013 [VER15/07-13]

          • AMI 6.5.2

            (1) An ExchangeG must have adequate arrangements, including technology, which:
            (a) are capable of preventing capacity limits relating to messaging being breached;
            (b) require its MembersG to apply pre-trade controls to their clients; and
            (c) permit only its MembersG to modify the parameters of any pre-trade controls.
            (2) An ExchangeG must make publicly available the details of arrangements it has in place in order to meet the requirement in (1).
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.5.2 Guidance

              1. In order to meet the requirements in Rule 6.5.2(1), an ExchangeG may, within its arrangements:
              a. include a mechanism for "throttling" orders to prevent breaches of its capacity;
              b. prohibit "naked" or "unfiltered" access to its facilities by Members'G clients where the client orders do not pass through pre-trade controls; and
              c. include requirements for MembersG to have appropriate pre-trade controls on the orders of their clients, which include in-built and automatic rejection of orders outside of certain pre-set parameters.
              2. Pre-trade controls which an Authorised Market InstitutionG requires from its MembersG should contain:
              a. price or size parameters: MembersG should be able to automatically block or cancel orders that do not meet the set price or size parameters either or both on an order-by-order basis or over a specified period of time;
              b. controls around permission to trade: MembersG should be able to block or cancel orders immediately as soon as they are made aware that trade permissions of a trader have been breached;
              c. effective risk management: MembersG should be able to block or cancel orders automatically where the trades pose risks that compromise the Member's own risk management thresholds. Such controls should be applied as necessary and appropriate to exposures to individual clients or financial instruments or groups of clients or financial instruments, exposures of individual traders, trading desks or the MemberG as a whole;
              d. reporting obligations: MembersG should be obliged to notify the ExchangeG about significant risks that may affect fair and orderly trading and major incidents as soon as they become aware of such risks or incidents;
              e. overriding of pre-trade controls: MembersG should have procedures and arrangements for dealing with orders which have been automatically blocked by the Member'sG pre-trade controls but which the MemberG may re-submit. Such procedures and arrangements should serve to alert compliance and risk management staff of the MemberG that controls have been overridden and require their approval for the overriding of these controls;
              f. training on order entry procedures: MembersG should ensure that employees using the order entry system have adequate training on order entry procedures before they are allowed to use Members'G order entry systems;
              g. monitoring and accessibility of knowledgeable and mandated staff: MembersG should monitor their orders to the ExchangeG in as close to real time as possible, including from a cross-market perspective, for potential signs of disorderly trading. Such monitoring should be conducted by Member'sG staff who understand its trading flow. They should be accessible to the ExchangeG and have necessary authority to take necessary and appropriate remedial action. MembersG should ensure that compliance staff are able to follow closely the Member'sG electronic trading activity so that they can quickly respond to and correct any failures or regulatory infractions that may take place; and
              h. control of messaging traffic: MembersG should have control of messaging traffic to the ExchangeG particularly to ensure any messaging limits imposed by the ExchangeG on the Members are not exceeded. Messaging limits are limits imposed by an ExchangeG on its MembersG for the transmission of orders such as buy or sell to ensure that the Exchange'sG capacity to deal with such orders is not exceeded.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.6 Error Trade Policy

          • AMI 6.6.1

            (1) An ExchangeG must be able to cancel, amend or correct any Error TradesG .
            (2) An Error TradeG is the execution of an order resulting from:
            (a) an erroneous order entry;
            (b) malfunctioning of the system of a MemberG or of the Authorised Market InstitutionG ; or
            (c) a combination of (a) and (b).
            (3) For the purposes of (1), an Exchange'sG Business RulesG must include a comprehensive Error TradeG policy which sets out clearly the extent to which transactions can be cancelled by the ExchangeG at its sole discretion, at the request of a MemberG or by mutual consent of the MembersG involved.
            (4) An ExchangeG must have adequate systems and controls to:
            (a) prevent or minimise Error TradesG ;
            (b) promptly identify and rectify Error TradesG where they occur; and
            (c) identify whether Error TradesG are related to disorderly market activity.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.6.1 Guidance

              When assessing whether an ExchangeG has an appropriate and adequate Error TradeG policy, the DFSAG will consider whether the rules and procedures included in the Business RulesG :

              a. are adequate and, where prevention is not possible, minimise the impact of Error TradesG ;
              b. are sufficiently flexible in the design to address varying scenarios;
              c. establish a predictable and timely process for dealing with Error TradesG , including measures specifically designed to detect and identify Error TradeG messages to market users;
              d. promote transparency to market users with regard to any cancellation decisions involving material transactions resulting from the invocation of the Error TradeG policy;
              e. include adequate surveillance conducted in the markets to detect Error TradesG ;
              f. promote predictability, fairness and consistency of actions taken under the Error TradeG policy; and
              g. enable sharing of information with other markets, when possible, concerning the cancellation of trades.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.7 Short Selling and Position Management

          • AMI 6.7.1

            (1) An ExchangeG must have in place effective systems, controls and procedures to monitor and manage:
            (a) Short SellingG in SecuritiesG ; and
            (b) risks arising from position concentrations.
            (2) For the purposes of (1), an ExchangeG must have adequate powers over its MembersG to address risks to an orderly functioning of its facilities arising from unsettled positions in Investments.
            (3) Short SellingG for the purposes of this Rule constitutes the sale of a SecurityG by a PersonG who does not own the SecurityG at the point of entering into the contract to sell.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.7.1 Guidance

              1. An ExchangeG should, when developing its controls and procedures with regard to Short SellingG and position management, have regard to:
              a. its own settlement cycle, in order to ensure that any Short SellingG activities on its facilities do not result in any delay or prevent effective settlement within such cycle; and
              b. orderly functioning of its facilities, to ensure that any long or short position concentration on InvestmentsG that remain unsettled does not interrupt such functioning.
              2. Examples of circumstances that would not be treated as short selling in Rule 6.7.1(3) include where the seller:
              a. has entered into an unconditional contract to purchase the relevant SecuritiesG but has not received their delivery at the time of the sale;
              b. has title to other securities which are convertible or exchangeable for the SecuritiesG to which the sale contract relates;
              c. has exercised an option to acquire the SecuritiesG to which the sale contract relates;
              d. has rights or warrants to subscribe and receive SecuritiesG to which the sale contract relates; and
              e. is making a sale of SecuritiesG that trades on a "when issued" basis and has entered into a binding contract to purchase such SecuritiesG , subject only to the condition of issuance of the relevant SecuritiesG .
              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.8 Foreign Ownership Restrictions

          • AMI 6.8.1

            (1) An ExchangeG may admit to trading on its facilities Investments which are subject to foreign ownership restrictions where it has in place adequate and effective arrangements to:
            (a) monitor applicable foreign ownership restrictions; and
            (b) promptly identify and take appropriate action where any breaches, or likely breaches, of such restrictions occur or are about to occur, so as to ensure that there is no undue interruption or negative impact on its trading activities.
            (2) For the purposes of (1), the arrangements of an ExchangeG must include:
            (a) requirements applicable to issuers and other PersonsG responsible for the relevant InvestmentsG to:
            (i) make available to the ExchangeG information relating to any ownership restrictions applicable to the InvestmentsG ; and
            (ii) take such action as appropriate to remedy any breaches as soon as practicable;
            (b) mechanisms to access current information relating to ownership of the relevant Investments, including any beneficial owners;
            (c) appropriate public disclosure of information where ownership restrictions are, or are about to be, breached;
            (d) mechanisms to suspend trading in the relevant InvestmentsG where the ownership restrictions are, or are about to be, breached; and
            (e) mechanisms to reinstate trading where ownership restrictions are no longer in breach.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 6.8.1 Guidance

              1. An ExchangeG is required, as part of information to be provided to the DFSAG , to promptly inform the DFSAG where breaches of the ownership restrictions occur. See section 9.8.
              2. An ExchangeG should establish appropriate thresholds at which an early warning system and subsequent public disclosure is triggered relating to foreign ownership restrictions. Such thresholds should be set at intervals/levels, taking into account the patterns of trading in the relevant InvestmentsG and other factors which enable the ExchangeG to take preventative measures before the breaches occur.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.9 Liquidity Incentive Schemes

          • AMI 6.9.1

            (1) An ExchangeG must not introduce a liquidity incentive scheme unless:
            (a) participation in such a scheme is limited to:
            (i) a MemberG of the ExchangeG ; or
            (ii) any other PersonG where:
            (A) the ExchangeG has undertaken due diligence to ensure that the PersonG is of sufficient good repute and has adequate competencies and organisational arrangements; and
            (B) the PersonG has agreed in writing to comply with the Business RulesG of the ExchangeG so far as those rules are applicable to that Person'sG activities; and
            (b) it has obtained the DFSA'sG prior written approval for the scheme.
            (2) For the purposes of this section, a liquidity incentive scheme means an arrangement designed to provide liquidity in the market or in relation to a particular InvestmentG or class of InvestmentsG .
            (3) An ExchangeG must, at least 10 business days prior to the introduction of a liquidity incentive scheme referred to in (1), lodge with the DFSAG a notification containing:
            (a) the details of the relevant scheme;
            (b) the benefits to the ExchangeG and its MembersG and other users resulting from the scheme;
            (c) a certification by it that the requirements in (1)(a) have been fully met; and
            (d) the date on which the scheme is intended to become operative.
            (4) The DFSAG will, within 10 business days of receiving the notification referred to in (3), approve the proposed liquidity incentive scheme unless it has reasonable grounds to believe that the introduction of the scheme is reasonably likely to be detrimental to the existence of Proper MarketsG . Where the DFSAG does not approve the proposed liquidity incentive scheme, it will notify the ExchangeG of its objections to the introduction of the proposed liquidity incentive scheme, and its reasons for that decision.
            (5) If the DFSAG decides to exercise its power under (4) not to approve a proposed liquidity incentive scheme, the ExchangeG may refer the matter to the FMTG for review.
            (6) An ExchangeG must, as soon as practicable, announce the introduction of the liquidity incentive scheme, including the date on which it becomes operative and any other relevant information.
            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 6.9.1 Guidance

              1. ExamplesG of liquidity incentive schemes are arrangements under which an ExchangeG offers to market makers rebates, stipends, waivers of membership or transaction fees and other financial incentives, including payments for routing order flows or other forms of soft dollar benefits.
              2. The period of 10 business days referred to in Rule 6.9.1(4) will commence to run from the date on which all the information relating to the liquidity incentive scheme as specified in Rule 6.9.1(3) has been provided to the DFSAG .
              3. For the purposes of certifying that a Person meets the criteria set out in Rule 6.9.1(a)(ii), an ExchangeG should undertake:
              a. a verification of the identity of the relevant PersonG and its beneficial owners and directors for the purposes of applicable AML requirements;
              b. an assessment of the character and good standing, as well as the knowledge, experience and skills, of the PersonG and its directors and relevant EmployeesG ; and
              c. the adequacy of the control framework created by the PersonG in respect of the liquidity incentive scheme to ensure that trading occurs in accordance with the Business Rules of the ExchangeG .
              4. An ExchangeG is not required, pursuant to Rule 6.9.1(6), to make public disclosure of any details about the liquidity incentive scheme where such information is reasonably regarded as commercially sensitive information. However, is should make such disclosure as it deems appropriate to keep its market well informed about the introduction of the scheme.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 6.10 Clearing and Settlement Arrangements

          • AMI 6.10.1

            An ExchangeG must:

            (a) ensure that there are satisfactory arrangements in place for securing the timely discharge of the rights and liabilities of the parties to transactions conducted on or through its facilities; and
            (b) inform its MembersG and other participants of the arrangements referred to in (a).
            Derived from RM118/2013 [VER15/07-13]

        • AMI 6.11 Listing Rules

          • Application

            • AMI 6.11.1

              (1) The requirements in this section apply, subject to (2), to an ExchangeG which maintains or proposes to maintain its own Official List of SecuritiesG .
              (2) The requirement in Rule 6.11.8(1) applies to a PersonG who wishes to have SecuritiesG included in an Official List of SecuritiesG .
              Derived from RM118/2013 [VER15/07-13]

          • General Requirements Relating to Listing Rules

            • AMI 6.11.2

              (1) An ExchangeG wishing to admit SecuritiesG to its own Official List of SecuritiesG must:
              (a) have listing rules which meet the requirements in Rule 6.11.3; and
              (b) ensure that its listing rules are approved by the DFSAG .
              (2) Any amendment to an Exchange'sG listing rules must, prior to the amendment becoming effective, have been:
              (a) made available for a reasonable period of time to the market for consultation; and
              (b) approved by the DFSAG .
              (3) In urgent cases, the DFSAG may, on written application by the Authorised Market InstitutionG , dispense with requirement in (2)(a).
              (4) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under this Rule not to approve a proposed listing rule or an amendment to a listing rule.
              (5) If the DFSAG decides to exercise the power under this Rule not to approve a proposed listing rule or an amendment to a listing rule, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • Publication of Listing Rules

            • AMI 6.11.3

              (1) An ExchangeG must publish, and make freely available, its listing rules.
              (2) Where an ExchangeG has made any amendments to its listing rules, it must have adequate procedures for notifying users of such amendments.
              Derived from RM118/2013 [VER15/07-13]

          • Content of Listing Rules

            • AMI 6.11.4

              (1) The listing rules of an ExchangeG must be clear, fair and legally enforceable and contain provisions dealing with:
              (a) procedures for admission of SecuritiesG to its Official List of SecuritiesG including;
              (i) requirements to be met before SecuritiesG may be granted admission to its Official List of SecuritiesG ; and
              (ii) agreements in connection with admitting SecuritiesG to its Official List of SecuritiesG ;
              (b) effective enforcement of the agreements referred to in (a)(ii);
              (c) procedures for suspension and delisting of SecuritiesG from its Official List of SecuritiesG ;
              (d) the imposition on any PersonG of obligations to observe specific standards of conduct or to perform, or refrain from performing, specified acts, reasonably imposed in connection with the admission of SecuritiesG to its Official List of SecuritiesG or continued admission of SecuritiesG to its Official List of SecuritiesG ;
              (e) penalties or sanctions which may be imposed by an ExchangeG or the DFSAG for a breach of the listing rules;
              (f) procedures or conditions which may be imposed, or circumstances which are required to exist, in relation to matters which are provided for in the listing rules;
              (g) actual or potential conflicts of interest that have arisen or might arise when a PersonG seeks to have SecuritiesG admitted to its Official List of SecuritiesG ; and
              (h) such other matters as are necessary or desirable for the proper operation of the listing rules and process.
              (2) Without prejudice to the requirements in (1), the listing rules of the ExchangeG must also include, where appropriate to the type the SecuritiesG being admitted to its Official List of Securities, requirements in respect of:
              (a) an issuer's financial reporting and, in particular how regular reports are made and the international accounting standards to which they comply;
              (b) auditing standards;
              (c) an issuer's track record in terms of profit or operating history;
              (d) the percentage of SecuritiesG in a class of SecuritiesG which can be considered as in free float;
              (e) any restrictions that may exist on transferability; and
              (f) any other matter deemed necessary by the DFSAG .
              Derived from RM118/2013 [VER15/07-13]

            • AMI 6.11.5

              An ExchangeG must have adequate systems and controls to comply with the requirements that are applicable to it in respect of an Official List of SecuritiesG maintained by itself or by the DFSAG for the purposes of trading of SecuritiesG using its facilities.

              Derived from RM118/2013 [VER15/07-13]

          • Compliance with Listing Rules

            • AMI 6.11.6

              (1) An ExchangeG which has an endorsement on its LicenceG authorising it to maintain an Official List of SecuritiesG must ensure the function is properly and independently operated.
              (2) An ExchangeG must have procedures in place to ensure that:
              (a) its listing rules are monitored and enforced; and
              (b) complaints regarding PersonsG subject to the listing rules are investigated.
              Derived from RM118/2013 [VER15/07-13]

            • AMI 6.11.7

              An ExchangeG must ensure that:

              (a) where appropriate, disciplinary action can be carried out and financial and other types of penalties can be imposed on PersonsG subject to the listing rules; and
              (b) adequate appeal procedures are in place.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.11.7 Guidance

                In determining whether an ExchangeG can effectively monitor its listing rules, the DFSAG will consider amongst other things:

                a. the oversight of the Official List of SecuritiesG ;
                b. the range of powers the ExchangeG retains over PersonsG with SecuritiesG admitted to its Official List of SecuritiesG which should include the ability to suspend, restore from suspension and de-list SecuritiesG from the Official List of SecuritiesG in accordance with this module; and
                c. the disciplinary procedures which have been established to take disciplinary action, including a fair and clear policy on any financial penalties which may be imposed, and the appeal processes.
                Derived from RM118/2013 [VER15/07-13]

              • AMI 6.11.7 Admission to an Official List of Securities

                • AMI 6.11.7 Guidance

                  1. The DFSAG has powers under Article 34 of the Markets Law in relation to the admission of SecuritiesG to an Official List of SecuritiesG maintained by an Authorised Market InstitutionG . Under that Article the DFSA may:
                  a. object to an admission of SecuritiesG to an Official List of SecuritiesG ; or
                  b. impose conditions or restrictions on an admission of SecuritiesG to an Official List of SecuritiesG .
                  2. Where the DFSAG objects to an application for an admission of SecuritiesG to an Official List of SecuritiesG , the ExchangeG is prohibited from admitting SecuritiesG to its Official List of SecuritiesG by virtue of Article 34 of the Markets Law.
                  3. Pursuant to Article 34(7) of the Markets Law, the FMTG may hear and determine any reference in relation to a decision by the DFSAG to object or impose conditions or restrictions upon an admittance of SecuritiesG to an Official List of SecuritiesG .
                  4. The DFSAG expects to exercise these powers rarely. An ExchangeG is responsible for assessing applications to its Official List of Securities. This section sets out the process for dealing with applications for admission.
                  Derived from RM118/2013 [VER15/07-13]
                  [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • Application for Admission of Securities to an Official List of Securities

              • AMI 6.11.8

                (1) Applications for the admission of SecuritiesG to an Official List of SecuritiesG must be made by the issuer of the SecuritiesG , or by a third party on behalf of and with the consent of the issuer of the SecuritiesG .
                (2) An ExchangeG must, before granting admission of any SecuritiesG to an Official List of SecuritiesG maintained by it:
                (a) be satisfied that the applicable requirements, including those in its listing rules, have been or will be fully complied with in respect of those SecuritiesG ; and
                (b) comply with the requirements relating to notification to the DFSAG in Rule 6.11.9(1).
                (3) An ExchangeG must notify an applicant in writing of its decision in relation to the application for admission of SecuritiesG to its Official List of SecuritiesG .
                Derived from RM118/2013 [VER15/07-13]

              • AMI 6.11.9

                (1) Subject to (2), at least 5 business days prior to an admission of SecuritiesG to its Official List of SecuritiesG , an ExchangeG must provide the DFSAG with notice of the decision and include the following information in the notification:
                (a) a copy of the listing application;
                (b) a copy of the assessment of the listing application carried out by the ExchangeG ; and
                (c) any information requested by the DFSAG .
                (2) An ExchangeG must immediately notify the DFSAG of any decision to suspend, restore from suspension or de-list any SecuritiesG from its Official List of SecuritiesG and the reasons for the decision.
                Derived from RM118/2013 [VER15/07-13]

      • AMI 7 Additional Licensing Requirements for Operating a Clearing House

        • AMI 7.1 Application

          • AMI 7.1.1

            (1) This chapter applies, subject to (3), to an Authorised Market InstitutionG Operating a Clearing HouseG and an applicant for such a LicenceG .
            (2) In this chapter, a reference to a "Clearing HouseG " is a reference to a PersonG in (1), except where specific reference is made to:
            (a) a Central CounterpartyG (CCP);
            (b) a Securities Settlement SystemG (SSS); or
            (c) a Central Securities DepositoryG (CSD).
            (3) Specific references in this chapter to a Clearing HouseG undertaking any of the functions specified in (2)(a) to (c) apply only in respect of that function.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 7.1.1 Guidance

              1. The Financial ServiceG of Operating a Clearing HousG e is defined in GEN Rule 2.18.1(1). This definition provides that Operating a Clearing HouseG can be carried on by either the operator becoming a Central CounterpartyG (CCP) or by operating a Securities Settlement SystemG (SSS) (i.e. a system that enables InvestmentsG to be transferred and settled by book entry), regardless of whether or not such a PersonG also acts as a Central Securities DepositoryG (CSD) in respect of SecuritiesG cleared or settled on its facility and similar facilities.
              2. Where a Clearing HouseG undertakes the function of acting as a CSDG under its own Licence, the additional requirements in section 7.4 apply to it. The function of CSDG may also be carried out by an Authorised FirmG licensed to carry on the Financial ServiceG of Providing CustodyG . See GEN definition in Rule 2.13.1(3). Such a firm is subject to similar requirements as in section 7.4, which are set out in COB section 10.2.
              3. Where a Clearing HouseG which did not at the time of licensing carry on CSDG functions wishes to do so subsequently, it needs to apply to the DFSAG for approval under Rule 4.3.1, as it is a material change to its current arrangements.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 7.2 Risk Management

          • AMI 7.2 Guidance

            1. An Authorised Market InstitutionG which operates a Clearing HouseG is subject to the management, systems and controls requirements in GEN chapter 5. These provisions require such an Authorised Market InstitutionG to establish and maintain risk management systems and controls to enable it to identify, assess, mitigate, control and monitor the risks to which it is exposed and to develop and implement policies and procedures to manage the risks to which it and the users of its facilities are exposed.
            2. The requirements set out below augment the GENG obligations referred to in 1.
            Derived from RM118/2013 [VER15/07-13]

          • Risk Management Framework

            • AMI 7.2.1.

              (1) A Clearing HouseG must have a comprehensive risk management framework (i.e. detailed policies, procedures and systems) capable of managing legal, credit, liquidity, operational and other risks to which it is exposed.
              (2) The risk management framework in (1) must:
              (a) encompass a regular review of material risks to which the Clearing HouseG is exposed and the risks posed to other market participants resulting from its operations; and
              (b) be subject to periodic review as appropriate to ensure that it is effective and operating as intended.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.2.1 Guidance

                1. The risk management framework should, for the purposes of Rule 7.2.1(2)(a), identify scenarios that may potentially prevent a Clearing HouseG from being able to provide its critical operations and services as a going concern and assess the effectiveness of a full range of options for recovery or orderly wind-down.
                2. A Clearing HouseG should prepare appropriate plans for resumption of its operations in such scenarios and, where it is not possible to do so, for an orderly wind-down of the operations of the Clearing HouseG premised on the results of such assessments.
                3. Such procedures should also include appropriate early notification to the DFSAG and other regulators as appropriate. See also the requirements in section 9.8 relating to disclosure to the DFSAG .
                4. A Clearing HouseG should also, to the extent possible, provide incentives to MembersG and other market participants to manage and contain the risks they pose to the orderly and efficient operations of the Clearing HouseG . Those may include financial penalties to MembersG and other participants that fail to settle InvestmentsG in a timely manner or to repay intraday credit by the end of the operating day.
                Derived from RM118/2013 [VER15/07-13]

          • Legal Risk

            • AMI 7.2.2

              (1) A Clearing HouseG must have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of its activities in all relevant jurisdictions.
              (2) A Clearing HouseG must have adequate rules and procedures, including contractual arrangements, which are legally enforceable.
              (3) A Clearing HouseG that operates in multiple jurisdictions must:
              (a) identify and mitigate the risks arising from doing business in the relevant jurisdictions, including those arising from conflicting laws applicable in such jurisdictions; and
              (b) ensure the arrangements referred to in (2) provide a high degree of certainty that actions taken by the Clearing HouseG under its rules and procedures will not be reversed, stayed or rendered void.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.2.2 Guidance

                1. This Rule is designed to address legal risks faced by a Clearing HouseG , particularly where it operates in multiple jurisdictions. For example, an unexpected application of a law or regulation may render a contract between itself and a counterparty void or unenforceable, thereby leading to a loss.
                2. A Clearing HouseG should be able to demonstrate to the DFSAG that the legal basis on which it operates, including in multiple jurisdictions, is well founded. A well founded legal basis would generally include well defined rights and obligations of the Clearing HouseG , its MembersG and other users, including its service providers such as custodians and settlement banks, or would provide a mechanism by which such rights and obligations can be ascertained. This would enable the Clearing HouseG to identify and address risks that arise from its operations involving such parties.
                3. A Clearing HouseG should, in order to form clear views about the legally binding nature of its contractual arrangements in the relevant jurisdictions, obtain independent legal opinions as appropriate to its activities. Such legal opinions should, to the extent practicable, confirm the enforceability of the rules and procedures of the Clearing HouseG in the relevant jurisdictions and be made available to the DFSAG upon request.
                4. A Clearing HouseG may be conducting its activities in multiple jurisdictions in circumstances such as:
                a. where it operates through linked CCPsG , SSSsG or CSDsG ;
                b. where its MembersG and other participants are incorporated, located, or otherwise conducting business in jurisdictions outside the DIFCG ; or
                c. where any collateral provided is located or held in a jurisdiction outside the DIFCG .
                Derived from RM118/2013 [VER15/07-13]

          • Liquidity Risk

            • AMI 7.2.3

              (1) A Clearing HouseG must:
              (a) determine the amount of its minimum liquid resources;
              (b) maintain sufficient liquid resources to be able to effect same-day, intra-day or multi-day settlement, as applicable, of its payment obligations with a high degree of confidence under a wide range of potential stress scenarios;
              (c) ensure that all resources held for the purposes of meeting its minimum liquid resource requirement are available when needed;
              (d) have a well-documented rationale to support the amount and form of total liquid resources it maintains for the purposes of (b) and (c); and
              (e) have appropriate arrangements in order to be able to maintain, on an on-going basis, such amount and form of its total liquid resources.
              (2) A Clearing HouseG must have a robust framework for managing its liquidity risks. Such a framework must enable it to manage liquidity risks arising from its MembersG and other participants on its facilities, and any other involved parties, such as settlement banks, custodian banks, liquidity providers ("MembersG and other involved parties"). For that purpose, the framework must, at a minimum, include:
              (a) rules and procedures that:
              (i) enable it to meet its payment obligations on time following any individual or combined default of its MembersG and other involved parties; and
              (ii) address unforeseen and potentially uncovered liquidity shortfalls to avoid unwinding, revoking, or delaying the settlement of its payment obligations arising under the same-day, intraday or multiday settlement obligations, as applicable;
              (b) effective operational and analytical tools to identify, measure and monitor its settlement and funding flows on an on-going and timely basis; and
              (c) rigorous due diligence procedures relating to its liquidity providers to obtain a high degree of confidence that each provider (whether the provider is a MemberG or other participant using its facilities or an external party) has:
              (i) sufficient information to assess, understand and manage its own liquidity risks; and
              (ii) the capacity to perform as required under their commitment.
              (3) A Clearing HouseG must regularly:
              (a) review the adequacy of the amount of its minimum liquid resources as determined in accordance with (1);
              (b) test the sufficiency of its liquid resources maintained to meet the relevant amount through rigorous stress testing; and
              (c) test its procedures for accessing its liquid resources at a liquidity provider.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.2.3 Guidance

                1. A Clearing HouseG should be able to effectively measure, monitor, and manage its liquidity risk. Some of the systems, controls and procedures set out under Rule 7.2.3 above to address liquidity risk are also commonly used to address credit risks, and therefore, the same procedures, adjusted as appropriate, can be used for both purposes.

                Acceptable types of liquid resources

                2. For the purposes of meeting its minimum liquid resource requirement referred to above, a Clearing House'sG qualifying liquid assets/resources may include cash held in appropriate currencies at a central bank in its or other relevant jurisdiction, or at creditworthy commercial banks, committed lines of credit, committed foreign exchange swaps and repos, as well as highly marketable collateral held in custody and investments that are readily available and convertible into cash with prearranged and highly reliable funding arrangements, even in extreme but plausible market conditions.
                3. If a Clearing HouseG has access to a routine line of credit made available by a central bank in its or other relevant jurisdiction, it may count such access as part of its liquid resources to the extent it has collateral that is eligible for pledging to (or for conducting other appropriate forms of transactions with) the relevant central bank. Even if it does not have access to a routine line of credit made available by a central bank, it should still take account of what collateral is typically accepted by the relevant central bank as such assets may be more likely to be liquid in stressed circumstances. However, a Clearing HouseG should not assume the availability of emergency central bank credit as a part of its liquidity plan.
                4. A Clearing HouseG may supplement its qualifying liquid resources with other forms of liquid resources. If it does so, then such liquid resources should be in the form of assets that are likely to be saleable, or acceptable as collateral, for lines of credit, swaps, or repos on an ad hoc basis following a default, even if this cannot be reliably prearranged or guaranteed in extreme market conditions.
                5. Where a Clearing HouseG has access to a central bank lines of credit or accounts, payment services, or securities services, it should use those services as far as practicable, as such use is likely to enhance its ability to manage liquidity risk more effectively.

                Review

                6. A Clearing HouseG should have clear procedures to report the results of its stress tests undertaken for the purposes of this Rule to its Governing BodyG and senior management as appropriate. It should use the results of stress testing to evaluate the adequacy of its liquidity risk-management framework and make any appropriate adjustments as needed.
                7. In conducting stress testing, a Clearing HouseG should consider a wide range of relevant scenarios. Scenarios should include relevant peak historic price volatilities, shifts in other market factors such as price determinants and yield curves, multiple defaults over various time horizons, simultaneous pressures in funding and asset markets, and a spectrum of forward-looking stress scenarios in a variety of extreme but plausible market conditions. Scenarios should also take into account the design and operation of the Clearing HouseG , and include all entities that may pose material liquidity risks to the Clearing HouseG (such as settlement banks, custodian banks, liquidity providers, and other involved entities), and where appropriate, cover a multi-day period.
                8. A Clearing HouseG should record the results of such stress testing and the rationale for any adjustments made to the amount and form of total liquid resources it maintains.

                Participant default

                9. A Clearing House'sG rules and procedures should also indicate any liquidity resources it may deploy, in the event of default by a MemberG or other involved parties, during a stress event to replenish the available liquid resources and the associated process, so that it can continue to operate in a safe and sound manner.
                Derived from RM118/2013 [VER15/07-13]

          • Custody and Investment Risk

            • AMI 7.2.4

              (1) A Clearing HouseG must have effective means to address risks relating to:
              (a) custody of its own assets, in accordance with (2); and
              (b) investments, in accordance with (3).
              (2) For the purposes of (1)(a), a Clearing HouseG must:
              (a) hold its own assets with entities which are Licensed by the DFSAG or a Financial Services RegulatorG for holding deposits or providing custody, as appropriate;
              (b) be able to have prompt access to its assets when required; and
              (c) regularly evaluate and understand its exposures to entities which hold its assets.
              (3) For the purposes of (1)(b), a Clearing HouseG must ensure that:
              (i) it has an investment strategy which is consistent with its overall risk-management strategy and is fully disclosed to its MembersG and other participants using its facilities; and
              (ii) its investments comprise instruments with minimal credit, market, and liquidity risks. For this purpose, the investments must be secured by, or be claims on, high-quality obligors, allowing for quick liquidation with little, if any, adverse price effect.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.2.4 Guidance

                A Clearing HouseG which holds assets for its MembersG and other participants is subject to the "safe custody" requirements in section 5.10. In addition to those requirements, a Clearing HouseG is required to manage risks associated with custody of its own assets (which may comprise cash) under Rule 7.2.4.

                Derived from RM118/2013 [VER15/07-13]

          • Money Settlement

            • AMI 7.2.5

              (1) Where a Clearing HouseG conducts its money settlements using commercial bank money, it must adopt appropriate measures to minimise and strictly control the credit and liquidity risk arising from such use.
              (2) For the purposes of (1), a Clearing HouseG must:
              (a) conduct its money settlements using only such settlement assets with little or no credit or liquidity risk;
              (b) monitor, manage, and limit its credit and liquidity risks arising from commercial settlement banks. In particular, it must establish and monitor adherence to strict criteria for the use of settlement banks, which take into account, among other things, the regulation and supervision, creditworthiness, capitalisation, access to liquidity, and operational reliability of the relevant settlement banks;
              (c) monitor and manage the concentration of credit and liquidity exposures to its commercial settlement banks; and
              (d) ensure that its legal agreements with any settlement banks, at a minimum:
              (i) specify clearly when transfers on the books of individual settlement banks are expected to occur and when they are final; and
              (ii) ensure that funds received are transferable as soon as possible, if not intra-day, at least by the end of the day to enable it and its MembersG and other participants on its facilities to manage their credit and liquidity risks.
              Derived from RM118/2013 [VER15/07-13]

          • Physical Delivery

            • AMI 7.2.6

              (1) A Clearing HouseG incurring obligations that require physical delivery of commodities must:
              (a) provide adequate information to its MembersG and other participants using its facilities relating to its obligations with respect to physical delivery of commodities. Such information must also be made publicly available;
              (b) identify, monitor, and manage the risks associated with such physical deliveries; and
              (c) identify, monitor, and manage the risks and costs associated with the storage and delivery of commodities.
              (2) A Clearing HouseG must have adequate arrangements, including service agreements, which enable it to meet its physical delivery obligations.
              Derived from RM118/2013 [VER15/07-13]

          • Collateral

            • AMI 7.2.7

              (1) A Clearing HouseG which requires collateral to manage its own, its Members'G or other participants' credit risks arising in the course of or for the purposes of its payment, clearing, and settlement processes must:
              (a) only accept collateral with low credit, liquidity, and market risks; and
              (b) set and enforce appropriately conservative haircuts and concentration limits.
              (2) A Clearing HouseG must, for the purposes of meeting the requirement in (1), establish and implement a collateral management system that is well designed and operationally flexible. Such a system must, at a minimum:
              (a) limit the assets it accepts as collateral to those with low credit, liquidity, and market risks;
              (b) establish prudent valuation practices and develop haircuts that are regularly tested and take into account stressed market conditions;
              (c) to reduce the need for procyclical adjustments, establish, to the extent practicable and prudent, stable and conservative haircuts that are calibrated to include periods of stressed market conditions;
              (d) avoid concentrated holdings of certain assets where that would significantly impair the ability to liquidate such assets quickly without significant adverse price effects; and
              (e) mitigate, if it accepts cross-border collateral, the risks associated with such use. Such measures must ensure that the collateral can be used in a timely manner.
              Derived from RM118/2013 [VER15/07-13]

          • Settlement Finality

            • AMI 7.2.8

              (1) A Clearing HouseG must have adequate arrangements to ensure clear and certain final settlement of payments, transfer instructions or other obligations of MembersG and other participants using its facilities and where relevant, its own obligations.
              (2) For the purposes of (1), a Clearing House'sG arrangements for final settlement must:
              (a) ensure that, if intra-day or real-time settlement is not feasible, settlement occurs at least by the end of the value date of the relevant transaction; and
              (b) clearly define:
              (i) the point at which the final settlement occurs; and
              (ii) the point after which unsettled payments, transfer instructions, or other obligations may not be revoked by the parties to the underlying contract.
              (3) For the purposes of this Rule:
              (a) "final settlement" is the irrevocable and unconditional transfer of an asset or financial instrument, or the discharge of obligations arising under the underlying contract by the parties to the contract; and
              (b) "value date" is the day on which the payment, transfer instruction, or other obligation arising under the underlying contract is due and, accordingly, the associated funds or InvestmentsG are available to the respective parties under the contract.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.2.8 Guidance

                1. Final settlement is usually dependent on the legal environment of where the settlement occurs. Generally, in the case of certain assets, final settlement includes the transfer of title.
                2. Completing final settlement by the end of the value date is important because deferring final settlement to the next-business day can create both credit and liquidity pressures for a Clearing House'sG MembersG and other participants on its facilities and stakeholders. This may also be a potential source of systemic risk. Therefore, where possible, a Clearing HouseG should provide intra-day or real-time settlement finality to reduce settlement risk.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 7.3 Additional Requirements for a CCP

          • Credit Risk

            • AMI 7.3.1

              (1) A Clearing HouseG acting as a CCPG must establish and implement a robust process to manage:
              (a) its current and potential future credit and market risk exposures to market counterparties, including MembersG and other participants on its facilities; and
              (b) credit risks arising from its payment, clearing, and settlement processes.
              (2) For the purposes of (1), a CCPG must, on a regular basis as appropriate to the nature, scale and complexity of its operations:
              (a) perform stress tests using models containing standards and predetermined parameters and assumptions; and
              (b) carry out comprehensive and thorough analysis of stress testing models, scenarios, and underlying parameters and assumptions used to ensure that they are appropriate for determining the required level of default protection in light of current and evolving market conditions.
              (3) A CCPG must:
              (a) undertake the analysis referred to in (2)(b) at least on a two-month basis, unless more frequent analysis is warranted because the InvestmentsG cleared or markets served display high volatility, become less liquid, or when the size or concentration of positions held by its participants increase significantly; and
              (b) perform a full validation of its risk-management models at least annually.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.3.1 Guidance

                1. A robust assessment process should enable a CCPG to effectively measure, monitor, and manage its risks and exposures effectively. In particular, it should be able to identify sources of credit risk and routinely measure and monitor its credit exposures. Generally, a CCPG should have daily stress testing to measure and monitor its risk exposures, especially if its operations are complex or widely spread over multiple jurisdictions. It should use appropriate risk management tools to control the identified credit risks. A CCPG should use margin and other prefunded financial resources in order to do so.
                2. In particular, a CCPG should establish explicit rules and procedures that address fully any credit losses it may face as a result of any individual or combined default among its MembersG and other participants with respect to any of their obligations to the CCPG . Such rules and procedures should address how any potentially uncovered credit losses would be allocated, including the repayment of any funds the CCPG may borrow from its liquidity providers. They should also indicate the CCP'sG process to replenish any financial resources that it may employ during a stress event, so that it can continue to operate in a safe and sound manner.
                3. A CCPG should document its supporting rationale for, and should have appropriate governance arrangements relating to, the amount of total financial resources it maintains. It should also have clear procedures to report the results of its stress tests to its Governing BodyG and senior management as appropriate, and use those results to evaluate the adequacy of its total financial resources and make any adjustments as appropriate.
                Derived from RM118/2013 [VER15/07-13]

          • Margin Requirements

            • AMI 7.3.2

              (1) Without limiting the generality of Rule 7.3.1, a Clearing HouseG operating as a CCPG must, for the purposes of managing its credit and market risk:
              (a) have a margin system which meets the requirements in (2) and (3);
              (b) mark participant positions to market and collect variation margin at least daily to limit the build-up of current exposures;
              (c) have necessary authority and operational capacity to make intra-day margin calls and payments, both scheduled and unscheduled, to participants; and
              (d) regularly review and validate its margin system to ensure that it operates effectively and as intended.
              (2) The margin system of a CCPG must, at a minimum:
              (a) establish margin levels which are commensurate with the risks and particular attributes of each product, portfolio, and market it serves;
              (b) use a reliable source of timely price data for its margin system, and also procedures and sound valuation models for addressing circumstances in which pricing data is not readily available or reliable; and
              (c) adopt initial margin models and parameters that are risk-based and generate margin requirements sufficient to cover its potential future exposure to MembersG and other participants using its facilities in the interval between the last margin collection and the close-out of positions following a participant default.
              (3) The initial margins established pursuant to (2)(c) must:
              (a) if the CCPG calculates margins:
              (i) at the Member'sG portfolio level, be applied in respect of each portfolio's distribution of future exposure; and
              (ii) at more granular levels, meet the corresponding distribution of future exposures; and
              (b) use models which, among other things:
              (i) rely on conservative estimates of the time horizons for the effective hedging or close out of the particular types of products cleared by the CCPG , including in stressed market conditions; and
              (ii) have an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products, and, to the extent practicable and prudent, limit the need for destabilising procyclical changes.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.3.2 Guidance

                1. A CCPG should adopt comprehensive and stringent measures to ensure that it has adequate total financial resources to effectively manage its credit risk and exposures.
                2. A CCPG should determine the amount of the total financial resources available to it and regularly test the sufficiency of such amount, particularly in the event of a default or multiple defaults in extreme but plausible market conditions through rigorous stress testing.
                3. In conducting stress testing, a CCPG should consider the effect of a wide range of relevant stress scenarios in terms of both defaulters' positions and possible price changes in liquidation periods. Scenarios should include relevant peak historic price volatilities, shifts in other market factors such as price determinants and yield curves, multiple defaults over various time horizons, simultaneous pressures in funding and asset markets, and a spectrum of forward-looking stress scenarios in a variety of extreme but plausible market conditions.
                4. A CCPG which is involved in activities with a more-complex risk profile, or is systemically important in multiple jurisdictions, should maintain additional financial resources to cover a wide range of potential stress scenarios. These should include the default of the two of its market counterparties (including their affiliates) that would potentially cause the largest aggregate credit exposure for the CCPG in extreme but plausible market conditions. In all other cases, a CCPG should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios, which include the default of the market counterparty (including its affiliates) that would potentially cause the largest aggregate credit exposure for the CCPG in extreme but plausible market conditions.
                5. An effective margining system is a key risk-management tool for an Authorised Market InstitutionG operating as a CCPG to manage the credit exposures posed by open positions of its Members or other participants using its facilities. Therefore, it should adopt and implement an effective margin system, which is risk-based and regularly reviewed, in order to cover its credit exposures to its Members and other participants in respect of all Investments and other products.
                6. In calculating margin requirements, a CCPG may allow offsets or reductions in required margin across products that it clears or between products that it and another CCPG clear, if the risk of one product is significantly and reliably correlated with the risk of the other product. Where two or more CCPsG are authorised to offer cross-margining, they must have appropriate safeguards and harmonised overall risk-management systems.
                7. A CCPG should analyse and monitor its model performance and overall margin coverage by conducting rigorous back testing regularly, and sensitivity analysis at least monthly and, where appropriate, more frequently. A CCPG should regularly conduct an assessment of the theoretical and empirical properties of its margin model for all products it clears. In conducting sensitivity analysis of the model's coverage, a CCPG should take into account a wide range of parameters and assumptions that reflect possible market conditions, including the most-volatile periods that have been experienced by the markets it serves and extreme changes in the correlations between prices.
                Derived from RM118/2013 [VER15/07-13]

          • Segregation and Portability

            • AMI 7.3.3

              (1) A Clearing HouseG acting as a CCPG must have systems and procedures to enable segregation and portability of positions of the customers of its MembersG and other participants on its facilities, and any collateral provided to it with respect to those positions.
              (2) For the purposes of (1), a CCP'sG systems and controls must, at a minimum, provide for the following:
              (a) the segregation and portability arrangements that effectively protect the positions and related collateral of the customers of the MembersG or other participants on its facilities from the default or insolvency of the relevant MemberG or other participants;
              (b) if the CCPG offers additional protection of the customer positions and related collateral against the concurrent default of both the relevant MemberG or other participants or other customers, the adoption of necessary measures to ensure that the additional protection offered is effective; and
              (c) the use of account structures that enable the CCPG to readily identify positions of the customers of the relevant MemberG or other participant, and to segregate their related collateral.
              (3) A CCPG must make available to its MembersG and other participants using its facilities, its rules, policies and procedures relating to the segregation and portability of the positions and related collateral of the customers of its MembersG and other participants using its facilities.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.3.3 Guidance

                1. A CCPG should:
                a. maintain the customer positions and any related collateral referred to in Rule 7.3.3 in individual customer accounts or in omnibus customer accounts; and
                b. structure its portability arrangements so that the positions and collateral of a defaulting Member'sG or other participant's customers can be transferred to one or more other MembersG or participants.
                2. A CCPG should also disclose whether the customers' collateral is protected on an individual or omnibus basis. In addition, it should disclose any constraints, such as legal or operational, that may impair its ability to segregate or transfer a Member'sG or other participant's customers' positions and related collateral.
                Derived from RM118/2013 [VER15/07-13]

        • AMI 7.4 Additional Requirements for a CSD

          • AMI 7.4.1

            (1) Where a Clearing HouseG operates a Central Securities DepositoryG (CSD), it must have rules and procedures, including robust accounting practices and controls to:
            (a) ensure the integrity of securities issues; and
            (b) minimise and manage risks associated with the safekeeping and transfer of securities.
            (2) A CSDG must ensure that securities referred to in (1)(a) are recorded in book-entry form prior to the trade date.
            (3) For the purposes of (1)(a), a CSD'sG systems and controls must ensure that:
            (a) the unauthorised creation or deletion of securities is prevented;
            (b) appropriate intra-day reconciliation is conducted to verify that the number of securities making up a securities issue or part of a securities issue submitted to the CSDG is equal to the sum of securities recorded on the securities accounts of the MembersG and other participants of the CSDG ;
            (c) where entities other than the CSDG are involved in the reconciliation process for a securities issue, such as the issuer, registrars, issuance agents, transfer agents or other CSDsG , the CSDG has adequate arrangements for cooperation and information exchange between all involved parties so that the integrity of the issue is maintained; and
            (d) there are no securities overdrafts or debit balances in securities accounts .
            Derived from RM118/2013 [VER15/07-13]

          • CSD Links

            • AMI 7.4.2

              (1) A CSDG must not establish any link with another CSDG (CSDG link) unless:
              (a) it has:
              (i) prior to establishing the CSDG link, identified and assessed potential risks, for itself and its MembersG and other participants using its facilities, arising from establishing such a link;
              (ii) adequate systems and controls to effectively monitor and manage, on an on-going basis, risks identified under (a) above; and
              (iii) complied with the requirement in (2); and
              (b) it is satisfied, on reasonable grounds, that the contractual arrangement establishing the CSDG link:
              (i) provides to the CSDG and its MembersG and other participants using its facilities adequate protection relating to possible risks arising from using the other CSDsG to which it is linked (linked CSDsG );
              (ii) in the case of a provisional transfer of securities between the CSDG and linked CSDsG , ensure intra-day finality by prohibiting the retransfer of securities before the first transfer of securities becomes final;
              (iii) sets out the respective rights and obligations of the CSDG and linked CSDsG and their respective MembersG and other participants using their facilities; and
              (iv) in the case of a linked CSDG outside the DIFCG , sets out clearly the applicable laws that govern each aspect of the CSD'sG and the linked CSD'sG operations.
              (2) The CSDG must be able to demonstrate to the DFSAG , prior to the establishment of any CSDG link, that:
              (a) the link arrangement between the CSDG and all linked CSDsG , contains adequate mitigants against possible risks taken by the relevant CSDsG , including credit, concentration and liquidity risks, as a result of the link arrangement;
              (b) each linked CSDG has robust daily reconciliation procedures to ensure that its records are accurate;
              (c) if it or another linked CSD uses an intermediary to operate a link with another CSDG , the CSDG or the linked CSDG has adequate systems and controls to measure, monitor, and manage the additional risks arising from the use of the intermediary;
              (d) to the extent practicable and feasible, linked CSDsG provide for Delivery Versus PaymentG (DVP) settlement of transactions between participants in linked CSDsG , and where such settlement is not practicable or feasible, reasons for non-DVPG settlement is notified to the DFSAG ; and
              (e) where interoperable securities settlement systems and CSDsG use a common settlement infrastructure, there are:
              (i) identical moments established for the entry of transfer orders into the system;
              (ii) irrevocable transfer orders; and
              (iii) finality of transfers of securities and cash.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 7.4.2 Guidance

                A CSDG should include in its notification to the DFSAG relating to the establishment of CSDG links the results of due diligence undertaken in respect of the matters specified in Rule 7.4.2(2) to demonstrate that those requirements are met. Where a CSDG changes any existing CSDG arrangements, fresh notification relating to such changes, along with its due diligence relating to the new CSDG link, should be provided to the DFSAG in advance of the proposed change.

                Derived from RM118/2013 [VER15/07-13]

    • Part 4 Other Requirements

      • AMI 8 Controllers

        • AMI 8.1 Application

          • AMI 8.1.1

            This chapter applies to:

            (a) an Authorised Market InstitutionG ; or
            (b) a PersonG who is a ControllerG as defined in Rule 8.1.2.
            Derived from RM118/2013 [VER15/07-13]

          • Definition of a Controller

            • AMI 8.1.2

              (1) A ControllerG is a PersonG who, either alone or with any AssociateG :
              (a) holds 10% or more of the shares in either the Authorised Market InstitutionG or a Holding CompanyG of that institution;
              (b) is entitled to exercise, or control the exercise of, 10% or more of the voting rights in either the Authorised Market InstitutionG or a Holding CompanyG of that institution; or
              (c) is able to exercise significant influence over the management of the Authorised Market InstitutionG as a result of holding shares or being able to exercise voting rights in the Authorised Market InstitutionG or a Holding CompanyG of that institution or having a current exercisable right to acquire such shares or voting rights.
              (2) A reference in this chapter to:
              (a) a share means:
              (i) in the case of an Authorised Market InstitutionG or a Holding CompanyG of an Authorised Market InstitutionG which has a share capital, its allotted shares;
              (ii) in the case of an Authorised Market InstitutionG or a Holding CompanyG of an Authorised Market InstitutionG with capital but no share capital, rights to a share in its capital; and
              (iii) in the case of an Authorised Market InstitutionG or a Holding CompanyG of an Authorised Market InstitutionG without capital, any interest conferring a right to share in its profits or losses or any obligation to contribute to a share of its debt or expenses in the event of its winding up.
              (b) "a holding" means, in respect of a PersonG , shares, voting rights or a right to acquire shares or voting rights in an Authorised Market InstitutionG or a Holding CompanyG of that institution held by that PersonG either alone or with any AssociateG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.1.2 Guidance

                1. For the purposes of these Rules, the relevant definition of a Holding CompanyG is found in the DIFC Companies LawG . That definition provides when one body corporateG is considered to be a holding companyG or a subsidiary of another body corporateG and extends that concept to the ultimate holding company of the body corporateG .
                2. Pursuant to Rule 8.1.2(1)(c), a Person becomes a Controller if that Person can exert significant management influence over an Authorised Market InstitutionG . The ability to exert significant management influence can arise even where a Person, alone or with Associates, controls less than 10% of the shares or voting rights of the Authorised Market InstitutionG or a Holding CompanyG of that institution. Similarly, a PersonG may be able to exert significant management influence where such Person does not hold shares or voting rights but has exercisable rights to acquire shares or voting rights, such as under OptionsG .
                Derived from RM118/2013 [VER15/07-13]

          • Disregarded Holdings

            • AMI 8.1.3

              For the purposes of determining whether a PersonG is a ControllerG , shares, voting rights or rights to acquire shares or voting rights that a PersonG holds, either alone or with an AssociateG , in an Authorised Market InstitutionG or a Holding CompanyG of that institution are disregarded if:

              (a) the shares are held for the sole purpose of clearing and settling within a short settlement cycle;
              (b) the shares are held in a custodial or nominee capacity and the voting rights attached to the shares are exercised only in accordance with written instructions given to that PersonG by another PersonG ; or
              (c) the PersonG is an Authorised FirmG or a Regulated Financial InstitutionG and it:
              (i) acquires a holding of shares as a result of an underwriting of a share issue or a placement of shares on a firm commitment basis;
              (ii) does not exercise the voting rights attaching to the shares or otherwise intervene in the management of the issuer; and
              (iii) retains the holding for a period less than one year.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 8.2 Changes Relating to Control

          • Requirement for Prior Approval of Controllers of an Authorised Market Institution incorporated under DIFC law

            • AMI 8.2.1

              (1) In the case of an Authorised Market InstitutionG which is incorporated under DIFCG law, a PersonG must not:
              (a) become a ControllerG of the Authorised Market InstitutionG ; or
              (b) increase the level of control which that PersonG has in the Authorised Market InstitutionG beyond a threshold specified in (2), unless that PersonG has obtained the prior written approval of the DFSAG to do so.
              (2) For the purposes of (1)(b), the thresholds at which the prior written approval of the DFSAG is required are when the relevant holding is increased:
              (a) from below 30% to 30% or more; or
              (b) from below 50% to 50% or more.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.1 Guidance

                See Rule 8.1.2 for the circumstances in which a PersonG becomes a ControllerG of an Authorised Market InstitutionG .

                Derived from RM118/2013 [VER15/07-13]

          • Approval Process

            • AMI 8.2.2

              (1) A PersonG who is required to obtain the prior written approval of the DFSAG pursuant to Rule 8.2.1(1) must make an application to the DFSAG using the appropriate form in AFNG .
              (2) Where the DFSA receives an application under (1), it may:
              (a) approve the proposed acquisition or increase in the level of control;
              (b) approve the proposed acquisition or increase in the level of control subject to such conditions as it considers appropriate; or
              (c) object to the proposed acquisition or increase in the level of control.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.2 Guidance

                1. A PersonG intending to acquire or increase control in an Authorised Market InstitutionG should submit an application for approval in the appropriate form in AFN sufficiently in advance of the proposed acquisition to be able to obtain the DFSAG approval in time for the proposed acquisition.
                2. Paragraph 3.6.7 of the RPP Sourcebook sets out the matters which the DFSAG takes into consideration when exercising its powers under Rule 8.2.2 to approve, object to or impose conditions of approval relating to a proposed ControllerG or an increase in the level of control of an existing ControllerG .
                Derived from RM118/2013 [VER15/07-13]

            • AMI 8.2.3

              (1) Where the DFSAG proposes to approve a proposed acquisition of or an increase in the level of control in an Authorised Market InstitutionG pursuant to Rule 8.2.2(2)(a), it must:
              (a) do so as soon as practicable and in any event within 90 days of the receipt of a duly completed application, unless a different period is considered appropriate by the DFSAG and notified to the applicant in writing; and
              (b) issue to the applicant, and where appropriate to the Authorised Market InstitutionG , an approval notice as soon as practicable after making that decision.
              (2) An approval, including a conditional approval granted by the DFSAG pursuant to Rule 8.2.2(2)(a) or (b), is valid for a period of one year from the date of the approval, unless an extension is granted by the DFSAG in writing.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.3 Guidance

                1. If the application for approval lodged with the DFSAG does not contain all the required information, then the 90 day period runs from the date on which all the relevant information is provided to the DFSAG .
                2. If a PersonG who has obtained prior DFSAG approval for an acquisition of or an increase in the control in an Authorised Market InstitutionG is unable to effect the acquisition before the end of the period referred to in Rule 8.2.3(2), it will need to obtain fresh approval from the DFSAG .
                Derived from RM118/2013 [VER15/07-13]

          • Objection or Conditional Approval Process

            • AMI 8.2.4

              (1) Where the DFSAG proposes to exercise its objection or conditional approval power pursuant to Rule 8.2.4(2)(b) or (c) in respect of a proposed acquisition or an increase in the level of control in an Authorised Market InstitutionG , it must, as soon as practicable and in any event within 90 days of the receipt of the duly completed application form, provide to the applicant:
              (a) a written notice stating;
              (i) the DFSA'sG reasons for objecting to that PersonG as a ControllerG or to the Person'sG proposed increase in control; and
              (ii) any proposed conditions subject to which that PersonG may be approved by the DFSAG ; and
              (b) an opportunity to make representations within 14 days of the receipt of such objections notice or such other longer period as agreed to by the DFSAG .
              (2) The DFSAG must, as soon as practicable after receiving representations or, if no representations are received, after the expiry of the period for making representations referred to in (1)(b), issue a final notice stating that:
              (a) the proposed objections and any conditions are withdrawn and the PersonG is an approved ControllerG ;
              (b) the PersonG is approved as a ControllerG subject to conditions specified in the notice; or
              (c) the Person is not approved and therefore is an unacceptable ControllerG with respect to that PersonG becoming a ControllerG of, or increasing the level of control in, the Authorised FirmG .
              (3) If the DFSAG decides to exercise its power under this Rule not to approve a PersonG as a ControllerG or to impose conditions on an approval, the PersonG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 8.2.4 Guidance [Deleted]

                [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 8.2.5

              (1) A PersonG who has been approved by the DFSAG as a ControllerG of an Authorised Market InstitutionG subject to any conditions must comply with the relevant conditions of approval.
              (2) A PersonG who has been notified by the DFSAG pursuant to Rule 8.2.4(2)(c) as an unacceptable ControllerG must not proceed with the proposed acquisition of control of the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.5 Guidance

                A PersonG who acquires control of or increases the level of control in an Authorised Market InstitutionG without the prior DFSAG approval or breaches a condition of approval is in breach of the Rules. See Rule 8.2.10 for the actions that the DFSA may take in such circumstances.

                Derived from RM118/2013 [VER15/07-13]

          • Notification for Decrease in the Level of Control of an AMI Incorporated under DIFC law

            • AMI 8.2.6

              A Controller of an Authorised Market InstitutionG which is incorporated under DIFCG law must submit, using the appropriate form in AFNG , a written notification to the DFSAG where that PersonG :

              (a) proposes to cease being a ControllerG ; or
              (b) proposes to decrease the existing holding from more than 50% to 50% or less.
              Derived from RM118/2013 [VER15/07-13]

          • Notification for Changes in Control Relating to an Authorised Market Institution Incorporated Under Non-DIFC Law

            • AMI 8.2.7

              (1) In the case of an Authorised Market InstitutionG which is incorporated other than under DIFCG law, a written notification to the DFSAG must be submitted by a ControllerG or a PersonG proposing to become a ControllerG in accordance with (3) in respect of any one of the events specified in (2).
              (2) For the purposes of (1), a notification to the DFSAG is required when:
              (a) a Person becomes a ControllerG ;
              (b) an existing ControllerG proposes to cease being a ControllerG ; or
              (c) an existing Controller'sG holding is:
              (i) increased from below 30% to 30% or more;
              (ii) increased from below 50% to 50% or more; or
              (iii) decreased from more than 50% to 50% or less.
              (3) The notification required under (1) must be made using the appropriate form in AFNG as soon as possible, and in any event, before making the relevant acquisition or disposition.
              Derived from RM118/2013 [VER15/07-13]

          • Obligations of an Authorised Market Institution Relating to its Controllers

            • AMI 8.2.8

              (1) An Authorised Market InstitutionG must have adequate systems and controls to monitor:
              (a) any change or proposed change of its ControllersG ; and
              (b) any significant changes in the conduct or circumstances of existing ControllersG which might reasonably be considered to impact the fitness and propriety of the Authorised Market InstitutionG or its ability to conduct business soundly and prudently.
              (2) An Authorised Market InstitutionG must, subject to (3), notify the DFSAG in writing of any event specified in (1) as soon as possible after becoming aware of that event.
              (3) An Authorised Market InstitutionG need not comply with the requirement in (2) if it is satisfied on reasonable grounds that a proposed or existing ControllerG has either already obtained the prior approval of the DFSAG or notified the event to the DFSAG as applicable.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.8 Guidance

                Steps which an Authorised Market InstitutionG may take in order to monitor changes relating to its ControllersG include the monitoring of any relevant regulatory disclosures, press reports, public announcements, share registers and entitlements to vote, or the control of voting rights, at general meetings.

                Derived from RM118/2013 [VER15/07-13]

            • AMI 8.2.9

              (1) An Authorised Market InstitutionG must submit to the DFSAG an annual report on its ControllersG within four months of its financial year end.
              (2) The Authorised Market Institution'sG annual report on its ControllersG must include:
              (a) the name of each ControllerG ; and
              (b) the current holding of each ControllerG , expressed as a percentage.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 8.2.9 Guidance

                1. An Authorised Market InstitutionG may satisfy the requirements of Rule 8.2.9 by submitting a corporate structure diagram containing the relevant information.
                2. An Authorised Market InstitutionG must take account of the holdings which the ControllerG , either alone or with an AssociateG , has in the Authorised Market InstitutionG or any Holding Company of that institution (see the definition of a ControllerG in Rule 8.1.2).
                Derived from RM118/2013 [VER15/07-13]

          • Other Powers Relating to Controllers

            • AMI 8.2.10

              (1) Without limiting the generality of its other powers, the DFSAG may, subject only to (2), object to a PersonG as a ControllerG of an Authorised Market InstitutionG where such a PersonG :
              (a) has acquired or increased the level of control that PersonG has in an Authorised Market InstitutionG without the prior written approval of the DFSAG as required under Rule 8.2.1;
              (b) has breached the requirement in Rule 8.2.5 to comply with conditions of approval applicable to that PersonG ; or
              (c) is no longer acceptable to the DFSAG as a ControllerG .
              (2) Where the DFSAG proposes to object to a PersonG as a ControllerG of an Authorised Market InstitutionG , the DFSAG must provide such a PersonG with:
              (a) a written notice stating:
              (i) the DFSA'sG reasons for objecting to that PersonG as a ControllerG ; and
              (ii) any proposed conditions subject to which that PersonG may be approved by the DFSAG ; and
              (b) an opportunity to make representations within 14 days of the receipt of such notice or such other longer period as agreed to by the DFSAG .
              (3) The DFSAG must, as soon as practicable after receiving representations, or if no representations are made, after the expiry of the period for making representations referred to in (2)(b), issue a final notice stating that:
              (a) the proposed objections and any conditions are withdrawn and the PersonG is an approved ControllerG ; or
              (b) the PersonG is approved as a ControllerG subject to conditions specified in the notice; or
              (c) the PersonG is an unacceptable ControllerG and accordingly, must dispose of that Person'sG holdings.
              (4) Where the DFSAG has issued a final notice imposing any conditions subject to which a PersonG is approved as a ControllerG , that PersonG must comply with those conditions.
              (5) Where the DFSAG has issued a final notice declaring a PersonG to be an unacceptable ControllerG that PersonG must dispose of the relevant holdings within such period as specified in the final notice.
              (6) If the DFSAG decides to exercise its power under this Rule to object to a PersonG as a ControllerG , to impose conditions on an approval or to require a PersonG to dispose of their holdings, the PersonG may refer the matter to the FMTG for review.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 8.2.10 Guidance [Deleted]

                [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

      • AMI 9 Supervision of Authorised Market Institutions

        • AMI 9.1 Application

          • AMI 9.1.1

            This chapter applies to every Authorised Market InstitutionG .

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.2 Relations with Regulators and the Risk Based Approach

          • AMI 9.2.1

            An Authorised Market InstitutionG must deal with regulatory authorities in an open and co-operative manner and keep the DFSAG promptly informed of significant events or activities, wherever they are carried on, relating to the Authorised Market InstitutionG , of which the DFSAG would reasonably expect to be notified.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.2.2

            An Authorised Market InstitutionG must advise the DFSAG immediately if it becomes aware, or has reasonable grounds to believe, that a significant breach of a Rule or Licensing RequirementG by the Authorised Market InstitutionG or any of its EmployeesG may have occurred or may be about to occur.

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.3 Notifications

          • AMI 9.3.1

            Unless otherwise provided, notifications in this section may be made orally or in writing, whichever is more appropriate in the circumstances, but where the Authorised Market InstitutionG gives notice or information orally, it must confirm that notice or information in writing without delay.

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.4 Key Individuals

          • Notifications

            • AMI 9.4.1

              An Authorised Market InstitutionG must, where an individual ceases or is reasonably likely to cease to be a Key IndividualG of the Authorised Market InstitutionG , give written notice to the DFSAG of that event and take prompt action to replace the Key IndividualG who has ceased to perform the relevant functions.

              Derived from RM118/2013 [VER15/07-13]

              • AMI 9.4.1 Guidance

                1. An Authorised Market InstitutionG must lodge with the DFSAG the relevant applications for the approval of the proposed Key IndividualG in accordance with the requirements in section 3.3.
                2. An Authorised Market InstitutionG should ensure that functions that are assigned to Key IndividualsG as per the definitions of those functions are carried out by the relevant Key IndividualsG or other individuals subject to appropriate oversight and control of the relevant Key IndividualsG .
                3. The DFSAG does not need to be notified where minor changes are made to the responsibilities of a Key IndividualG , but where major changes in responsibilities are made, such as a significant re-alignment of responsibilities, then the DFSAG should be notified with the appropriate information. Such changes may also require the DFSAG prior approval if they are material changes. See section 4.3.
                Derived from RM118/2013 [VER15/07-13]

          • Disciplinary Action and Events Relating to Key Individuals

            • AMI 9.4.2

              Where any Key IndividualG of an Authorised Market InstitutionG :

              (a) is the subject of any:
              (i) disciplinary action arising out of alleged misconduct; or
              (ii) criminal prosecution arising out of alleged misconduct involving fraud or dishonesty;
              (b) resigns as a result of an investigation into alleged misconduct; or
              (c) is dismissed for misconduct;

              the Authorised Market InstitutionG must immediately give the DFSAG notice of that event and give the following information:
              (d) the name of the Key IndividualG and his responsibilities within the Authorised Market InstitutionG ;
              (e) details of the alleged acts of misconduct by that Key IndividualG ; and
              (f) details of any disciplinary action which has been imposed or is proposed to be taken by that body in relation to that Key IndividualG .
              Derived from RM118/2013 [VER15/07-13]

            • AMI 9.4.3

              Where an Authorised Market InstitutionG becomes aware that any of the following events have occurred in relation to a Key IndividualG , it must immediately give the DFSAG notice of that event:

              (a) a petition of bankruptcy is presented against a Key IndividualG ;
              (b) a bankruptcy order is made against a Key IndividualG ; or
              (c) a Key IndividualG entering into a voluntary arrangement with his creditors.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.5 Constitution and Governance

          • AMI 9.5.1

            Where an Authorised Market InstitutionG is to circulate any notice or other document proposing any amendment to its memorandum or articles of association, or other document relating to its constitution, to:

            (a) its shareholders or any group or class of them;
            (b) persons granted access to its facilities or any group or class of them; or
            (c) any other group or class of persons which has the power to make that amendment or whole consent or approval is required before it may be made:

            that Authorised Market InstitutionG must give notice of that proposed amendment to the DFSAG setting out the following information:

            (d) the proposed amendment;
            (e) the reasons for the proposal; and
            (f) a description of the group or class of persons to whom the proposal is to be circulated.
            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.5.2

            Where an Authorised Market InstitutionG makes an amendment to its memorandum or articles of association, or other document relating to its constitution, that Authorised Market InstitutionG must immediately give the DFSAG notice of that event, setting out written particulars of that amendment and of the date on which it is to become or became effective.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.5.3

            (1) Where any significant change is made to an agreement which relates to the constitution, or to the corporate governance framework or the remuneration structure or strategy, of an Authorised Market InstitutionG , that Authorised Market InstitutionG must give the DFSAG a notice as provided in (2).
            (2) Where any significant change is made to:
            (a) an agreement which relates to the constitution of an Authorised Market InstitutionG , the Authorised Market InstitutionG must give the DFSAG notice of that change as soon as it becomes aware of it, and the date on which it is to become or became effective; or
            (b) the corporate governance framework or the remuneration structure or strategy of an Authorised Market InstitutionG , the Authorised Market InstitutionG must give the DFSAG notice of that change as soon as practicable before making such a change.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 9.5.3 Guidance

              1. Key aspects of the corporate governance framework of an Authorised Market InstitutionG encompass a range of matters. These include the composition of its Governing BodyG , any committees of the Governing BodyG , the senior management and the Persons Undertaking Key Control FunctionsG , the reporting lines between the Governing BodyG , senior management and the Persons Undertaking Key Control FunctionsG and any key policies and practices relating to the internal governance of the firm, such as codes of ethics or its remuneration practices. Significant changes relating to such arrangements and policies need to be notified to the DFSAG pursuant to Rule 9.5.3(2)(b) before making any changes.
              3. Notification relating to proposed changes to corporate governance and remuneration referred to in Rule 9.5.3(2)(b) must be given sufficiently in advance of effecting the proposed change. If there are any concerns that an Authorised Market InstitutionG may not be able to meet the applicable requirements relating to corporate governance and remuneration set out in GEN Rules 5.3.30 and 5.3.31 as a result of a proposed change, the DFSAG may require the Authorised Market InstitutionG to address those concerns effectively before implementing such a change.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.6 Financial and Other Information

          • AMI 9.6.1

            An Authorised Market InstitutionG must give the DFSAG :

            (a) a copy of its annual report and accounts; and
            (b) a copy of any consolidated annual report and accounts of any group of which the Authorised Market InstitutionG is a member;

            no later than when the first of the following events occurs:
            (c) three months after the end of the financial year to which the document relates;
            (d) the time when the documents are sent to PersonsG granted access to the facilities or shareholders of the Authorised Market InstitutionG ; or
            (e) the time when the document is sent to a Holding CompanyG of the Authorised Market InstitutionG .
            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.6.2

            Where an audit committee of an Authorised Market InstitutionG has received a report in relation to any period or any matter relating to any Regulatory FunctionsG of that Authorised Market InstitutionG , the Authorised Market InstitutionG must immediately give the DFSAG a copy of that report.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.6.3

            An Authorised Market InstitutionG must give the DFSAG a copy of its quarterly management accounts within one month of the end of the period to which they relate.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.6.4

            An Authorised Market InstitutionG must give the DFSAG :

            (a) a statement of its anticipated income, expenditure and cash flow for each financial year; and
            (b) an estimated balance sheet showing its position as it is anticipated at the end of each financial year;

            at least 15 days before the beginning of that financial year.

            Derived from RM118/2013 [VER15/07-13]

            • AMI 9.6.4 Guidance

              An Authorised Market InstitutionG is subject to GEN 8 and the requirements imposed by those Rules.

              Derived from RM118/2013 [VER15/07-13]

          • Fees and Charges

            • AMI 9.6.5

              An Authorised Market InstitutionG must give the DFSAG a summary of:

              (a) any proposal for changes to the fees or charges levied on users of its facilities, or any group or class of them, at the same time as the proposal is communicated to the relevant users; and
              (b) any such change, no later than the date when it is published and notified to relevant parties.
              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.7 Complaints

          • AMI 9.7.1

            Where an Authorised Market InstitutionG has investigated a complaint arising in connection with the performance of, or failure to perform, any of its Regulatory FunctionsG , and the conclusion is, that the Authorised Market InstitutionG should:

            (a) make a compensatory payment to any person; or
            (b) remedy the matter which was the subject of that complaint,

            the Authorised Market InstitutionG must immediately notify the DFSAG of that event and give the DFSAG a copy of the report and particulars of the recommendation as soon as that report or those recommendations are available to it.

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.8 Notification

          • Notification in Respect of Trading

            • AMI 9.8.1

              Where an Authorised Market InstitutionG proposes to remove from trading or admit to trading, by means of its facilities, a class of Investment which it has not previously traded, but is licensed to do so, it must give the DFSAG notice of that event, at the same time as the proposal is communicated to persons granted access to its facilities or shareholders, with the following information;

              (a) a description of the Investment to which the proposal relates;
              (b) where that Investment is a derivative product, the proposed terms of that derivative; and
              (c) the name of any clearing or settlement facility in respect of that InvestmentG .
              Derived from RM118/2013 [VER15/07-13]

            • AMI 9.8.2

              Where an Authorised Market InstitutionG decides to suspend, restore from suspension or cease trading any Investment, it must immediately notify the DFSAG and any person granted access to its facilities of the decision.

              Derived from RM118/2013 [VER15/07-13]

            • AMI 9.8.3

              Where a Clearing HouseG proposes to cease clearing or settling, or to commence clearing or settling, by means of its facilities, a class of InvestmentG which it has not previously cleared or settled, but is licensed to do so, it must give the DFSAG notice of that event, at the same time as the proposal is communicated to persons granted access to its facilities or shareholders, with the following information;

              (a) a description of the Investment to which the proposal relates;
              (b) where that InvestmentG is a derivative product, the proposed terms of that derivative; and
              (c) the name of any trading facility in respect of that Investment.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 9.8.3 Delisting or Suspension of Securities from an Official List of Securities

                • AMI 9.8.3 Guidance

                  An Authorised Market InstitutionG which maintains an Official List of SecuritiesG has the power under Article 35(1) of the Markets Law 2012 to delist or suspend Securities from its Official List of SecuritiesG .

                  Derived from RM118/2013 [VER15/07-13]

            • AMI 9.8.4

              Where an Authorised Market InstitutionG suspends, restores or delists from suspension any SecuritiesG from an Official List of SecuritiesG it maintains under an endorsement on its LicenceG , it must immediately notify the DFSAG of its decision and the reasons for the decision.

              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.9 Information Technology Systems

          • AMI 9.9.1

            Where an Authorised Market InstitutionG changes any of its plans for action in response to a failure of any of its information technology systems resulting in disruption to the operation of its facilities, it must immediately give the DFSAG notice of that event, and a copy of the revised or new plan.

            Derived from RM118/2013 [VER15/07-13]

          • AMI 9.9.2

            Where any reserve information technology system of an Authorised Market InstitutionG fails in such a way that, if the main information technology system of that body were also to fail, it would be unable to operate any of its facilities during its normal hours of operation, that body must immediately give the DFSAG notice of that event, and inform the DFSAG of:

            (a) what action that Authorised Market InstitutionG is taking to restore the operation of the reserve information technology system; and
            (b) when it is expected that the operation of that system will be restored.
            Derived from RM118/2013 [VER15/07-13]

          • Inability to Discharge Regulatory Functions

            • AMI 9.9.3

              Where, because of the occurrence of any event or circumstances, an Authorised Market InstitutionG is unable to discharge any Regulatory FunctionG , it must immediately give the DFSAG written notice of its inability to discharge that function, and inform the DFSAG of:

              (a) what event or circumstance has caused it to become unable to do so;
              (b) which of its Regulatory FunctionsG it is unable to discharge; and
              (c) what action, if any, it is taking or proposes to take to deal with the situation and, in particular, to enable it to recommence discharging that Regulatory FunctionG .
              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.10 Investigations and Disciplinary Action

          • AMI 9.10.1

            Where an Authorised Market InstitutionG becomes aware that a person other than the DFSAG has been appointed by any regulatory authority to investigate:

            (a) any business transacted on or through its facilities; or
            (b) any aspect of the clearing or settlement services which it provides,

            it must immediately give the DFSAG notice of that event.

            Derived from RM118/2013 [VER15/07-13]

            • AMI 9.10.1 Guidance

              An Authorised Market InstitutionG need not give the DFSAG notice of:

              a. routine inspections or visits undertaken in the course of regular monitoring, complaints handling or as part of a series of theme visits;
              b. routine requests for information; or
              c. investigations into the conduct of PersonsG granted access to the facilities of an Authorised Market InstitutionG where the use of its facilities is a small or incidental part of the subject matter of the investigation.
              Derived from RM118/2013 [VER15/07-13]

          • Disciplinary Action Relating to Persons Granted Access to its Facilities

            • AMI 9.10.2

              Where an Authorised Market InstitutionG has taken disciplinary action against a MemberG or any other PersonG granted access to its facilities, or any EmployeeG of such PersonG , in respect of a breach of its Business RulesG , trading rules or Listing RulesG , the Authorised Market InstitutionG must immediately notify the DFSAG of that event, and give:

              (a) the name of the PersonG concerned;
              (b) details of the disciplinary action taken by the Authorised Market InstitutionG ; and
              (c) the Authorised Market InstitutionG 's reasons for taking that disciplinary action.
              Derived from RM118/2013 [VER15/07-13]

            • AMI 9.10.3

              Where an appeal is lodged against any disciplinary action referred to in Rule 9.10.2, the Authorised Market InstitutionG must immediately give the DFSAG notice of that event and:

              (a) the name of the appellant and the grounds on which the appeal is based, immediately; and
              (b) the outcome of the appeal, when known.
              Derived from RM118/2013 [VER15/07-13]

          • Criminal Offences and Civil Prohibition

            • AMI 9.10.4

              Where an Authorised Market InstitutionG has information tending to suggest that any person has:

              (a) been carrying on Financial ServicesG in the DIFCG in contravention of the general prohibition;
              (b) engaged in Market AbuseG ; or
              (c) engaged in financial crime or money laundering;

              it must immediately give the DFSAG notice of that event, along with full details of that information in writing. In regard to (c) the AMIG must immediately inform the appropriate authorities in the U.A.EG .

              Derived from RM118/2013 [VER15/07-13]
              [Amended] RM193/2016 (Made 7th December 2016). [VER18/02-17]

          • Directions by an Authorised Market Institution

            • AMI 9.10.5

              Where an Authorised Market InstitutionG :

              (a) decides to limit the open position of any PersonG in InvestmentsG ; or
              (b) issues directions to any PersonG to close out his position in any InvestmentG ;

              that Authorised Market InstitutionG must immediately give the DFSAG notice of that event, and the Person'sG name, the InvestmentG and size of any position to be limited or closed-out and the reasons for the Authorised Market Institution'sG decision.

              Derived from RM118/2013 [VER15/07-13]

        • AMI 9.11 Supervisory Directions

          • AMI 9.11 Guidance

            1. Article 26 of the Markets Law provides as follows:
            "(1) Without limiting the application of the Regulatory LawG 2004, the DFSAG may direct an Authorised Market InstitutionG to do or not do specified things that the DFSAG considers are necessary or desirable or ensure the integrity of the financial services industry in the DIFCG , including but not limited to, directions:
            (a) requiring compliance with any duty, requirement, prohibition, obligation or responsibility applicable to an Authorised Market InstitutionG ;
            (b) requiring an Authorised Market InstitutionG to act in a specified manner in relation to transactions conducted on or through the facilities operated by an Authorised Market InstitutionG , or in relation to a specified class of transactions; or
            (c) requiring an Authorised Market InstitutionG to act in a specified manner or to exercise its powers under any rules that the Authorised Market InstitutionG has made.
            (2) Without limiting the application of Article 75 of the Regulatory LawG 2004, the DFSAG may direct an Authorised Market InstitutionG to:
            (a) close the market or facilities operated by an Authorised Market InstitutionG in a particular manner or for a specified period;
            (b) suspend transactions on the market or through the facilities operated by an Authorised Market InstitutionG ;
            (c) suspend transactions in InvestmentsG conducted on the market or through the facilities operated by an Authorised Market InstitutionG ;
            (d) prohibit trading in Investments conducted on the market or through the facilities operated by an Authorised Market InstitutionG ;
            (e) defer for a specified period the completion date of transactions conducted on the market or through the facilities operated by an Authorised Market InstitutionG ;
            (f) prohibit a specified person from undertaking any transactions on the facilities operated by the Authorised Market InstitutionG ; or
            (g) do any act or thing, or not do any act or thing, in order to ensure an orderly market, or reduce risk to the DFSA'sG objectives."
            2. The DFSAG expects to use these powers only in exceptional circumstances. Factors the DFSAG will consider in exercising these powers include:
            a. what steps the Authorised Market InstitutionG has taken or is taking in respect of the issue being addressed in the planned direction;
            b. the impact on the DFSA'sG objectives if a direction were not issued; or
            c. whether it is in the interests of the DIFCG .
            3. The Decision NoticeG given by the DFSAG will specify what an Authorised Market InstitutionG is required to do under the exercise of such powers.
            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 9.12 Reports

          • AMI 9.12.1

            For the purposes of Article 74(2) of the Regulatory LawG 2004, an Authorised Market InstitutionG must deliver to the DFSAG a report in writing at such times as the DFSAG may direct addressing those matters contained in Article 74(2)(a)-(d) of the Regulatory LawG and such other matters as the DFSAG may reasonably require.

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.13 Listing Directions

          Derived from RM118/2013 [VER15/07-13]

          • AMI 9.13 Guidance

            Article 35(2) of the Markets LawG 2012 allows the DFSAG to direct an Authorised Market InstitutionG to suspend or restore from suspension or delist SecuritiesG from its Official List of SecuritiesG . Such directions may take immediate effect or from a date and time as may be specified in the directive.

            Derived from RM118/2013 [VER15/07-13]

        • AMI 9.14 Public Disclosures of Decisions in Relation to an Official List of Securities of an Authorised Market Institution

          • AMI 9.14.1

            (1) An Authorised Market InstitutionG must make a market disclosure:
            (a) on the website of the Authorised Market InstitutionG ; and
            (b) to the DFSAG ,
            of decisions in relation to the following events:
            (c) an admission of SecuritiesG to its Official List of SecuritiesG ;
            (d) a suspension of SecuritiesG from its Official List of SecuritiesG ;
            (e) a restoration from suspension of SecuritiesG from its Official List of SecuritiesG ;
            (f) a delisting of SecuritiesG from its Official List of SecuritiesG ; and
            (g) a suspension, restoration from suspension or decision to cease trading of any InvestmentG .
            (2) The disclosure made in accordance with (1) should also indicate whether the event was made under a direction made to the Authorised Market InstitutionG by the DFSA.
            Derived from RM118/2013 [VER15/07-13]

            • AMI 9.14.1 Guidance

              Disclosures made in accordance with Rule 9.14.1 are designed to help ensure that an orderly market exists in relation to SecuritiesG admitted to an Official List of SecuritiesG of an Authorised Market InstitutionG .

              Derived from RM118/2013 [VER15/07-13]

      • AMI 10 Withdrawal of a Licence

        • AMI 10.1 Application

          • AMI 10.1.1

            This chapter applies to an Authorised Market InstitutionG .

            Derived from RM118/2013 [VER15/07-13]

        • AMI 10.2 Withdrawal of a Licence at an Authorised Market Institution's request

          • AMI 10.2.1

            (1) An Authorised Market InstitutionG must continue to carry on every Financial ServiceG it is authorised to conduct under its LicenceG until its LicenceG is withdrawn or the DFSAG consents in writing.
            (2) An Authorised Market InstitutionG seeking to have its LicenceG withdrawn must submit a request in writing stating:
            (a) the reasons for the request;
            (b) the date on which it will cease to carry on Financial ServicesG in or from the DIFCG ;
            (c) how PersonsG using facilities maintained by it for trading, clearing or settlement, as applicable, are affected and any alternative arrangements made for the trading, clearing or settlement;
            (d) where applicable, how persons with SecuritiesG admitted to an Official List of SecuritiesG maintained by it are affected and any alternative arrangements made for the listing and trading of the relevant SecuritiesG ; and
            (e) that it has discharged, or will discharge, all obligations owed to its users in respect of whom the Authorised Market InstitutionG has carried on Financial ServicesG in or from the DIFCG .
            Derived from RM118/2013 [VER15/07-13]

            • AMI 10.2.1 Guidance

              1. The DFSAG will need to be satisfied when considering requests under Rule 10.2.1, that an Authorised Market InstitutionG has made appropriate arrangements with respect to its existing users (including the receipt of consent where required) and, in particular:
              a. whether there may be a long period in which the business will be wound down or transferred;
              b. whether money and other assets belonging to users must be returned to them; and
              c. whether there is any other matter which the DFSAG would reasonably expect to be resolved before granting a request for the withdrawal of a LicenceG .
              2. In determining a request for the withdrawal of a LicenceG , the DFSAG may require additional procedures or information as appropriate including evidence that the Authorised Market InstitutionG has ceased to carry on Financial ServicesG .
              3. Detailed plans should be submitted where there may be an extensive period of wind-down. It may not be appropriate for an Authorised Market InstitutionG to immediately request a withdrawal of its LicenceG in all circumstances, although it may wish to consider reducing the scope of its LicenceG during this period. Authorised Market InstitutionG should discuss these arrangements with the DFSAG .
              4. The DFSAG may refuse a request for the withdrawal of a LicenceG where it appears that users and customers may be adversely affected.
              5. The DFSAG may also refuse a request for the withdrawal of a LicenceG where:
              a. the Authorised Market InstitutionG has failed to settle its debts to the DFSAG ; or
              b. it is in the interests of a current or pending investigation by the DFSAG , or by another regulatory body or Financial Services RegulatorG .
              6. Under Article 63 where the DFSAG grants a request for the withdrawal of a LicenceG , the DFSAG may continue to exercise any power under the Regulatory Law, the Markets Law or Rules in relation to an Authorised Market InstitutionG for a period of three years from the date on which it became aware of the matter giving rise to the right to exercise the power.
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 10.3 Withdrawal of a Licence on the DFSA's Initiative

          • AMI 10.3 Guidance

            In section 10.2 above, an application to withdraw a LicenceG will be at the Authorised Market InstitutionG 's request. Under Article 51 of the Regulatory Law, the DFSAG may act on its own initiative to withdraw an Authorised Market Institution'sG LicenceG in cases when the Authorised Market InstitutionG no longer has authority to carry on any Financial ServiceG , is no longer meeting the conditions of its LicenceG or has failed to remove a ControllerG in the circumstances described in Article 64 of the Regulatory LawG .

            Derived from RM118/2013 [VER15/07-13]

      • AMI 11 Appeals from Authorised Market Institution Decisions

        • AMI 11.1 Application

          • AMI 11.1.1

            (1) Pursuant to Article 30 of the Regulatory LawG , any PersonG who:
            (a) is aggrieved by a decision of the Authorised Market InstitutionG ;
            (b) has a right to a further appeal of the Authorised Market InstitutionG decision to a tribunal under the Business RulesG of that Authorised Market InstitutionG ; and
            (c) has exhausted the internal appeal process of that Authorised Market InstitutionG ;
            may appeal the Authorised Market InstitutionG decision by commencing a regulatory proceeding before the FMTG .
            (2) The grounds on which an appeal may lie under this Rule are limited to the following:
            (a) an error of law or jurisdiction;
            (b) a breach of the rules of natural justice; or
            (c) the decision is manifestly unreasonable.
            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

      • AMI 12 Transition and Saving

        • AMI 12.1 Transitional Rule for Key Individuals

          • AMI 12.1.1

            (1) In this Rule:
            (a) "Commencement Date" means the date on which the DIFC Law Amendment Law No. 1 of 2014 comes into force;
            (b) "Current Regime" means the provisions in the Regulatory LawG and AMIG module as in force on the Commencement DateG ; and
            (c) "Previous Regime" means the provisions in the Regulatory LawG and AMIG module as in force immediately before the Commencement DateG .
            (2) A PersonG who was authorised as a Key IndividualG by the DFSAG under the Previous RegimeG is on the Commencement DateG deemed to be authorised as a Key IndividualG by the DFSAG under the Current RegimeG .
            Derived from RM118/2013 [VER15/07-13]
            [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 12.1.2 [Deleted]

            [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 12.2 [Deleted]

          • AMI 12.2.1 [Deleted]

            [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 12.3 Saving Rules

          • AMI 12.3.1

            (1) Save as provided in Rule 12.2.1, anything done or omitted to be done pursuant to or for the purposes of the Previous RegimeG is deemed to be done or omitted to be done pursuant to or for the purposes of the Current Regime.
            (2) Without prejudice to (1):
            (a) any right, privilege, remedy, obligation or liability accrued to or incurred by any PersonG ; and
            (b) any investigation or legal or administrative proceeding commenced or to be commenced in respect of any right, privilege, remedy, obligation or liability,
            under the Previous RegimeG continues and is enforceable under the Current RegimeG .
            Derived from RM118/2013 [VER15/07-13]

    • AMI App 1 Testing of Technology Systems

      • AMI A1.1 Application

        • AMI A1.1.1 Application

          An Authorised Market InstitutionG must, for the purposes of meeting the requirements in Rule 5.5.5 relating to the testing of its information technology systems, comply with the requirements in this Appendix.

          Derived from RM118/2013 [VER15/07-13]

      • AMI A1.2 Testing of Technology Systems

        • AMI A1.2.1

          An Authorised Market InstitutionG must, before commencing live operation of its information technology systems or any updates thereto, use development and testing methodologies in line with internationally accepted testing standards in order to test the viability and effectiveness of such systems. For this purpose, the testing must be adequate for the Authorised Market InstitutionG to obtain reasonable assurances that the systems, among other things:

          (a) enable it to comply with all the applicable requirements, including legislation, on an on-going basis;
          (b) can continue to operate effectively in stressed market conditions; and
          (c) any risk management controls embedded within the systems, such as generating automatic error reports, work as intended.
          Derived from RM118/2013 [VER15/07-13]

          • AMI A1.2.1 Guidance

            In assessing whether an Authorised Market InstitutionG has adequate information technology resourcing, the DFSAG will consider:

            a. whether its systems have sufficient electronic capacity to accommodate reasonably foreseeable volumes of messaging and orders, and
            b. whether such systems are adequately scalable in emergency conditions that might threaten the orderly and proper operations of its facility.
            Derived from RM118/2013 [VER15/07-13]

      • AMI A1.3 Testing Relating to Members' Technology Systems

        • AMI A1.3.1

          (1) An Authorised Market InstitutionG must implement standardised conformance testing procedures to ensure that the systems which its MembersG are using to access facilities operated by it have a minimum level of functionality that is compatible with the Authorised Market Institution'sG information technology systems and will not pose any threat to fair and orderly conduct of its facilities.
          (2) An Authorised Market InstitutionG must also require its MembersG , before commencing live operation of any electronic trading system, user interface or a trading algorithm, including any updates to such arrangements, to use adequate development and testing methodologies to test the viability and effectiveness of their systems.
          (3) For the purposes of (2), an Authorised Market InstitutionG must require its MembersG :
          (a) to adopt trading algorithm tests, including tests in a simulation environment which are commensurate with the risks that such a strategy may pose to itself and to the fair and orderly functioning of the facility operated by the Authorised Market InstitutionG ; and
          (b) not to deploy trading algorithms in a live environment except in a controlled and cautious manner.
          Derived from RM118/2013 [VER15/07-13]

          • AMI A1.3.1 Guidance

            When assessing whether the trading algorithm testing plan of its MembersG is adequate and appropriate and implemented effectively, an Authorised Market InstitutionG should consider whether:

            a. it includes testing where the markets in which the algorithm is to be used change in structure;
            b. the MemberG has taken into account any limits that are being placed on the number of InvestmentsG to be traded on, and the value and number of orders to be sent to, the facility operated by the Authorised Market InstitutionG ;
            c. the algorithm works effectively in stressed market conditions, including whether it can be switched off in appropriate circumstances; and
            d. it includes adequate independent auditing of the Member'sG testing procedures.
            Derived from RM118/2013 [VER15/07-13]

    • AMI App 2 Use of Price Information Providers

      • AMI A2.1 Application

        • AMI A2.1.1

          This Appendix applies to an Authorised Market InstitutionG referred to in Rule 5.8.1(3).

          Derived from RM118/2013 [VER15/07-13]

        • Use of Price Information Providers

          • AMI A2.1.2

            (1) An Authorised Market InstitutionG may only admit to trading or clearing or trade on its facilities InvestmentsG that reference to an underlying benchmark or index provided by a Price Information ProviderG where it has undertaken appropriate due diligence to ensure that the Price Information ProviderG , on an on-going basis, meets the requirements set out in (3).
            (2) A Price Information ProviderG is a price reporting agency or an index provider which constructs, compiles, assesses or reports, on a regular and systematic basis, prices of Investments, rates, indices, commodities or figures, which are made available to users.
            (3) For the purposes of (1), the Price Information ProviderG must:
            (a) have fair and non-discriminatory procedures for establishing prices of InvestmentsG which are made public.
            (b) demonstrate adequate and appropriate transparency over the methodology, calculation and inputs to allow users to understand how the benchmark or index is derived and its potential limitations;
            (c) where appropriate, give priority to concluded transactions in making assessments and adopt measures to minimise selective reporting;
            (d) be of good standing and repute as an independent and objective price reporting agency or index provider;
            (e) have a sound corporate governance framework;
            (f) have adequate arrangements to avoid its staff having any conflicts of interest where such conflicts are, or are likely to have, a material adverse impact on price establishment process; and
            (g) adequate complaint resolution mechanisms to resolve any complaints about the Price Information Provider'sG assessment process and methodology.
            Derived from RM118/2013 [VER15/07-13]

            • AMI A2.1 Guidance

              An Authorised Market InstitutionG , when assessing the suitability of a Price Information ProviderG (the provider), should take into account factors such as:

              a. the provider's standing and reliability in the relevant physical or derivatives markets as a credible price reporting agency;
              b. the quality of corporate governance adopted, covering areas such as independent members of the board, independence of its internal audit and risk management function;
              c. whether the methodologies and processes (including any material changes to such methodologies and processes) adopted by the provider for the purposes of pricing are made publicly available;
              d. whether there are adequate procedures adopted to ensure that conflicts of interests between the provider's commercial interests and that of users of its services, including that of its EmployeesG involved in pricing process, are adequately addressed, including through codes of ethics;
              e. whether there is a clear conveyance to its users of the economic realities of the underlying interest the Price Information ProviderG seeks to measure; and,
              f. the degree to which the Price Information ProviderG has given consideration to the characteristics of underlying interests measured, such as:
              •   the size and liquidity: Whether the size of the market informs the selection of an appropriate compilation mechanism and governance processes. For example, a benchmark or index that measures a smaller market may be impacted by single trades and therefore be more prone to potential manipulation, whereas a benchmark for a larger market may not be well represented by a small sample of participants;
              •   the relative market size. Where the size of a market referencing a benchmark is significantly larger than the volume of the underlying market, the potential incentive for benchmark manipulation to increase; and
              •   Transparency: Where there are varying levels of transparency regarding trading volumes and positions of market participants, particularly in non-regulated markets and instruments, whether the benchmark represents the full breadth of the market, the role of specialist participants who might be in a position to give an overview of the market, and the feasibility, costs and benefits of providing additional transparency in the underlying markets.
              Derived from RM118/2013 [VER15/07-13]

    • AMI App 3 Contract Delivery Specifications

      • AMI A3.1 Application

        • AMI A3.1.1

          This Appendix applies to an Authorised Market InstitutionG which trades, or clears or settles, on its facilities Commodity DerivativeG contracts which require physical delivery of the underlying commodity.

          Derived from RM118/2013 [VER15/07-13]

      • AMI A3.2 Deliverability of the Underlying Commodity

        • AMI A3.2.1

          An Authorised Market InstitutionG referred to in A3.1.1 must, for the purposes of meeting the requirement in Rule 6.3.2(1)(b), ensure that the terms and conditions of the Commodity Derivative contracts which are to be traded, or cleared or settled, on its facilities, are designed to include the matters specified in Rules A3.2.2A3.2.9.

        • Quality or Deliverable Grade

          • AMI A3.2.2

            A Commodity DerivativeG contract must include specifications of commodity characteristics for par delivery, including those relating to grade, class, and weight. The quality or grade specified must conform to the prevailing practices in the underlying physical market relating to the relevant commodity.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.2 Guidance

              1. Par delivery envisages delivery of commodities which are of a comparable quality or grade as specified in the contract. Contracts that call for delivery of a specific quality of commodity may provide commercial participants with a clearer, more efficient hedging and price-basing contracts than a contract that permits delivery of a broad range of commodity grades or classes.
              2. However, as contracts that permit delivery of only a specific grade of commodity may be susceptible to manipulation if that grade of the commodity is in short supply or controlled by a limited number of sellers, an Authorised Market InstitutionG should require appropriate measures to mitigate such risks.
              Derived from RM118/2013 [VER15/07-13]

        • Size of Delivery Unit

          • AMI A3.2.3

            A Commodity DerivativeG contract must contain provisions relating to size or composition of delivery units which conform to the prevailing market practice in the underlying physical market to ensure that it does not constitute a barrier to delivery or otherwise impede the performance of the contract.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.3 Guidance

              An Authorised Market InstitutionG should, where the provisions relating to size and delivery units of the Commodity DerivativesG contract deviate from the underlying physical market, examine the reasons for such deviation and ensure that the risks arising from such deviation can be effectively addressed by the contract parties.

              Derived from RM118/2013 [VER15/07-13]

        • Delivery Instruments

          • AMI A3.2.4

            A Commodity DerivativeG contract must specify the acceptable form or type of delivery instruments, and whether such instruments are negotiable or assignable and, if so, on what conditions.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.4 Guidance

              Acceptable delivery instruments include warehouse receipts, bills of lading, shipping certificates, demand certificates, or collateralized depository receipts.

              Derived from RM118/2013 [VER15/07-13]

        • The Delivery Process and Facilities

          • AMI A3.2.5

            A Commodity DerivativeG contract must specify:

            (a) the delivery process, including timing, location, manner and form of delivery, and
            (b) the delivery and/or storage facilities available,

            which conform to the prevailing practices in the underlying physical market to permit effective monitoring and to reduce the likelihood of disruption.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.5 Guidance

              1. An Authorised Market InstitutionG should consider issues associated with the delivery process, including those relating to acceptable delivery locations. Such issues include:
              a. the level of deliverable supplies normally available, including the seasonal distribution of such supplies;
              b. the nature of the physical market at the delivery point (e.g., auction market, buying station or export terminal);
              c. the number of major buyers and sellers; and
              d. normal commercial practices in establishing cash commodity values.
              2. The delivery months specified in the Commodity DerivativeG contract should take into account cyclical production and demand and accord with when sufficient deliverable supplies are expected to exist in the underlying physical market. Seasonality of a commodity should also be taken into account in relation to transport and storage, as it may affect the availability of warehouse space and transportation facilities.
              3. Consistent with the grade differentials noted above, Commodity DerivativeG contracts that permit delivery in more than one location should set delivery premiums or discounts consistent with those observed in the underlying physical market. The adequacy of transportation links to and from the delivery point should also be taken into account when setting delivery premiums.
              4. The delivery facilities available can include oil or gas storage facilities, warehouses or elevators for agricultural commodities and bank or vault depositories for precious metals.
              5. An Authorised Market InstitutionG should consider issues relating to the selection of delivery facilities under the contract which include:
              a. the number and total capacity of facilities meeting contract requirements;
              b. the proportion of such capacity expected to be available for short traders who may wish to make delivery against Commodity DerivativeG contracts and seasonal changes in such proportions;
              c. the extent to which ownership and control of such facilities is dispersed or concentrated; and
              d. its ability to access necessary information from such facility.
              Derived from RM118/2013 [VER15/07-13]

        • Inspection and Certification Procedures

          • AMI A3.2.6

            A Commodity DerivativeG contract must specify applicable inspection or certification procedures for verifying that the delivered commodity meets the quality or grade specified in the contract, which conform to the prevailing practices in the underlying physical market.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.6 Guidance

              If the commodity is perishable, the Commodity DerivativeG contract should specify if there are any limits on the duration of the inspection certificate and the existence of any discounts applicable to deliveries of a given age.

              Derived from RM118/2013 [VER15/07-13]

        • Payment for Transportation or Storage

          • AMI A3.2.7

            A Commodity DerivativeG contract must specify:

            (a) the respective responsibilities of the parties to the contract regarding costs associated with transporting the commodity to and from the designated delivery point and any applicable storage costs; and
            (b) how and when title to the commodity transfers, including from any short to long position holder.
            Derived from RM118/2013 [VER15/07-13]

        • Legal Enforceability

          • AMI A3.2.8

            A Commodity DerivativeG contract must, where any one or more of the activities of trading, clearing or settlement under the contract take place in different jurisdictions, contain adequate arrangements to mitigate risks arising from any disparity between governing laws applicable in the relevant jurisdictions.

            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.8 Guidance

              An Authorised Market InstitutionG should, when assessing whether the contractual terms adequately provide for addressing jurisdictional risks, take into account whether the contract:

              a. clearly identifies the different legal requirements applicable in the relevant jurisdictions and any differences, including those relating to the manner in which standard clauses are interpreted; and
              b. the impact such differences may have in dealing with matters such as delivery disputes, and determination of rights in insolvency proceedings; and
              c. contains effective measures to address risk of unenforceability of the contractual terms, particularly those relating to cargos and storage where jurisdictional differences could have a significant impact on the deliverability.
              Derived from RM118/2013 [VER15/07-13]

        • Default Provisions and Force Majeure

          • AMI A3.2.9

            A Commodity DerivativeG contract must specify:

            (a) the rights and obligations of the parties to the contract in the event of default by the parties, or in the event of frustration of the contract due to force majeure or other specified event; and
            (b) whether any Clearing HouseG or ExchangeG guarantees the settlement of the transaction in an event specified in (a), and if so, the manner in which such settlement will occur.
            Derived from RM118/2013 [VER15/07-13]

            • AMI A3.2.9 Guidance

              1. An Authorised Market InstitutionG when considering whether a Commodities DerivativeG contract adequately provides for contract certainty in the event of default or force majeure, should take into account:
              a. whether any collateral provided by the contracting parties would be sufficient to address the replacement risk in the performance of the contract; and
              b. whether there are any monetary consequences attaching to defaulting parties that would act as a disincentive against default.
              2. The contract terms should clearly specify which jurisdictional laws are applicable to the governing law, including where there are any significant variations in the rights and liabilities attaching to the contracting parties for the event that occur in the relevant jurisdiction.
              Derived from RM118/2013 [VER15/07-13]