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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Authorised Market Institutions (AMI) [VER18/02-17]
Part 3 Licensing Requirements
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
Archive

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  • 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]