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Dubai Financial Services Authority (DFSA): Contents

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  • 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]