RPP 3-6 RPP 3-6 Supervision of Authorised Market Institutions
Regulatory Law2004 establishes a principles-based framework for the licensing and supervision of Authorised Market Institutionsand for taking regulatory action against those licensed institutions. This framework is supplemented by supervisory powers and other requirements in the Markets Law 2012.
The Markets Law 2012 establishes a framework in relation to how an
Authorised Market Institutionmay administer and operate an Official List of Securitiesand stipulates some specific Rulerequirements in respect of this.
Official List of Securities
Exchangeadministers and operates an Official List of Securities, the risk-based approach to supervision also applies to the carrying on of this activity.
DFSAlicenses an Authorised Market Institution, it takes into consideration the relationship with any wider Groupto which the Authorised Market Institutionmay belong or with other Personsclosely linked to it. The DFSAwill also take into account lead or consolidated supervision to which an Authorised Market Institutionor its Groupmay be subject in another jurisdiction. This may lead to the DFSAplacing some reliance on the supervisory arrangements in another jurisdiction or creating and participating in special arrangements for the supervision of the Authorised Market Institutionand its Group. The Authorised Market Institutionis expected to provide information required or reasonably requested in relation to these consolidated or lead supervisory arrangements before final supervisory arrangements are established.
Each relationship will be considered on a case by case basis and according to the risks posed by the
Authorised Market Institution'sactivities identified during supervisory arrangements. Such supervisory arrangements may include a process to be agreed by the DFSA, the Authorised Market Institutionitself and other relevant regulators.
Effective co-operation with regulators will provide for prompt exchange of information and co-operation in relation to supervision and enforcement between jurisdictions. This may include exchanges of information and co-operation in respect of activity conducted by an
Authorised Market Institution. Usually co-operation arrangements will be in the form of memoranda of understanding. The information exchange will enhance the DFSA'sunderstanding of the operations of the Groupand the effect on the Authorised Market Institution.
Application for a Change in Control
Article 26 of the Markets Law 2012 empowers the
DFSAto give an Authorised Market Institutioncertain directions in relation to the Authorised Market Institution'sduties under DFSA-administered laws. It also gives the DFSAa power to direct an Authorised Market Institutionto do specified things including closing the market, suspending transactions and prohibiting trading in Investments. Article 26 also empowers the DFSAto exercise the powers contained in the Authorised Market Institution's Rulesfor participants as though it was the Authorised Market Institutionwhere it considers that the Authorised Market Institutionhas not exercised the powers under those Rules.
In considering whether to exercise such powers, the
DFSAmay take into account factors including:(a) what steps the Authorised Market Institutionhas taken or is taking in respect of the issue being addressed in the planned direction;(b) the impact on the DFSA'sobjectives if a direction were not issued; or(c) whether it is in the interests of the DIFC.
The written notice given by the
DFSAwill specify what an Authorised Market Institutionis required to do under the exercise of such powers. Though the DFSAis not required to do so under the Markets Law 2012, in most cases the DFSAwill contact the Authorised Market Institutionprior to issuing such a direction.
Article 35 of the Markets Law 2012 allows the
DFSAto direct an Authorised Market Institutionto suspend or delist Securitiesfrom its Official List of Securities. Such directions may take effect immediately or from a date and time as may be specified in the direction. Chapter 9 of the MKT contains details in this regard.