Entire Section

  • GEN 2.18 GEN 2.18 Operating a clearing house

    • GEN 2.18.1 GEN 2.18.1

      (1) In GEN Rule 2.2.2, operating a Clearing House means operating a facility where confirmation, clearance and settlement of transactions in Investments are carried out in accordance with the non-discretionary rules of the facility, under which the Person operating the facility:
      (a) becomes a Central Counterparty ("CCP"); or
      (b) provides a book-entry Securities Settlement System ("SSS"),
      regardless of whether or not such a Person also operates a Central Securities Depository.
      (2) In (1), confirmation, clearance and settlement means the process of:
      (a) establishing settlement positions, including the calculation of net positions arising from any transactions in Investments (the transactions);
      (b) checking that Investments, cash or both, including margin, are available to secure the exposure arising from the transactions; and
      (c) securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities in relation to the transactions.
      (3) In (1)(a), a Person operates as a CCP where it:
      (a) ensures the performance of open contracts relating to Investments made on a facility for trading Investments; and
      (b) does so by interposing itself between counterparties to such contracts by becoming either the buyer to every seller, or the seller to every buyer.
      (4) In (1)(b), a Person operates an SSS where it operates a system which enables Investments held in accounts to be transferred and settled by book entry according to a set of predetermined multilateral rules.
      (5) Acting as a Central Securities Depository in (1) means holding securities in uncertificated (dematerialised) form to enable book entry transfer of such securities for the purposes of clearing or settlement of transactions on its own facility and on any other similar facility, including an Alternative Trading Facility or a facility supervised or regulated by another Financial Services Regulator.
      (6) To the extent that any activity under (1) constitutes Dealing In Investments as Principal, Dealing in Investments as Agent, Arranging Deals in Investments, Managing Assets, Arranging Custody or Arranging Credit, such Financial Services are taken to be incorporated within Operating a Clearing House, provided such activities are carried out as an incidental and integral part of Operating a Clearing House.
      Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] DFSA RM119/2013 (Made 14th July 2013). [VER33/07-13]
      [Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

      • GEN 2.18.1 Guidance

        1. The activity of operating a Central Securities Depository may be carried on by an Authorised Market Institution licensed to Operate a Clearing House in conjunction with its regulated activities, particularly operating an SSS. An Authorised Firm which has a licence authorising it to carry on Providing Custody may also operate a CSD under its licence (see GEN Rule 2.13.1(3)). If a Clearing House were to operate a CSD through a subsidiary, that subsidiary would need to be licensed separately as an Authorised Firm Providing Custody.
        2. An Authorised Market Institution licensed to Operate a Clearing House may also act as a Trade Repository if it has an endorsement on its Licence that permits it to do so (see GEN Rule 2.2.13). Acting as a Trade Repository does not constitute a Financial Service but is subject to the additional conduct requirements in GEN App 5.
        [Added] DFSA RM19/2005 (as from 19th April 2005). [VER3/04-05]
        Amended in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM119/2013 (Made 14th July 2013). [VER33/07-13]
        [Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

    • [Deleted]

      [Deleted] DFSA RM119/2013 (Made 14th July 2013). [VER33/07-13]

      • GEN 2.18.2 [Deleted]

        [Deleted] DFSA RM119/2013 (Made 14th July 2013). [VER33/07-13]