RAR 3.6 Resolution Safeguards
RAR 3.6 Guidance
Under Article 84R (b) of the Law, the DFSA may prescribe safeguards that the DFSA shall aim to meet when it exercises a Resolution Power or applies a Resolution Tool. This section prescribes a number of safeguards that are in addition to the safeguard specified in Article 84R (a).
Procedural Requirements after Exercise of a Resolution Power or Resolution Tool
The DFSA shall, as soon as is reasonably practicable after the use of a Resolution Power or Resolution Tool (including in conjunction with a Recognition Order), publish or arrange for the publication of a copy of a notice summarising the key terms of its Resolution Action by the following means:(a) by publishing it on the websites of both the DFSA and the Authorised Firm in Resolution; and(b) if securities issued by the Authorised Firm in Resolution have been admitted to trading on an Authorised Market Institution or on an exchange in a Recognised Jurisdiction, by means of a relevant regulatory information service used on that exchange.
Safeguard for Counterparties in Partial Transfers
RAR 3.6.2(1) Where the DFSA:(a) transfers some but not all of the rights, assets or liabilities of an Authorised Firm in Resolution to another entity; or(b) exercises the power to cancel or modify the terms of a contract to which the Authorised Firm in Resolution is a party or substitute a recipient as a party,the DFSA shall take reasonable steps to protect the arrangements specified in (2) and the counterparties of such arrangements.(2) The arrangements protected under (1) are as follows:(a) collateral arrangements, including title transfer collateral arrangements;(b) set-off arrangements under which two or more claims or obligations owed between the Authorised Firm in Resolution and a counterparty can be set off against each other;(c) netting arrangements;(d) collateral and default fund contributions provided to payment systems, Central Counterparties, Securities Settlement Systems and Central Securities Depositories; and(e) any transfer or obligation that is subject to irrevocable settlement finality protections under applicable DIFC law.(3) The arrangements under (2) are to be protected irrespective of the number of parties involved in the arrangements or whether the arrangements:(a) are created by contract, deed, trusts or other means, or arise automatically by operation of law; or(b) arise under or are governed in whole or in part by the law of another jurisdiction.
Protection for Title Transfer Collateral Arrangements and Set-off and Netting Arrangements
Protection for Security Arrangements
The DFSA shall not, in respect of liabilities secured under the collateral arrangements referred to in RAR Rule 3.6.2(2)(a) that are not title transfer collateral arrangements:(a) transfer assets against which a liability is secured under any such arrangement, unless that liability and the benefit of the security are also transferred;(b) transfer a secured liability, unless the benefit of the security is also transferred;(c) transfer the benefit of the security under any such arrangement, unless the secured liability is also transferred; or(d) modify or terminate such an arrangement through the exercise of ancillary powers, if the effect of that modification or termination is that the liability ceases to be secured.
Protection of Trading, Clearing and Settlement Systems
The DFSA shall take reasonable steps to ensure that the application of a Resolution Tool does not affect the operation of an AMI, Regulated Exchange, payment system, Central Counterparty, Securities Settlement System or Central Securities Depository where it:(a) transfers some but not all of the rights, assets or liabilities of an Authorised Firm in Resolution to another entity; or(b) exercises its Resolution Power to cancel or modify the terms of a contract to which the Authorised Firm in Resolution is a party or to substitute a recipient as a party.