(1) Without limiting the generality of the systems and controls obligations of the Authorised Market Institution, an Authorised Market Institution must have in place adequate systems and controls to address market integrity, AML, CTF and investor protection risks in permitting a Direct Access Member to access its facility, including procedures to:
(a) identify the ultimate beneficial owner of a Direct Access Member, where the Member is a Body Corporate;
(b) ensure that appropriate customer due diligence sufficient to address AML and CTF risks has been conducted on each Direct Access Member, before permitting that Member to access its facility;
(c) detect and address market manipulation and abuse; and
(2) An Authorised Market Institution must have adequate controls and procedures to ensure that trading in Investment Tokens by Direct Access Members does not pose any risks to the orderly and efficient functioning of the facility’s trading system, including controls and procedures to:
(a) mitigate counterparty risks that may arise from defaults by Direct Access Members, through adequate collateral management measures, such as margin requirements, based on the settlement cycle adopted by the Authorised Market Institution;
(b) identify and distinguish orders that are placed by Direct Access Members, and, if necessary, enable the Authorised Market Institution to stop orders of, or trading by, such Members;
(c) prevent Direct Access Members from allowing any other Persons to access the facility through that Member’s access; and
(d) ensure that Direct Access Members fully comply with the Business Rules of the facility and promptly address any gaps and deficiencies that are identified.
(3) An Authorised Market Institution must have adequate resources and mechanisms to carry out front-line monitoring of the trading activities of Direct Access Members.
(4) An Authorised Market Institution must ensure that, to the extent that any of the systems and controls referred to in (1) are embedded within, or otherwise facilitated through DLT, they must be included within the scope of the annual audit and written report required under AMI Rule 5A.5.
Derived from DFSA RMI310/2021 (Made 30th June 2021). [VER20/10-21]