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GEN 2.9.8 Guidance

1. GEN Rule 2.9.2 excludes the activities of a party to a transaction from being 'arranging'. This is because a person cannot be both a party to a transaction, and its arranger.

2. Where a Person (an arranger) makes arrangements in the DIFC for another Person to obtain dealing services (e.g. broking services) from its head office, the arranger is not regarded as 'Dealing in Investments as Agent' in the DIFC merely because it is the same legal entity as its head office. However, to be able to do so without breaching the Financial Services Prohibition, the arranger would need to have an Authorisation for 'Arranging Deals in Investments'. It would also need to take care not to conduct activities that go beyond 'arranging' (see Guidance under GEN Rule 2.9.1 for activities which constitute arranging).

3. GEN Rule 2.9.3 excludes providers of means by which one party to a transaction (or potential transaction) communicates with the other contracting parties, from being arrangers. Communication channel providers, such as internet or telecommunication network providers, are excluded from being arrangers under this exclusion. However, if such a provider goes beyond being a 'mere' communication channel provider, for example, by adding value to the service provided to those communicating with each other, with a view to facilitating a contract being concluded, this exclusion will not apply to them.

4. GEN Rule 2.9.4 excludes from being arranging the activity of making arrangements for a lender (such as a bank) to accept an instrument acknowledging debt by a person who has obtained credit, a loan, a guarantee or any other form of financial facility. This mirrors the similar carve-out from regulation available to banks and other lenders where they are not considered to be 'dealing as principal' in Investments merely because they accept instruments acknowledging debt from those obtaining credit, loans, guarantees or any other form of financial facility from them.

5. GEN Rule 2.9.6 excludes issuers of Securities from being regarded as arrangers. For example, if an issuer of Securities sets up a website which enables prospective buyers of Securities to read the offer document and apply for the relevant Securities, the issuer is not required to have a Licence as an arranger due to this exclusion (but may have to comply with the disclosure requirements in MKT relating to the offer).

6. GEN Rule 2.9.7 excludes from being 'arrangers' lawyers and accountants, who, in the course of conducting their legal and accounting business, arrange for their clients to buy or sell Securities. To have the benefit of this exclusion, certain conditions have to be met (such as the activity being reasonably regarded as a necessary part of services provided by legal and accounting practitioners and not being separately remunerated). For example, if a lawyer arranges as part of estate planning services for a portfolio of investments to be sold by a brokerage firm, this exclusion can be applied, provided the lawyer's fees do not include a separate charge for arranging the liquidation of the portfolio, and the lawyer does not assist or participate in the conclusion of the contracts.

Derived from DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]