Supervision of Authorised Market Institutions

Supervision of Authorised Market Institutions

AFSA or (as the case may be) its officers may, by notice in writing, require an AMI or any other Person who is connected to the AMI to provide or produce specified information or information of a specified description, at a specified place and within a reasonable period, in such form and with such verification or authentication as it may reasonably require.

An AMI or its Employees must deal with AFSA in an open and cooperative manner, and notify AFSA about:

• Significant activities and events
• Significant breaches by the AMI or its Employees
• Significant breaches of the AMI’s Business Rules
• Changes in the AMI’s constitution and governance
• Complaints
• Admission to or removal from trading/clearing of a listed entity
• Financial and other information

1. Authorised Investment Exchanges

An Authorised Investment Exchange (“AIE”) is an AIFC Centre Participant which has been licensed by AFSA to carry on the Market Activity of Operating an Investment Exchange.

AISs must ensure that they have transparent rules and procedures to provide for fair and orderly trading and to establish objective criteria for the efficient execution of orders.

An AIE must continually ensure:

• Fair and orderly trading
• Admission of Securities to trading
• Suspending or removing Securities or Units in a Listed Fund from trading when appropriate
• Transparency obligations
• Default management
• Listing Rules

For more detailed information regarding Rules governing Authorised Investments Exchanges please follow this link.

Authorised Investment Exchange Supervisory Measures

• Obtain appropriate permits and licences from AFSA
• Provide Information about their activities upon request
• Provide monthly trading reports
• Provide reports on the exchange‘s performance of its regulatory functions
• Provide quarterly management reports
• Provide annual consolidated financial and auditor's report
• Provide forward-looking estimates and projected annual balance sheets each year
• Provide reports on potential issuers and trading members
• Verify application for listing documents

• Track disclosures of significant news relating to the issuer
• Take supervisory measures as necessary to ensure compliance with AFSA’s Rules and its own Business Rules
• Recognition of foreign exchanges (as “Equivalent Foreign Exchanges”) for the purpose of the cross-listing of securities that are listed on other exchanges
• Conducting inspections (onsite and offsite)

• Monitoring of trades to identify potential illegal insider trading and market manipulation

2. Authorised Clearing Houses

An Authorised Clearing House is an AIFC Centre Participant which has been licensed by AFSA to carry on the Market Activity of Operating a Clearing House.

An Authorised Clearing House (“ACH”) must have clear and objective criteria included in its Business Rules according to which investments can be cleared or settled through its facilities.

An ACH must ensure it has the following:

• Risk Management Framework
• Safeguards for investors
• Loss allocation
• Credit and Liquidity management
• Margin system
• Settlement finality
• Central Securities Depositary (CSD) and exchange-of-value settlement system
• Default management (Rules)

More detailed information regarding Authorised Clearing Houses can be found here.

AIX CSD Supervisory Measures Deployed by AFSA

• Provide Information about their activities upon request
• Provide monthly trading reports
• Provide reports on the clearing house’s performance of its regulatory functions
• Provide quarterly management reports
• Providing AIX CSD statistics on business undertaken

3. Crowdfunding Platform

An Authorised Crowdfunding Platform is an AIFC Centre Participant which has been licensed by AFSA to carry on the Market Activity of Operating a Loan Crowdfunding Platform and/or Operating an Investment Crowdfunding Platform.

A Crowdfunding Platform must ensure the following on a continual basis:

• Permissible activities (kinds of investments and loans)
• Correct client classifications
• Default or failure rate disclosures
• Due diligence on its borrowers and issuers
• Material change notifications
• Equal treatment of lenders or investors

An Authorised Crowdfunding Platform may apply to AFSA to carry on one or more of the following Regulated and Market Activities.

• Dealing in Investments as Agent
• Arranging Custody
• Arranging Deals in Investments
• Operating a Representative Office
• Providing Credit
• Arranging a Credit Facility
• Providing Money Services; and
• Operating a Digital Asset Trading Facility

Crowdfunding Supervisory Measures

• Quarterly management reporting provisions
• Annual consolidated financial and audit reports
• Forward-looking estimates and projected annual balance sheets
• Provision of information about activities upon request