Wholesale trade agents and brokers dubai timetables
One issue that was raised was the possibility of creating a two tier regulatory regime for firms within the same industry that could damage competition between firms that are close to the dividing line between being supervised by the FCA or PRA.
This label was heavily criticised by the Treasury Select Committee who considered it to be inappropriate, confusing and dangerous. The crux of their argument was that the promotion of a regulator as a consumer champion would lead consumers to falsely believe that all financial products are risk free, potentially creating moral hazard. The Government dropped this name in favour of the FCA but stressed that the term "consumer champion" should be viewed in the context of the FCA's role as a focused and proactive conduct regulator that is entirely independent and impartial.
The FCA will focus more closely on wholesale conduct and will take a more assertive and interventionist approach to risks caused by wholesale activities. The FCA does not believe there is a clear divide between retail and wholesale markets and consequently, its approach will recognise that activities in these markets are connected and that risks caused by poor conduct can be transmitted between them. Poor behaviour has a wider impact on trust in the integrity of markets and, following a number of high-profile scandals in recent years, will not be tolerated by the regulator.
Further thematic work on key risks and priorities in the wholesale market will be carried out in due course. The FCA will make a temporary product intervention rule where it identifies a threat to its statutory objectives which requires prompt action. Although the FSA intervened robustly to secure redress of consumer detriment, in the future the FCA will look to ensure that fewer such problems develop in the first place.
To this end firms can expect far greater scrutiny of the product lifespan, from design to point of sale. Recent enforcement action indicates those areas the FCA will be focussing on and the level of intervention firms will need to get used to. We have produced a briefing looking at how the FCA will supervise product development and issues firms need to consider when designing insurance products.
Insurance product development in the new regulatory landscape. To this end, the Government has legislated for a variety of general coordination mechanisms including a statutory duty to coordinate the exercise of the authorities' functions contained in a Memorandum of Understanding , cross-membership of boards and a veto mechanism for the PRA to reduce the risk of regulatory actions by the FCA threatening financial stability or the disorderly failure of a firm.
The general principle underpinning the Government's model of dual regulation applies to insurance regulation. The FCA is responsible for supervising the day-to-day conduct of insurance firms in dealing with their customers and clients, whilst the PRA will look to promote their long-term soundness and stability.
There are, however, certain areas which require further consideration. The Government originally intended to insert a section into FSMA giving the PRA sole responsibility for securing an appropriate degree of protection for the reasonable expectations of policyholders in regard to their returns under with-profit policies. This necessarily covers conduct as well as prudential issues. The Joint Committee contended that the phrase would make it difficult for the PRA to be clear on the meaning of its duties, and near to impossible for consumers and Parliament to hold the PRA to account for its actions.
Given the importance of facilitating effective communication, the Joint Committee also suggested that the PRA should be subject to an explicit duty to consult with the FCA on matters affecting with-profits customers. A with-profits policy is defined as a contract of insurance under which the policyholder is eligible to receive a financial benefit at the discretion of the insurer. FSMA does not set out how the regulation of with-profits business is split between the PRA and FCA and instead requires the regulators to enter into and maintain a memorandum describing in general terms the role of each regulator in relation to with-profits insurers.
It states that the exercise of discretion in policyholder returns gives rise to questions of fairness which is a matter for the FCA. The PRA will be concerned about the impact on the safety and soundness of with-profits insurers, in particular their solvency, of any action taken or proposed by the firm. The PRA meanwhile will consider whether actions proposed by the insurer are affordable. Insurers are expected to establish and maintain adequate financial resources in respect of both guaranteed and discretionary payments to with-profits policyholders.
The PRA is granted a significant power, under section 3J, which allows it to direct the FCA not to exercise its regulatory powers or not to exercise them in a specified manner if the regulators cannot reconcile their concerns.
The MoU also details how with-profits regulation will operate in practice. Both regulators have rule-making powers in their respective areas of competence.
In cases where the PRA has no affordability concerns or other concerns in line with its objectives , firms can expect to deal with the FCA. For conduct of business matters that do not trigger affordability issues, the PRA will have no role and the FCA will determine the outcome on the basis of fairness.
In the Government's original consultation paper, the Society of Lloyd's was hardly mentioned and Lord Myners described the consideration given to the regulation of Lloyd's as an "afterthought". This lack of thought was heavily criticised by the Treasury Select Committee in Financial Regulation: The FCA is tasked with the oversight of market conduct and consumer protection.
The division of responsibility largely follows the division of interests in relation to insurance business or activities but also has regard to the unique nature of Lloyd's, including the way it operates as a specialist financial market and the distinctive roles played by certain participants in the market. Firms must apply to the PRA for authorisation if they wish to effect or carry out contracts of insurance.
The PRA will administer the application and be responsible for granting authorisation. Authorisation to carry out regulated activities will not be granted unless both the PRA and the FCA are satisfied that it should be.
Before granting authorisation, the PRA will assess whether the firm satisfies the relevant statutory threshold conditions. Under the new regulatory structure, each regulator will be responsible for different sets of threshold conditions. Part 1B, 1C, 1D an 1E. The result is that dual-regulated firms will have to comply with two sets of threshold conditions: Part 1B covers threshold conditions for firms authorised and regulated by the FCA only i.
This is an FCA condition and is therefore applicable to all firms. For firms that are regulated by the FCA only, the condition requires that the business model is suitable and considers the interests of consumers and the integrity of the system.
To meet this requirement, insurers should be prepared to explain their business model to the FCA and justify the rationale behind it. The Bank of England and FSA joint paper explained that the importance of scrutinising firms' business models is one of the key lessons learnt from previous episodes of insurer distress.
The requirement was designed to prevent insurers attracting business through aggressive pricing, without setting aside sufficient claim reserves as occurred in the case of HIH Group and Independent Insurance and to ensure that a firm's business model does not run ahead of its capital potential as was the case in Equitable Life.
In terms of authorisation, the PRA will lead the process for dual-regulated firms. As such there will be a single administrative process with a single application form and timetable for decisions by each authority.
Prior to legal cutover, one issue that sparked debate was the possibility of overly burdensome administrative processes and the risk of duplication as a result of dual-regulation. Initial proposals amending the approved persons regime were criticised by firms for being inefficient and confusing. There is very little change for FCA-authorised firms. For dual-regulated firms, the PRA will designate those functions deemed to be materially connected to the prudential soundness of a firm.
The FCA has a statutory obligation to minimise the likelihood of duplication of approvals, but not eliminate the possibility entirely. Finally, the FCA can withdraw approval, granted by either regulator, from a person carrying on a controlled function if it considers that the person is not a fit and proper person to perform the function. Both the PRA and FCA may withdraw approval from a person who is carrying on a significant influence function in connection with a dual-regulated firm, regardless of which regulator gave approval.
If withdrawing an approval given by the other regulator, it must consult that other regulator first. The FS Act did not alter the substance of the current framework. The courts are ultimately responsible for sanctioning or rejecting an application for a business transfer. The PRA will be primarily responsible for the process but the FCA also has an interest and will need to satisfy itself that, as a minimum, the transfer will not adversely affect the customers of the firms involved in the transfer.
Both regulators will be able to make representations to the court during the transfer process. The involvement of two regulatory bodies in the transfer process may lead to more complex negotiations between the transferring parties and the regulators in relation to issues such as notification, particularly in light of the different objectives of the PRA and FCA.
For firms passporting out of the UK, the PRA will be responsible for issuing all relevant notices in relation to insurers. It is clear that the PRA needs to oversee the entire financial system in the UK, including parts made up of branches passporting in from other countries. Nevertheless, prudential supervision under European single market directives remains within the remit of the home state regulator, with only conduct issues regulated by a host state under the "general good" provisions.
Accordingly, the PRA will need to build close working relationships with overseas regulators and supervisory colleges supervising large firms passporting into the UK. Notifications in relation to all other directives will go to the FCA. In their joint paper, the Bank and the FSA stated that the PRA's policies and supervisory actions will take place within an international context and that much of the PRA's proposed approach in relation to insurers will be achieved through the application of Solvency II.
The joint paper states that the PRA will play an active and constructive role in shaping the development of the common framework for regulation and supervision at a global level and in the EU. The PRA will reconsider its approach should a realistic timetable emerge but, in the meantime, firms have until 31 December to submit their internal models to the regulator. The PRA and the FCA will work together to ensure that the other regulator and any other relevant authorities are kept fully informed of any matters due to be discussed which fall within their sphere of responsibility.
When another body has an interest, the PRA may bring along a non-voting representative of that national body. During the legislative process, the Joint Committee explained that it is vital that the MoU establishes a committee responsible for ensuring that the UK authorities agree consistent objectives and exercise their functions in a way that is effective.
The MoU on international organisations, published in January , sets out a framework for consultation and cooperation amongst the relevant authorities in order to ensure that the UK takes a coherent position internationally and a consistent line in discussions with its international partners. Amongst other things, the MoU confirms that where not all the UK authorities are represented in international organisations and bodies, the UK authorities that are represented shall, in a timely manner, consult with, and keep the other UK authorities informed, in relation to any matter of common interest.
The form is designed to capture the counterparty risk capital requirement of an Authorised Firm G through the applicable capital charges for the counterparty risk of unsettled transactions, OTC derivatives, securities financing transactions SFTs , and deferred settlement transactions. Accordingly, all items related to the counterparty risk of unsettled transactions should be analysed in the first part, OTC derivatives in the second part, SFTs in the third part, and deferred settlement transactions in the third part.
The main form has the links to the four linked forms and also displays the total capital requirement for counterparty risk calculated by each of the linked forms. Form B60A3 is intended to capture details related to the credit risk capital requirement for an Authorised Firm G exposed to securitised assets.
This is to be completed in accordance with PIB 4. The form is designed to capture the securitisation capital requirement of an Authorised Firm G and calculate the applicable capital charges for securitisation exposures, broken down by total exposures as originator, investor, or sponsor as well as outstanding positions broken down by credit quality grade.
B60A3 consists of one form with several columns to calculate the applicable capital requirement. The Firm is required to refer to PIB 4. These rules will include directions on how exposures and credit risk mitigants are to be recognised and measured.
The form is designed to provide an overview of the Market Risk Capital Requirements G the Authorised Firm G is subject to from the various risk elements. Detailed rules and guidance in respect of the Market Risk Capital Requirements G and each of its components are contained in chapter 5 of the PIB module. B60B is presented as a single form and its cells are populated automatically from the respective market risk element form.
The Securities Underwriting and Collective Investment Fund Risk do not have separate forms and their capital requirements will have to be input directly into this form. This form is applicable to Authorised Firms G which are Domestic Firms G categorised under prudential categories 1, 2, and 5. The form is designed to calculate the interest rate risk capital charge in accordance with PIB 5. Details of the calculations are located in PIB A5. This form captures the general and specific risk capital charge of interest rate sensitive instruments as specified in PIB A5.
There are four sections on this form. The first three relate to general risk capital requirements and the last section relates to specific risk capital requirements. For the purposes of completing the general market risk section, the Authorised Firm G can aggregate their positions across different currencies. However, it is expected that the Authorised Firm G will calculate their general market risk on a currency by currency basis for its own records and the DFSA G may request to review this on an ad hoc basis.
The specific risk charge is applicable in conjunction with the general market risk charge; this is in accordance with PIB A5. The form is designed to calculate the equity risk capital charge in accordance with PIB 5. This form captures the general and specific risk capital charge of equity Exposures and similarly related instruments as specified in PIB A5.
The Authorised Firm G is required to report the gross and net positions when completing this schedule; equity positions may only be netted in accordance with PIB A. There are two sections of this form. The first follows the Standard method and the second follows the Simplified method to calculate the capital charge.
When completing the general market risk section or the Simplified method, the Authorised Firm G can aggregate their positions across different countries for the purpose of completing the schedule, however it is expected that the Authorised Firm G will calculate this on a country by country basis for their own records and the DFSA G may request to review this on an ad hoc basis. The form is designed to calculate the foreign exchange capital charge in accordance with PIB 5.
This form captures the gross and net positions of each individual currency including gold and calculates the applicable capital charge accordingly.
The main form links to two subsequent forms. The second form Net Position in Currencies records the gold position of the Authorised Firm G and subsequently calculates the Foreign Exchange capital charge. Form B60B6 is intended to capture information on capital charges applicable to commodities and options Exposures G of an Authorised Firm G.
The form is designed to calculate the commodities and options capital risk charge in accordance with PIB 5. This form captures positions in each commodity and captures various data points that are used in the calculation of the option risk capital requirement. The respective capital charge is calculated and displayed.
The second form Option Risk Capital Requirement captures the options Exposure G and requires the Firm to input manually the total applicable capital charge.
Form B60B7 is intended to capture information where Authorised Firms G are using the internal models approach to calculate market risk capital requirements. The form is designed to calculate the market risk capital requirement in accordance with PIB 5. The form breaks down the various risk element positions, highlights the applicable risk charge and requires reporting of instances of overshooting. Form B60C is intended to capture information on capital charges applicable to operational risks of an Authorised Firm G.
The form is designed to enable Authorised Firms G to report the capital charges applicable to the various elements of operational risks inherent in their business. Refer to PIB 6 — Operational risk for further details. The Form requires the Authorised Firm G to report their revenues over the past 3 years. The form is divided into the three difference approaches: Firms using the Standardised Approach will be required to report their revenues broken down by eight business lines.
Firms using the ASA will be required to report their 3 year average loan book for Commercial and Retail Banking lines. The Firm may only use one approach at a time.
This form is applicable to Authorised Firms G categorised under prudential categories 1, 2, 3A and 5. The form seeks to capture the following:. Part II is further split into three segments covering various aspects of the largest Exposures G. The remaining values are to be entered manually. Part II — Contains three linked forms, the first linked form Overview is populated automatically based on the figures entered in the second and third linked forms Exposures and Credit Risk mitigation respectively.
This form is applicable to Authorised Firms G authorised under prudential categories 1 and 5. The form is designed to capture information regarding cash inflows and outflows and the overall liquidity position of an Authorised Firm G.
As set out in PIB 9. In accordance with PIB 9. This form is applicable to Authorised Firms G operating under prudential categories 1 and 5. This Form is designed to capture detailed information about the Authorised Firm's G available unencumbered High Quality Liquid Assets as well as its cash outflows and inflows over a 30 days horizon. The Form is also used to calculate the Liquidity Coverage Ratio based on specified liquidity stress scenario. For this reason the LCR schedule is to be completed in line with these mentioned standards.
Where there is a requirement to deviate from these standards these are outlined in the guidance below. Form B is intended to capture information regarding an Authorised Firm's G exposure to interest rate risk in the Non-Trading Book G , also known as the banking book.
This form is applicable to Authorised Firms G authorised under prudential categories 1 and 2. The form is designed to capture the interest rate risks arising from maturity and repricing mismatches. Form B also known as Interest Rate Gap Report or Gap Analysis distributes an Authorised Firm's G assets, liabilities and off-balance sheet positions into time bands based on either the next repricing or maturity date whichever first.
The form also capture details of the sensitivity of an Authorised Firm's G earning to interest rate risk. The Firm is required to prepare a separate report for each significant currency. All other significant and non-significant currencies are to be grouped up and recorded under Other Currencies.
Form B — This form is designed to capture the details of the credit activity of Authorised Firms G carried out by way of business, on the dimensions of both outstanding credit at the end of the reporting period and fresh credit delivery disbursements during the reporting period. Such authorised firms are likely to be included in prudential categories 1, 2 and 5.
B is presented with two sections. The first section records the outstanding amount at the end of the reporting period and the disbursements provided during the period against four dimensions:. Form B is intended to capture the exposures in arrears and provisions taken by an Authorised Firm G.
The form is designed to capture the details of exposures in arrears and provisions, including the details of problem loans, movement in provisions for impairment, and movement in provisions for impairment by credit classification standard, special mention, substandard, doubtful, loss.
Form B is intended to capture the Firm's credit exposures that have been subject to a change in the obligations of the counterparty. The Form is intended to capture details related to transactions that counterparties have restructured due to their inability to satisfy the original contractual obligations.
This captures all restructured transactions during the reporting period irrespective of when the initial exposure to the client has taken place. B — Restructured Loans is presented on a single form. The form captures exposures on a transactional basis per counterparty.
Details of the transaction before and after the restructuring are collected. Form B — Investment Activity is intended to capture the details of the investments held by an Authorised Firm G on its own account, i.
The form is designed to capture information about the investments carried on an Authorised Firm's G balance sheet. Specifically, the form captures the detailed breakdown of investments across different classes of assets, the sector and the geographical distribution of investments. The form seeks to obtain the value of direct exposures to investments and the value of exposures to derivatives in respect of the relevant underlying investments.
Investments held by an Authorised Firm G as part of its Client Assets must not be included in this form. The following general factors must be considered while using the guidelines given below to complete the form. The outstanding amount at the end of the reporting period is to be reported against the above dimensions and whether the exposure is through a direct or indirect exposure. Form B — Financial Instruments at Fair Value is intended to capture details of the valuation of financial assets and liabilities measured at fair value.
The Form intends to capture the level of reliability of the fair value assigned to an asset or a liability. Assets measured at fair value are to be categorised as Level 1, Level 2 or Level 3 assets. The Firm is required to split the line items recorded across Level 1, Level 2 and Level 3 types of measurement.
The Form records the Opening Balance, the movement during the period, and the closing balance. The sum of the Accumulated Change in Fair Value for a line item is to be equal to the amount recorded for the respective line item on the Asset or Liability sheet e.
This form is applicable to Authorised Firms G which are categorised under prudential categories 1, 2, 3A and 5. This form captures the gross and net positions of each individual currency includes domestic currency. B is presented on a single form. The form records the positions of the Authorised Firm G in every currency.
Form B — Funding Schedule is designed to capture the details of fund raising activity of Authorised Firms G carried out by way of business, on both dimensions of outstanding amount at the end of the reporting period and fresh funding inflows during the reporting period.
The form is intended to capture information about the outstanding amount of funding received by an Authorised Firm G through:. The form also captures the amount of funding raised by the Firm during the reporting period. Specifically the form captures the detailed break-up of funding across:. B is presented on a single form with three dimensions. The first dimension seeks data on funds received by the Authorised Firm G by type of fund providers. The second section seeks classification of the data across countries from which funds have been received, while the third section seeks the data on the maturity of the funds received by the Authorised Firm G.
Authorised Firms G are required to disclose the total outstanding funds at the end of the reporting period and the total funding raised during the reporting period. The form also captures credit facilities available for utilisation by counterparties of the firm. The Form also captures details of the aggregate funded credit lines approved by the Firm for its client base. Form B — Wealth Management Activity is designed to capture data regarding wealth management activity of Authorised Firms G , including both business arising out of accounts booked in the DIFC G and accounts booked elsewhere.
The form is intended to capture information about the number of Clients, net new assets during the reporting period and the total assets under management of the Authorised Firm G.
The form captures the composition of these data both for accounts booked in the DIFC G and for accounts booked elsewhere. The form seeks classification of the data across discretionary and non-discretionary investment accounts as well as across domicile of the Clients. The form also seeks to collect information on the booking destination of the accounts for any accounts that are not booked in the DIFC G.
Authorised firms are required to report all data on wealth management assets under management in USD equivalent, including any assets denominated in other currencies. Authorised Firms G are required to report all accounts of their Clients, including accounts booked outside the DIFC G and for which the firm provides only investment advisory or arranging services.
B is presented on one form and consists of three sections. The first section seeks the composition of data between discretionary and non-discretionary accounts, while the second section seeks classification of the data across broad geographical segments of the Client base.
The third section seeks data on accounts booked other than in the DIFC G , to be classified across the different booking centres where such accounts are booked. The first three columns relate to accounts booked in the DIFC G and seek data on number of accounts, net new assets added during the reporting period and the total assets under management on the reporting date.
This form is designed to capture data regarding discretionary asset management and related fund, trust and account services covering both the business arising out of services provided in the DIFC G and services arranged from the DIFC G. This Form is designed to capture data about acting as a trustee of CIFs G and fund administration activity. Authorised Firms G need to complete only the sections of the form which are applicable to them. These forms are an Annual reporting requirement only i.
The purpose of the form is to capture investment vehicle data regarding discretionary asset management and related fund, trust and account services covering only business arising from services provided by the Firms situated in the DIFC G. It is not intended to capture information on discretionary asset management and related services that were only 'arranged' by Firms in the DIFC G , except where Arranging Custody G has been provided.
The purpose of the form is to capture information about firms who have marketed CIFs G during the year, which rule the firm has utilised for marketing the fund CIR rulebook 'Marketing' refers , the name, domicile and type of fund marketed. This form applies to any firm who has offered marketed or sold either a Domestic or Foreign Collective Investment Fund G to a prospective or existing unit holder.
This form is designed to capture data on all Executing, Arranging, and principal trading activity of an Authorised Firm G , including Execution of client orders, Arranging the Execution of client orders with other market intermediaries, and Execution of orders for the Authorised Firm's G own principal account.
This includes inter-desk transactions. This does not include money market, certificates of deposit, or other similar deposit products. This form is designed to capture information about the number of transactions; the value of transactions; and the number, type, and domicile of clients.
This form is applicable to Authorised Firms G carrying out banking business. The form seeks data on remittances classified according to the purpose of the remittance. Authorised Firms G are required to report data relating to all remittances made by them, both on their own account and those made for the benefit of their Clients or on the instructions of their Clients.
The data are to be provided across different purposes for which the remittances are made. The form has two sections — the first covers trade related remittances and the second covers non-trade related remittances. The data being sought in the form are self-explanatory given the description provided in the title column, except for the following specific point.
Form B — This form is designed to capture data on inward remittances received by Authorised Firms G. Authorised Firms G are required to report data relating to all remittances received by them, both for their own account and those received on their Client accounts. The purpose of Form B is to collect data about insurance brokerage activities of Authorised Firms G.
Some of these Classes of insurance business are further broken down by subclasses of insurance commonly used in the industry. B has two linked forms. Form B is designed to capture high level statistics in relation to the firm's staff, its clients, as well as the firm's complaints, regulatory breach and suspicious transaction experience. The information sought is factual numbers and current status where applicable.
Complaints are further broken down into high level types. It is further split into five business sectors with firms expected to complete the column that best represents their activities. This form is applicable to all Authorised Firms G. B is presented on a single Form. On this form the firm would have to record whether that deposit was placed with a related party on a non-related party. Form B is required to be completed by Authorised Firms G in prudential categories 1, 2 and 5.
Values reported in this Form should be determined at the end of period e. This form only applies to Domestic Firms G. This is to take account of the fact that for netting agreements employed by CCPs, no standardisation has currently emerged that would be comparable with respect to OTC netting agreements for bilateral trading.
Where a Firm buys credit protection through a total return swap TRS and records the net payments received as net income, but does not record offsetting deterioration in the value of the written credit derivative either through reductions in fair value or by an addition to reserves reflected in Tier 1 capital, the credit protection will not be recognised for the purpose of offsetting the effective notional amounts related to written credit derivatives.
However, no adjustments must be made to NGR. Where effective bilateral netting contracts are not in place, the PFE add-on may be set to zero. The DFSA G is providing the following suggested template which can be used as guidance for this submission. While the use of this template is not mandatory, the submitted document should address the elements contained in the template.
Supplementary information, such as policies, risk management frameworks and processes, can be referred to by way of appendices. The overarching approach comprises three steps as set out in PIB Chapter Not all of the steps are applicable to all Firms.
The application of the sections is set out in PIB The SREP will be structured to provide consistency of treatment to all Firms, taking into consideration risk profile, business strategy and management.
Fundamentally, the SREP process aims to develop a meaningful and detailed assessment by a Firm of its own risks, and foster a meaningful interaction and dialogue between the DFSA G and Firms to enhance understanding and consider any remedial actions that may be required to reduce a firms risk profile and meet prudential requirements on an on-going basis. It should include details of the Firm's risk management framework together with the business planning and capital management process utilised in the assessment.
It should also provide details covering relevant policies and systems used by the Firm to identify, manage, and monitor its risks according to its risk appetite. Structure and Governance This section should include information regarding the following: This should also outline key audit findings and management actions taken. Statement of Risk Appetite This section should provide a high level overview of the Firm's risk appetite.
It should also set out the frequency of review of the risk appetite by senior management and the Governing Body G. The DFSA G appreciates that risk appetite will vary significantly between Firms considering the nature, scale and complexity of their business, including the nature of the Licence permissions. For example, Firms undertaking balance sheet risks will have materially different risk appetites than Firms engaging in advisory or pure brokerage business.
Risk appetite may also vary across business lines and across risk types. Nevertheless, all Firms should set a risk appetite to provide a cornerstone for the Firm's risk management framework and business strategy. Internal Risk Assessment Process IRAP This section should provide a concise description of the Firm's risk identification process and outline how the Firm identifies material risk areas. While we have highlighted certain key risks below Firms should consider all specific risks applicable to their business.
Key risks which should be considered as part of an IRAP include: Credit Risk G ; b. Market Risk G ; c. Interest rate risk in the non-trading book; e. Conduct of business risk; k. Money Laundering G risk; l. Any other risks identified. Not all risk factors will have a quantifiable financial capital charge but these should nonetheless be considered with regards to appropriate mitigations and management actions to minimise any potential implications.
For example, conduct and AML risks may lead to significant regulatory or other fines and penalties; and consequently will require appropriate systems and controls. The Firm can utilise a separate appendix to provide further detail on the risk assessment and quantification methodology, including: Capital planning This section should outline the Firms capital needs, anticipated capital expenditures, desired capital level and external capital sources and must be in line with the Firms desired strategic objectives and business plan.
It should include the analysis conducted on the Firm's capital position and whether it is appropriate for the nature, scale and complexity of the business, including the refection of the perceived risks in section 5 above. This section should include: For example the analysis should include: Where relevant, Financial Group ICAAP considerations will typically take into account the risks to which the Firm is exposed due to its membership of a broader corporate group.
Examples to be considered include: Liquidity Planning This section should summarise how Liquidity Risk G is managed as distinct from any capital set aside to cover losses incurred in a liquidity stress.
In particular, it would set out the key assumptions and conclusions from stress testing of cash flows undertaken to manage the risk. This is particularly important for Firms operating as subsidiaries and should include any restrictions on the ability of the Group to provide liquidity to the DIFC G Firm; g. Any material impact of Liquidity Risk on capital such as scenarios relating to ratings downgrades or material increases in cost of a liquidity stress should be included in the stress and scenario testing outlined in the next section.
The DFSA G does not stipulate specific stress test criteria or scenarios given the broad nature of business models in operation and scale and complexity of Firms. However, the following are suggested guidelines to be utilised: Using the "baseline" projections, the Firm should use stress-tests to consider how it would perform under stressed conditions.
Management actions following the stress tests should be outlined, with consideration to: For Firms without material Credit Risk G , ensure that suitable tests are completed to reflect other relevant risks such as operational or reputation risk.
Integration, Review and Approval This section should include information regarding: This should include reference to its scope, methodologies and objectives; b. Added by Made 3rd March The purpose of the B Form is for the Authorised Form to confirm that the returns submitted have been printed and signed by the directors in accordance with PIB 2. The Form intends to capture the confirmation that the returns have been signed by the directors. The 'Statement of Financial Position' provides the DFSA G with the necessary information on assets, liabilities and capital to undertake an assessment of an Insurer's G financial position and performance and facilitate assessing compliance with the minimum capital requirements.
This form summarises the capital adequacy position of the Insurer G so far as concerns the reporting unit for which it is prepared Global, Cell, or Fund. This form summarises the financial performance of the Insurer G. This form must agree with other forms in the Return G where those forms are prepared for the same reporting unit in the following respects: Movements in Insurance Liabilities Gross: Under this section, an Insurer G must report the amount of the movement in the balance of Insurance Liabilities G over the reporting period.
Movements in Recoveries Against Insurance Liabilities: Under this section, an Insurer G must report the amount of the movement in the balance of reinsurance and other recoveries in respect of Insurance Liabilities G over the reporting period.
Insurance Liabilities are reported gross of reinsurance and other recoveries. Reinsurance and other recoveries that are recorded in respect of Insurance Liabilities G are reported as assets. An increase in Insurance Liabilities G is reported on this form as an expense. In the same manner, an increase in the reinsurance and other recoveries in respect of Insurance Liabilities G is recorded as revenue. By virtue of PIN Rule 3. Net Income Before Taxation: This item is calculated by EPRS and must equal the total of operating income and net investment income reported above.
Net Income After Taxation: This item is calculated by EPRS and must equal net income before taxation less tax expenses. Net Income After Dividends: This item is calculated by EPRS and must equal net income after taxation less dividend in respect of current reporting period.
Structure of the form in the EPRS. Because this form would always be blank for such a company in its Global Return G , there is no need for it to submit the form or to complete a Supplementary Note G to explain its absence. An Insurer G must record premiums and reinsurance premiums relating to its Insurance Business G on this form as follows: Reinsurance premiums recorded as ceded must be gross of any commissions or brokerage, and must be recognised on a basis consistent with the recognition of Gross Written Premium G on this form.
Reinsurance premiums ceded must be analysed between the four columns referring to the different types of insurance contracts on the basis of the underlying insurance contracts that they are protecting, not on the basis of the reinsurance contracts themselves. Where reinsurance arrangements protect more than one type of business for example both direct and facultative business or more than one Class of Business G , the Insurer G must make a reasonable allocation of the reinsurance premiums between the types or Classes of Business G covered.
An Insurer G must disclose the aggregate amount of its insurance and reinsurance transactions with its Related G parties as follows: An Insurer G must record claims paid and reinsurance and other recoveries in respect of claims paid relating to its Insurance Business on this form as follows: An Insurer G that is carrying on Long-Term Insurance Business G and General Insurance Business G of Class 1 or Class 2 must record the General Insurance Business G in a manner consistent with that adopted in respect of form 4 or determined in accordance with the instructional guidelines 3c under section 3.
For the purposes of this form, the amount of claims paid includes expenses incurred by the Insurer G in the settlement of the claims. Reinsurance recoveries must be analysed between columns 1 and 4 on the basis of the underlying insurance contracts that they relate to, not on the basis of the reinsurance contracts themselves. Where the nature of the reinsurance contract is such that the Insurer G cannot identify individual claims benefiting from the recoveries for example, in the case of an aggregate excess of loss contract, or a stop loss contract the Insurer G must make a reasonable allocation of the recoveries across the types and classes of business that have benefit of the reinsurance contracts.
An Insurer G required to complete part III must record the reinsurance and other recoveries receivable for the reporting period in respect of different classes of business and for different types of insurance contracts, using the second table in part III of this form. The amounts in the far right column, referring to the total amounts in part III of the form must equal the amounts in the first column Direct insurance in part II of the form in respect of Gross Claims Paid across different classes of business, total claims paid to Related G parties, reinsurance and other recoveries in respect of paid claims and total recoveries from Related G parties.
This part provides an analysis of the information provided in column 1 of part II. Because this form would always be blank for such a company in its Global Return G , and it is exempted from the requirement to complete other forms relating to General Insurance Business G , there is no need for it to submit the form, or to complete a Supplementary Note G to explain its absence.
An Insurer G must record separately, in parts I to IV and parts V to VIII respectively of this form, the information required in respect of claims outstanding including IBNR gross of reinsurance and other recoveries, and reinsurance and other recoveries in respect of those claims outstanding. This information must be presented for each Class of Business G. Reinsurance recoveries must be analysed between parts V to VIII on the basis of the underlying insurance contracts that they relate to, not on the basis of the reinsurance contracts themselves.
Where the nature of the reinsurance contract is such that the Insurer G cannot identify individual claims benefiting from the recoveries for example, in the case of an aggregate excess of loss contract, or a stop loss contract the Insurer G must make a reasonable allocation of the recoveries across the types and Classes of Business G that have benefit of the reinsurance contracts. You need the Flash plugin. Download Macromedia Flash Player. The Code is intended to: The Code is relevant to any person to whom Part 6 of the Markets Law applies.
Part 6 applies to persons generally, that is: The information in the Code is made and issued as Guidance on the provisions in Part 6 of the Markets Law and as such is indicative and non-binding. These views are not intended to be exhaustive or definitive and interpretation of the Markets Law is ultimately a matter for the Court.
If you have any doubt about your obligations under a provision, you should seek appropriate legal advice. The chapters in the Code generally set out for each type of Market Abuse G: Where the Code sets out the text of a prohibition, definition or defence, it sometimes does so in abbreviated form to assist the reader. For the precise terms, readers should refer to the Markets Law itself. Unless the context otherwise requires, where capitalisation of the initial letter is not used, an expression has its natural meaning.
Unless the context otherwise requires, where the Code refers to: The Code does not try to exhaustively describe or list: Market Abuse G prohibitions overlap in some circumstances so that conduct by a person may potentially contravene more than one Article. A number of prohibitions are expressed to have residual scope i.
The following are examples of conduct which occurs outside the DIFC G that, in the DFSA's view may, depending on other factors such as the state of knowledge of the person concerned, fall within the scope of the Market Abuse G provisions: The Market Abuse G prohibitions generally do not require that the person engaging in the relevant conduct intended to commit Market Abuse G.
However, a number of Articles require that the person knew or reasonably ought to have known of a certain matter e. If a misleading or deceptive statement or a material omission occurs in a Prospectus G , then separate and specific prohibitions and defences are likely to apply. If a Reporting Entity G fails to make a timely disclosure of information to the market then Article 41 of the Markets Law is likely to apply. However, if a Reporting Entity G discloses information to the market which is false or misleading and knows or could reasonably be expected to know that it is false or misleading then the Market Abuse G provisions may apply.
The following are general examples of conduct that, in the DFSA's view, may result in or contribute to a false or misleading impression under Article 54 a: While some of the above examples are more commonly associated with algorithmic trading, such as high frequency trading, in the DFSA's view, the conduct could amount to Market Abuse whether it occurs using automated systems or manually.
The following are general examples of conduct that, in the DFSA's view, may create or may be likely to create an artificial price for an Investment under Article 54 b: The following are some more specific examples of conduct that, in the DFSA's view, may contravene Article 54 a or b: A's purpose is to position the price of the Commodity Derivatives at an artificial level so as to make a profit from his Derivative G position;.
Whether the Investment G will fall out of the index depends on the closing price of the Investment on a particular day.
B places a large sell order in this Investment G just before the close of trading on that day. His purpose is to position the price of the Investment G at an artificial level so that the Investment G will drop out of the index resulting in his making a profit;.
The order is to be executed at or just before the close of the last trading day of the quarter. His purpose is to position the price of those shares at an artificial level; and. In the period between that listing and the end of A's financial year, the price of the Issuer's shares declines significantly. Near the close of market on the date of A's financial year end, a broker acting for A enters several bids to buy shares in the Issuer.
The bid prices are well above those at which the shares had been trading and have the effect of significantly increasing the closing price of the shares.
The purpose of A making the bids is to increase the price of the shares, marking up the book value of A's proprietary holdings in the Issuer, thus boosting its own financial position at year end. The following factors are, in the DFSA's view, likely to indicate that conduct does not contravene Article 54 a or b: In considering whether conduct may result in, or contribute to, a false or misleading impression as to the supply of, demand for, or price of an Investment G , the DFSA G may take into account factors such as: In considering whether or not conduct creates, or is likely to create, an artificial price under Article 54 b , the DFSA G is likely to take into account factors such as: It is unlikely that the conduct of market participants in dealing at times and in sizes most beneficial to them whether for the purpose of long term investment objectives, risk management or short term speculation and seeking the maximum profit from their dealings will of itself amount to creating an artificial price.
The fact that prices in the market are trading outside their normal range does not necessarily indicate that someone has engaged in conduct for the purpose of positioning prices at an artificial level.
High or low prices relative to a trading range can be the result of the proper interplay of supply and demand. Squeezes occur relatively frequently when the proper interaction of supply and demand leads to market tightness, but this does not of itself indicate that there has been Market Abuse G. Having the power significantly to influence the supply of, or demand for, or delivery mechanisms for an Investment G e.
The following are specific examples of an abusive squeeze that, in the DFSA's view, may contravene Article 54 b: The trader fails to offer to lend the crude oil back to other market participants at a reasonable commercial rate. His conduct causes an abnormal movement in the price of crude oil contracts for forward month delivery; and. His purpose is to position the price at which persons with short positions have to deliver to satisfy their obligations at a materially higher level, making him a profit on his position.
In considering whether a person has engaged in an abusive squeeze that contravenes Article 54 b , the DFSA G may take into account factors such as: The more widespread the risk of settlement default, the more likely that an abusive squeeze has occurred;.
The greater the divergence beyond that to be reasonably expected, the more likely that an abusive squeeze has occurred; and. The purpose of publishing the accounts with the false transactions is to give a more positive impression to investors of the financial position of the Reporting Entity G ;.
Information provided to the investors indicates that the funds will be used for a specified purpose related to the business of the company. The officers of the company, however, use the funds raised for their own personal purposes unrelated to any business of the company ;.
The person reports non-existent transactions, omits to report transactions or reports transactions selectively to the benchmark administrator in order to manipulate the price of the benchmark and profit from that benchmark price ; and. The company creates false financial statements to give potential investors the impression that it has significant assets and income, to help it to obtain funding. Article 64 1 a provides that: A person shall not be found to have contravened Article 54 if the person establishes that the conduct or practice the person engaged in was carried out in the performance of….
Article 64 1 b provides that: The effect of Article 64 1 b is that if a person establishes that they carried out the purchase of their own shares in accordance with DFSA G Rules, this conduct will not contravene Article Article 55 of the Law provides that: A person shall not, in the DIFC or elsewhere….
The dissemination of information under Article 55 could, in the DFSA's view, be by a variety of means, including, for example: It should be noted that this type of Market Abuse G does not require any transaction to be entered into in connection with the dissemination of information.
Article 55 requires that the person who disseminates the information either knows or could reasonably be expected to know that the information is false or misleading. That is, it sets out either a subjective or objective test relating to knowledge that must be met. In assessing whether a person could reasonably be expected to know that the information is false or misleading i. If a person disseminates information about an Investment that is false or misleading and the person is reckless as to whether the information is true or false e.
The DFSA G would ordinarily consider that a person did not know and could not reasonably be expected to have known that the information is false or misleading if: After holding the Shares G for a period of time he decides to sell the Shares G as he doubts whether the company will be successful. However, there is no market for the Shares G and so he is unable to exit the investment.
He therefore posts misleading information on the platform forum suggesting that the company is about to make a significant breakthrough which will make its Shares G valuable. Article 56 of the Law provides that: A person shall not, in the DIFC or elsewhere, engage in any activity or conduct in relation to Investments… which consists of effecting transactions or orders to trade….
Under Article 56 it is necessary for there to be a transaction or order to trade. The transaction or order to trade must either itself or in conjunction with other factors create an effect that is fictitious, deceptive or a contrivance. In the DFSA's view, these terms have a potentially broad meaning. This Article would, for example, in the DFSA's view, cover situations where the transaction or order to trade when viewed in the context of other related conduct such as dissemination of information has an overall effect that is fictitious or deceptive.
The person does not disclose his conflict of interest when voicing the opinion;. As a result of his conduct the person is able to sell his Investments G at an inflated price. The DFSA G notes that some of the above examples may also breach other Articles such as Article 55 false or misleading statements or Article 60 inducing persons to deal.
Article 57 of the Law provides that: A person shall not, in the DIFC or elsewhere, engage in any activity or conduct in relation to Investments….. The conduct referred to in Article 57 overlaps to a large extent with the conduct referred to in Article 54 relating to creating false or misleading impressions or an artificial price for an Investment G. It should be noted however that Article 57 has 'residual scope' i.
Article 57 requires that the activity or conduct in question is likely to be regarded by market participants as a failure on the part of the person concerned to observe the standard of behaviour reasonably expected of a person in his position in relation to the market. This requirement imports an objective test into the assessment of whether the provision is contravened. In the DFSA's view, for the purposes of the test, the market participant is a hypothetical reasonable person who regularly deals in the Investments of the kind in question.
In determining if there has been a failure to meet the standards expected by market participants, the DFSA G is likely to take into account factors such as: To be "Inside Information G ", information must be of a precise nature. Information is only "Inside Information G " under the definition in Article 63 1 a if it is not generally available. The following factors are, in the DFSA's view, likely to indicate that information is "generally available" and therefore is not Inside Information G: For example, if a passenger in a vehicle passing a burning factory calls his broker and tells him to sell shares in the company that owns the factory, the passenger will be acting on information which is generally available, since it is information which has been obtained by legitimate means through observation of a public event.
It is not relevant, in the DFSA's view, in relation to information referred to in paragraph 4 that: Information is only "Inside Information G " under the definition in Article 63 1 a if it would be likely to have a significant effect on the price of the Investment or a related investment.
Information would be likely to have a "significant effect on price" if and only if it is information of the kind which a reasonable investor would be likely to use as part of the basis of his investment decisions see Article 63 3.
In the DFSA's view, if information is of a kind which a reasonable investor would be likely to use as part of the basis of his investment decisions, then the "significant effect on price" test will be satisfied. Article 63 4 provides that information about a person's pending orders in relation to an Investment or related investment is also Inside Information G.
A person who executes a client order does not contravene Article 58 insider dealing provided he complies with certain conditions see CMC section paragraphs 8 and 9. A person will form an intention to deal in an Investment G before doing so. His carrying out of his own intention will not of itself contravene Article 58 insider dealing. To contravene Article 58 , it is necessary that the Insider G deals or attempts to deal "on the basis" of Inside Information G. In the DFSA's view, if the Inside Information G is the reason for, or a material influence on, the decision to deal or attempt to deal then this indicates that the dealing or attempt to deal is "on the basis" of the Inside Information G.
In the DFSA's view, an "attempt to deal" covers circumstances where an Insider G takes steps to enter into a transaction but the transaction is not executed. For example, if an Insider G places an order with a broker or instructs another person such as his investment adviser to place an order with a broker, even though the order is not subsequently executed.
Article 58 prohibits an Insider G from dealing or attempting to deal in relation to either the Investment G i. The definition of a "related investment" is set out at CMC chapter 1 paragraph The family members would have contravened Article 58 insider dealing and A would have contravened Article 59 1 providing inside information see CMC chapter 7 ;.
Before the new joint venture is disclosed to the market, B buys shares in his employer company based on his expectation that the price of the shares will rise significantly once the new joint venture is announced;. C buys shares in D based on his expectation that the takeover will soon be announced;. Both trades would contravene Article 58 insider dealing ; and. Dealing undertaken by a person solely in the course of the legitimate performance of his functions as a market maker will not contravene Article 58 insider dealing see Article 64 2 d.
In the DFSA's view, the following factors are likely to indicate that a person's dealing in an Investment G is in the course of the legitimate performance of his functions as a market maker: In the DFSA's view, if the person acted in contravention of a regulatory requirement or a requirement of the relevant market, that is a factor that indicates that the person's dealing is not in the legitimate performance of his functions as a market maker.
Dealing by a person that occurs in the legitimate performance of an underwriting agreement for the Investments G or related investments in question will not contravene Article 58 insider dealing see Article 64 2 b. In the DFSA's view, an underwriting agreement is an agreement under which a party agrees to buy, before issue, a specific quantity of Investments G in an issue of Investments G on a given date at a given price, if no other party has purchased or acquired them.
In the DFSA's view, if the person acted in contravention of a relevant regulatory requirement or a requirement of the relevant market, that is a factor that indicates that, the person's dealing is not in the legitimate performance of his functions under an underwriting agreement.
The execution of an unsolicited client order in Investments or related investments while in possession of Inside Information G will not contravene Article 58 insider dealing if the person executing the order has not: In the DFSA's view, the following factors are likely to indicate that the person's dealing is the execution of an unsolicited client order in accordance with Article 64 2 e: Dealing by a person does not contravene Article 58 insider dealing if the dealing is undertaken legitimately and solely in the context of that person's public takeover bid for the purpose of gaining control of the Reporting Entity G or a proposed merger with the Reporting Entity G see Article 64 2 f.
There are two categories of Inside Information G potentially relevant to a takeover or merger: In determining whether or not the dealing is undertaken legitimately and solely in the context of a takeover bid or merger, the DFSA G is likely to take into account factors such as: Article 65 provides that a person does not contravene Article 58 insider dealing by dealing in Investments G or related investments if: For example, if Inside Information G is held behind an effective information barrier, from the individuals who make the decision to deal, the dealing by the person does not contravene Article In the DFSA's view, to rely on this defence, the person must not only have in place information barriers which could reasonably be expected to prevent the communication of the Inside Information G , but must also be able to show that the information was not in fact communicated to the person who made the decision to deal.
Article 59 1 does not prohibit the disclosure of Inside Information G by an Insider G to another person if the disclosure is made "in the necessary course of business".