• MIR 2.4 MIR 2.4 Financial resources

    • MIR 2.4.1

      A Recognised Body must have financial resources sufficient for the proper performance of its relevant functions as a Recognised Body. In considering whether this requirement is satisfied, the Regulator must take into account all the circumstances, including the Recognised Body's connection with any Person, and any activity carried on by the Recognised Body, whether or not it is an exempt activity.

    • MIR 2.4.2

      In determining whether a Recognised Body has financial resources sufficient for the proper performance of its relevant functions, the Regulator may have regard to:

      (a) the operational and other risks to which the Recognised Body is exposed;
      (b) if the Recognised Body is principal to or guarantees the performance of transactions, the counterparty and market risks to which it is exposed in that capacity;
      (c) the amount and composition of the Recognised Body's capital and liquid financial assets;
      (d) the amount and composition of the Recognised Body's other financial resources (such as insurance policies and guarantees, where appropriate);
      (e) the financial benefits, liabilities, risks and exposures arising from the Recognised Body's connection with any Person, including but not limited to, its connection with:
      (i) any undertaking in the same group as the Recognised Body;
      (ii) any other Person with a significant shareholding or stake in the Recognised Body;
      (iii) any other Person with whom the Recognised Body has made a significant investment, whether in the form of equity, debt, or by means of any guarantee or other form of commitment; and
      (iv) any Person with whom the Recognised Body has a significant contractual relationship;
      (f) the amount and liquidity of its financial assets and the likely availability of liquid financial resources to the Recognised Body during periods of major market turbulence or other periods of major stress for the Abu Dhabi Global Market financial system; and
      (g) in relation to a Recognised Investment Exchange, the nature and extent of the transactions concluded on the Recognised Investment Exchange.

    • Capital requirements

      • MIR 2.4.3

        A Recognised Investment Exchange must, at all times, hold capital in accordance with Rule 3.2.

      • MIR 2.4.4

        A Recognised Clearing House must, at all times, hold capital in accordance with Rule 4.2.

      • MIR 2.4.5

        "Capital" means Tier 1 Capital, as defined in PRU 3.12.

      • MIR 2.4.6

        The Regulator may require a Recognised Body to hold an additional capital buffer, which may be used only in times of market stress or financial difficulty.

    • Accounting information and standards

      • MIR 2.4.7 MIR 2.4.7

        The Regulator will usually rely on a Recognised Body's published and internal management accounts and financial projections, provided that those accounts and projections are prepared in accordance with Global Market, US or international accounting standards.

        • Guidance

          GEN 6.2.2 requires all Recognised Bodies and Authorised Persons to prepare and maintain all financial statements in accordance with the International Financial Reporting Standards.

    • Counterparty, market, operational and other risks

      • MIR 2.4.8

        In assessing whether, pursuant to Rule 2.4.2(b), a Recognised Body has sufficient financial resources in relation to counterparty and market risks, the Regulator may have regard to the:
        (a) amount and liquidity of its financial assets and the likely liquid financial resources available to the Recognised Body during periods of major market turbulence or other periods of major stress for the ADGM Financial System; and
        (b) nature and scale of the Recognised Body’s exposures to counterparty and market risks and, where relevant, the counterparties to which it is exposed.

      • MIR 2.4.9

        For the purposes of Rule 2.4.2(a), in assessing whether a Recognised Body has sufficient financial resources in relation to operational and other risks, the Regulator may have regard to the extent to which, after allowing for the financial resources necessary to cover counterparty and market risks, the Recognised Body’s financial resources are sufficient and sufficiently liquid to:
        (a) enable the Recognised Body to continue to properly carry on the Regulated Functions that it expects to carry on; and
        (b) ensure that it would be able to complete an orderly closure or transfer of its Regulated Functions without being prevented from doing so by insolvency or lack of available funds.