MIR 2.8 MIR 2.8 Membership criteria and access
A Recognised Body must ensure that access to its facilities is subject to criteria designed to protect the orderly functioning of the market and the interests of investors.
The Recognised Body must make transparent and non-discriminatory rules, based on objective criteria, governing access to, or Membership of, its facilities. In particular, those rules must specify the obligations for users or Members of its facilities arising from:(a) the constitution and administration of the Recognised Body;(b) its professional standards for staff of any investment firm or credit institution having access to or Membership of a financial market operated by the Recognised Body;(c) conditions established for access to or Membership of a financial market operated by the Recognised Body by Persons other than investment firms or credit institutions; and(d) the rules and procedures for Clearing and settlement of transactions.
The Recognised Body shall only give access to or admit to Membership a Person who:(a) is fit and proper and of sufficient good repute;(b) has a sufficient level of ability, competence and experience, including appropriate standards of conduct for its staff; and(c) where applicable, has adequate organisational arrangements, including financial and technological resources.
A Recognised Body may refuse access to its facilities on legitimate commercial grounds.
In assessing whether access to a Recognised Body's facilities is subject to criteria designed to protect the orderly functioning of the market, or of those facilities, and the interests of investors, the Regulator may have regard to whether (in respect of Persons other than investment firms and credit institutions):(a) the Recognised Body limits access as a Member to such Persons:(i) over whom it can with reasonable certainty enforce its rules contractually;(ii) who have sufficient technical competence to use its facilities;(iii) whom it is appropriate to admit to Membership having regard to the size and sophistication of users of its facilities and the nature of the business effected by means of, or cleared through, its facilities; and(iv) (if appropriate) who have adequate financial resources in relation to their exposure to the Recognised Body;(b) indirect access to the Recognised Body's facilities is subject to suitable criteria, remains the responsibility of a Member of the Recognised Body and is subject to its rules; and(c) where access is granted to Members outside the Abu Dhabi Global Market, there are adequate safeguards against financial crime.
The Recognised Body must make arrangements regularly to provide the Regulator with a list of users or Members of its facilities.
A Recognised Body may only permit a Member to provide its clients Direct Electronic Access to the Recognised Body's facilities where:(a) the clients meet the suitability criteria established by the Member in order to meet the requirements in Rule 2.8.8;(b) the Member retains responsibility for the orders and trades executed by the clients who are using direct electronic access; and(c) the Member has adequate mechanisms to prevent the clients placing or executing orders using Direct Electronic Access in a manner that would result in the Member exceeding its position or margin limits.
A Recognised Body which permits its Members to allow their clients to have Direct Electronic Access to its trading facilities must:(a) set appropriate standards regarding risk controls and thresholds on trading through direct electronic access;(b) be able to identify orders and trades made through direct electronic access; and(c) if necessary, be able to stop orders or trades made by a client using Direct Electronic Access provided by the Member without affecting the other orders or trades made or executed by that Member.
"Direct Electronic Access" means any arrangement, such as the use of the Member's trading code, through which a Member or the clients of that Member are able to transmit orders relating to investments directly to the facility provided by the Recognised Body.
For avoidance of doubt, a Person who is permitted to have Direct Electronic Access to a Recognised Body's facilities through a Member is not, by virtue of such permission, a Member of the Recognised Body.
The Regulator may have regard to the arrangements made to permit Direct Electronic Access to the Recognised Body's facilities and to prevent and resolve problems likely to arise from the use of electronic systems to provide indirect access to its facilities by Persons other than its Members, including:(a) the rules and guidance governing Members' procedures, controls and security arrangements for inputting instructions into the system;(b) the rules and guidance governing the facilities Members provide to clients to input instructions into the system and the restrictions placed on the use of those systems;(c) the rules and practices to detect, identify, and halt or remove instructions breaching any relevant restrictions;(d) the quality and completeness of the audit trail of any transaction processed through an electronic connection system; and(e) procedures to determine whether to suspend trading by those systems or access to them by or through individual Members.