• Legal risk

    • MIR 4.7.9

      A Recognised Clearing House must have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of its activities in all relevant jurisdictions.

    • MIR 4.7.10

      A Recognised Clearing House must have adequate rules and procedures, including contractual arrangements, which are legally enforceable.

    • MIR 4.7.11

      A Recognised Clearing House that operates in multiple jurisdictions must:

      (a) identify and mitigate the risks arising from doing business in the relevant jurisdictions, including those arising from conflicting laws applicable in such jurisdictions; and
      (b) ensure the arrangements referred to in Rule 4.7.10 provide a high degree of certainty that actions taken by the Recognised Clearing House under its rules and procedures will not be reversed, stayed or rendered void.

    • MIR 4.7.12

      A Recognised Clearing House may be conducting its activities in multiple jurisdictions in circumstances such as:
      (a) where it operates through linked Recognised Clearing Houses in or outside of the Abu Dhabi Global Market, or clearing houses, securities settlement systems, being systems that enable Financial Instruments to be transferred and settled by book entry, or Central Securities Depositories outside of the Abu Dhabi Global Market;
      (b) where its Members and other participants are incorporated, located, or otherwise conducting business in jurisdictions outside the Abu Dhabi Global Market; or
      (c) where any collateral provided is located or held in a jurisdiction outside the Abu Dhabi Global Market.

    • MIR 4.7.13

      A Recognised Clearing House should be able to demonstrate to the Regulator that the legal basis on which it operates, including in multiple jurisdictions, is well founded. This would general include:

      (a) well-defined rights and obligations of the Recognised Clearing House, its Members and other users, including its service providers such as custodians and settlement banks, or would provide a mechanism by which such rights and obligations can be ascertained. This would enable the Recognised Clearing House to identify and address risks that arise from its operations involving such parties;
      (b) adequately addressing legal risks faced by a Recognised Clearing House, particularly where it operates in multiple jurisdictions including a situation where an unexpected application of a law or regulation may render a contract between itself and counterparty void or unenforceable, thereby leading to a loss; and
      (c) obtaining independent legal opinions as appropriate to its activities in order to form clear views about the legally binding nature of its contractual arrangements in the relevant jurisdictions. Such legal opinions should, to the extent practicable, confirm the enforceability of the rules and procedures of the Recognised Clearing House in the relevant jurisdictions and be made available to the Regulator upon request.