• MIR 6 MIR 6 SUPERVISION

    • MIR 6.1 MIR 6.1 Suspension and removal of Financial Instruments from trading

      • MIR 6.1.1

        The Regulator may for the purpose of protecting:

        (a) the interests of investors; or
        (b) the orderly functioning of the financial markets,

        require a Recognised Investment Exchange to suspend or remove a Financial Instrument from trading or require a Recognised Clearing House to cease Clearing a Financial Instrument and to invoice back all open contracts.

      • MIR 6.1.2 MIR 6.1.2

        If the Regulator exercises this power, the Recognised Body concerned may refer the matter to the Regulatory Committee.

        • Guidance

          The procedure the Regulator will follow if it exercises its power to require a Recognised Investment Exchange to suspend or remove a Financial Instrument from trading or Clearing is set out in Part 14 of FSMR. The procedure the Regulator will follow if it exercises its power to require a Recognised Clearing House to cease Clearing a Financial Instrument is set out in Part 14 of FSMR, as if references to Recognised Investment Exchanges were to Recognised Clearing Houses.

      • MIR 6.1.3

        The procedure the Regulator will follow if it exercises its power to require a Recognised Body to suspend or remove a Financial Instrument from trading or Clearing is set out in Part 14 of FSMR. The Regulator's internal arrangements provide for decisions to exercise this power to be taken at an appropriately senior level. If the Regulator exercises this power, the Recognised Body concerned and the issuer (if any) of the relevant Financial Instrument may refer the matter to the Regulatory Committee.

    • MIR 6.2 MIR 6.2 Information gathering power on Regulator's own initiative

      • MIR 6.2.1

        While the Regulator will seek to obtain information from a Recognised Body in the context of an open, cooperative and constructive relationship with the Recognised Body, where it appears to the Regulator that obtaining information in that context will not achieve the necessary results, the Regulator or (as the case may be) its officers may, by notice in writing, require the Recognised Body or any Person who is connected to the Recognised Body to provide or produce specified information or information of a specified description, at a specified place and before the end of a reasonable period, in such form and with such verifications or authentications as it may reasonably require.

      • MIR 6.2.2

        A Person is connected with a Recognised Body if he is or has at any relevant time been:

        (a) a Member of the Recognised Body's group;
        (b) a controller of the Recognised Body;
        (c) any other Member of a partnership of which the Recognised Body is a Member; or
        (d) a Person mentioned in section 39 of FSMR (reading references in that Part to the "authorised Person" as references to the Recognised Body).

    • MIR 6.3 MIR 6.3 Risk assessments for Recognised Bodies

      • MIR 6.3.1

        Information is needed to support the Regulator's risk-based approach to the supervision of all regulated entities. Risk-based supervision is intended to ensure that the allocation of supervisory resources and the supervisory process are compatible with the Regulatory objectives and the Regulator's general duties. The central element of the process of risk-based supervision is a systematic assessment by the Regulator (a risk assessment) of the main supervisory risks and concerns for each regulated entity.

      • MIR 6.3.2

        For each Recognised Body, the Regulator will conduct a periodic risk assessment. This assessment will take into account relevant considerations including the special position of Recognised Bodies under the Act, the nature of the Recognised Body's Members, the position of other users of its facilities and the business environment more generally.

      • MIR 6.3.3 MIR 6.3.3

        The risk assessment will guide the Regulator's supervisory focus. It is important, therefore, that there is good dialogue between the Regulator and the Recognised Body. The Regulator expects to review its risk assessment with the staff of the Recognised Body to ensure factual accuracy and a shared understanding of the key issues, and may discuss the results of the risk assessment with Key Individuals of the Recognised Body. If appropriate, the Regulator may send a detailed letter to the body's chief executive, chairman or both with proposals for further action or work to address particular concerns or issues and seek their comments on the risk assessment.

        • Guidance

          Information is needed to support the Regulator's risk‐based approach to the supervision of all regulated entities, including Recognised Bodies. Risk‐based supervision is intended to ensure that the allocation of supervisory resources and the supervisory process are compatible with the Regulators objectives and the Regulator's general duties. The central element of the process of risk‐based supervision is a systematic assessment by the Regulator (a risk assessment) of the main supervisory risks and concerns for each regulated entity.

          The risk assessment will guide the Regulator's supervisory focus. It is important, therefore, that there is good dialogue between the Regulator and the Recognised Body. The Regulator expects to review its risk assessment with the staff of the Recognised Body to ensure factual accuracy and a shared understanding of the key issues, and may discuss the results of the risk assessment with Key Individuals of the Recognised Body. If appropriate, the Regulator may send a detailed letter to the Recognised Body with proposals for further action or work to address particular concerns or issues and seek its comments on the risk assessment.

    • MIR 6.4 MIR 6.4 Complaints - Regulator's arrangements

      • MIR 6.4.2 MIR 6.4.2

        The Regulator is required to have arrangements to investigate complaints which it considers relevant to the question of whether a Recognised Body should remain recognised as such. This section describes aspects of the Regulator's arrangements for investigating relevant complaints.

        • MIR 6.4.1

          Recognised Bodies may receive complaints from time to time from their Members and other people, both about the conduct of Members and about the Recognised Body itself. A Recognised Body will need to have satisfactory arrangements to investigate these complaints in order to satisfy the relevant Recognition Requirements (see Rule 2.12 and Rule 2.13).

        • MIR 6.4.3

          Where the Regulator receives a complaint about a Recognised Body, it will, in the first instance, seek to establish whether the complainant has approached the Recognised Body. Where this is not the case, the Regulator will ask the complainant to complain to the Recognised Body. Where the complainant is dissatisfied with the handling of the complaint, but has not exhausted the Recognised Body's own internal complaints procedures (in the case of a complaint against a Recognised Body, including by applying to that body's complaints investigator), the Regulator will encourage the complainant to do so.

        • MIR 6.4.4

          The Regulator will not usually consider a complaint which has not, in the first instance, been made to the Recognised Body concerned, unless there is good reason for believing that it is a relevant complaint which merits early consideration by the Regulator.

        • MIR 6.4.5

          When it is considering a relevant complaint, the Regulator will make its own enquiries as appropriate with the Recognised Body, the complainant and other Persons. It will usually ask the Recognised Body and the complainant to comment upon any preliminary or draft conclusions of its review and to confirm any matters of fact at that stage.

        • MIR 6.4.6

          The Regulator will communicate the outcome of its review of a relevant complaint to the complainant and the Recognised Body, but will normally only discuss any action which it considers the Recognised Body should take with the Recognised Body itself.

    • MIR 6.5 MIR 6.5 Regulator supervision of action by Recognised Bodies under their Default Rules

      • MIR 6.5.1

        Recognised bodies which, under their rules, have market contracts are required to have Default Rules enabling them (among other things) to take action in relation to a Member who appears to be unable to meet his obligations in respect of one or more unsettled market contracts. The detailed Recognition Requirements relating to the Default Rules are set out in Rule 3.10 and Rule 4.5.

      • MIR 6.5.2 MIR 6.5.2

        The Default Rules for Recognised Clearing Houses are designed to ensure that rights and liabilities between the defaulter and any counterparty to an unsettled market contract are discharged, and for there to be paid between the defaulter and each counterparty one net sum. The Insolvency Regulations contain provisions which protect action taken under Default Rules from the normal operation of insolvency law which might otherwise leave this action open to challenge by a relevant office-holder.

        • Guidance

          Recognised bodies which, under their rules, have Market Contracts are required to have Default Rules enabling them (among other things) to take action in relation to a Member who appears to be unable to meet his obligations in respect of one or more unsettled Market Contracts. The detailed Recognition Requirements relating to the Default Rules are set out in Rule 3.10 and Rule 4.5.

          The Default Rules are designed to ensure that rights and liabilities between the defaulter and any counterparty to an unsettled Market Contract are discharged, and for there to be paid between the defaulter and each counterparty one net sum. The Insolvency Regulations contain provisions which protect action taken under Default Rules from the normal operation of insolvency law which might otherwise leave this action open to challenge by a Relevant Office Holder.

      • MIR 6.5.3

        The Regulator may direct a Recognised Body to take, or not to take, action under its Default Rules (see Rules 6.5.4 and 6.5.5). Before exercising these powers the Regulator must consult the Recognised Body. The Regulator may also exercise these powers if a relevant office-holder applies to it.

      • MIR 6.5.4

        The Regulator may issue a "positive" direction (to take action) where in any case a Recognised Body has not taken action under its Default Rules — if it appears to the Regulator that it could take action, the Regulator may direct it to do so. Before giving such a direction the Regulator shall consult the Recognised Body in question; and the Regulator shall not give a direction unless the Regulator is satisfied, in the light of that consultation that failure to take action would involve undue risk to investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the Abu Dhabi Global Market, or that the direction is necessary to facilitate a proposed or possible use of a power under COBS 16 or in connection with a particular exercise of a power under that Part.

      • MIR 6.5.5

        The Regulator may issue a "negative" direction (not to take action) where in any case a Recognised Body has not taken action under its Default Rules — if it appears to the Regulator that it is proposing to take or may take action, the Regulator may direct it not to do so. Before giving such a direction, the Regulator shall consult the Recognised Body in question; and the Regulator shall not give a direction unless the Regulator is satisfied, in the light of that consultation that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the Abu Dhabi Global Market, or that the direction is necessary to facilitate a proposed or possible use of a power under COBS 16 or in connection with a particular exercise of a power under that Part.

      • MIR 6.5.6

        A negative direction cannot be given if, in relation to the defaulter, either:

        (a) a bankruptcy order or an award of sequestration of the defaulter's estate has been made, or an interim receiver or interim trustee has been appointed; or
        (b) a winding-up order has been made, a resolution for voluntary winding-up has been passed or an administrator, administrative receiver or provisional liquidator has been appointed,

        and any previous negative direction will cease to have effect on the making or passing of any such order, award or appointment.

      • MIR 6.5.7

        A negative direction may be expressed to have effect until a further direction is given, which may either be a positive direction or a revocation of the earlier negative direction.

      • MIR 6.5.8

        Where a Recognised Body has taken action either of its own accord or in response to a direction, the Regulator may direct it to do or not to do specific things subject to these being within the powers of the Recognised Body under its Default Rules. However,

        (a) where the Recognised Body is acting in accordance with a direction given by the Regulator to take action on the basis that failure to take action would involve undue risk to investors or other participants in the market, the Regulator will not direct it to do or not to do specific things which the Recognised Body has power to do under its Default Rules, unless the Regulator is satisfied that this will not impede or frustrate the proper and efficient conduct of the default proceedings; and
        (b) where the Recognised Body has taken action under its Default Rules without being directed to do so, the Regulator will not direct it to do or not to do specific things which the Recognised Body has power to do under its Default Rules, unless the Regulator is satisfied that:
        (i) the direction will not impede or frustrate the proper and efficient conduct of the default proceedings; or
        (ii) the direction is necessary:
        A. having regard to the public interest in the stability of the Abu Dhabi Global Market financial system;
        B. to facilitate a proposed or possible use of a power under COBS 16; or
        C. in connection with a particular exercise of a power under COBS 16.

      • MIR 6.5.9

        Where, in relation to a Member (or designated non-Member) of a Recognised Body:

        (a) a bankruptcy order;
        (b) an award of sequestration of his estate;
        (c) an order appointing an interim receiver of his property;
        (d) an administration or winding-up order;
        (e) a resolution for a voluntary winding-up; or
        (f) an order appointing a provisional liquidator,

        has been made or passed and the Recognised Body has not taken action under its Default Rules as a result of this event or of the matters giving rise to it, a relevant office-holder appointed in connection with the order, award or resolution may make an application to the Regulator.

      • MIR 6.5.10

        The effect of such an application is to require the Recognised Body concerned to take action under its Default Rules or to require the Regulator to take action.

      • MIR 6.5.11

        The procedure is that the Regulator must notify the Recognised Body of the application and, unless within three business days after receipt of that notice, the Recognised Body:

        (a) takes action under its Default Rules;
        (b) notifies the Regulator that it proposes to take action forthwith; or
        (c) is directed to take action by the Regulator,

        section 268 of the Insolvency Regulations do not apply in relation to market contracts to which the Member or designated non-Member is a party or to anything done by the Recognised Body for the purpose of, or in connection with, the settlement of any market contracts.

      • MIR 6.5.12

        The effect of such an application is to require the Recognised Body concerned to take action under its Default Rules or to require the Regulator to take action.

      • MIR 6.5.13

        The procedure is that the Regulator must notify the Recognised Body of the application and, unless within three business days after receipt of that notice, the Recognised Body:

        (a) takes action under its Default Rules;
        (b) notifies the Regulator that it proposes to take action forthwith; or
        (c) is directed to take action by the Regulator,

        section 268 of the Insolvency Regulations do not apply in relation to Market Contracts to which the Member or designated non‐Member is a party or to anything done by the Recognised Body for the purpose of, or in connection with, the settlement of any Market Contracts.

    • MIR 6.6 MIR 6.6 Power to give directions

      • MIR 6.6.1

        The Regulator has the power to give directions to a Recognised Body to take specified steps in order to secure its compliance with the Recognition Requirements. Those steps may include granting the Regulator access to the Recognised Body's premises for the purposes of inspecting those premises or any documents on the premises and the suspension of the carrying on of any Regulated Activity by the Recognised Body for the period specified in the direction.

      • MIR 6.6.2

        The Regulator is likely to exercise its power if it considers that:

        (a) there has been, or was likely to be, a failure to satisfy one or more of the Recognition Requirements which has serious consequences;
        (b) compliance with the direction would ensure that one or more of the Recognition Requirements is satisfied; and
        (c) the Recognised Body is capable of complying with the direction.

      • MIR 6.6.3

        The Regulator need not follow the consultation procedure set out in the rest of Rule 6.9 or may cut short that procedure, if it considers it reasonably necessary to do so.

    • MIR 6.7 MIR 6.7 Controllers - Notifications and powers to direct

      • MIR 6.7.1

        The Regulator has the power to give a direction to the controllers of a Recognised Body if it considers that it is desirable to give the direction in order to advance one of more of its operational objectives.

      • MIR 6.7.2

        In exercising or deciding whether to exercise its power to direct a controller, the Regulator will have regard to any statement of policy published under this section and for the time being in force.

      • MIR 6.7.3

        In exercising or deciding whether to exercise its power to direct a Controller, the Regulator will have regard to any statement of policy published under this section and for the time being in force.

    • MIR 6.8 MIR 6.8 Power to revoke recognition

      • MIR 6.8.1

        The Regulator has the power to revoke a recognition order relating to a Recognised Body.

      • MIR 6.8.2

        The Regulator will revoke a recognition order if the Recognised Body has asked the Regulator to revoke the order.

      • MIR 6.8.3

        The Regulator will usually consider revoking a recognition order if:

        (a) the Recognised Body is failing or has failed to satisfy one or more of the Recognition Requirements and that failure has or will have serious consequences; or
        (b) it would not be possible for the Recognised Body to comply with a direction under the Regulator's power to give directions; or
        (c) for some other reason, it would not be appropriate for the Regulator to give a direction under its power to give directions; or
        (d) it has not carried on the business of a Recognised Body during the 12 months beginning with the day on which the recognition order took effect in relation to it, or it has not carried on the business of a Recognised Body at any time during the period of six months ending with the day the recognition order is revoked.

      • MIR 6.8.4

        The Regulator would be likely to consider the conditions in Rule 6.8.3(b) or Rule 6.8.3(c) to be triggered in the following circumstances:

        (a) the Recognised Body appears not to have the resources or management to be able to organise its affairs so as to satisfy one or more of the Recognition Requirements; or
        (b) the Recognised Body does not appear to be willing to satisfy one or more of the Recognition Requirements; or
        (c) the Recognised Body is failing or has failed to comply with a direction made by the Regulator; or
        (d) the Recognised Body has ceased to carry out Regulated Activities in the Abu Dhabi Global Market, or has so changed the nature of its business that it no longer satisfies one or more of the Recognition Requirements in respect of the Regulated Activities for which Recognised Body status is relevant.

      • MIR 6.8.5

        In addition to the relevant factors set out in Rule 6.8.4, the Regulator will usually consider that it would not be able to secure a Non-Abu Dhabi Global Market Recognised Body's compliance with the Recognition Requirements or other obligations means of a direction, if it appears to the Regulator that the Non-Abu Dhabi Global Market Recognised Body is prevented by any change in the legal framework or supervisory arrangements to which it is subject in its home territory from complying with the Recognition Requirements or other obligations in or under the Act.

      • MIR 6.8.6

        A Recognised Clearing House must terminate, transfer, invoice back or otherwise close out all open contracts prior to any such revocation taking effect.

    • MIR 6.9 MIR 6.9 Procedure for making orders

      • MIR 6.9.1

        A decision to revoke a recognition order, make a direction, or refuse to make a recognition order is a serious one and Rule 6.9.6 sets out procedures which the Regulator will follow unless, in the case of a revocation of a recognition order, the Recognised Body concerned has given its consent or, in case where the Regulator proposes to make a direction, it considers it is reasonably necessary not to follow, or to cut short, the procedure.

      • MIR 6.9.2

        The Regulator's internal arrangements provide for any of these decisions to be taken at an appropriately senior level.

      • MIR 6.9.3

        In considering whether it would be appropriate to exercise its powers to make directions, the Regulator will have regard to all relevant information and factors including:

        (a) the rules contained in this rulebook;
        (b) the results of its routine supervision of the body concerned;
        (c) the extent to which the failure or likely failure to satisfy one or more of the Recognition Requirements may affect the statutory objectives.

      • MIR 6.9.4

        In considering whether or not to make a recognition order, the Regulator will have regard to all relevant information and factors, including its guidance to Recognised Bodies and applicants and the information provided by applicants.

      • MIR 6.9.5

        Before exercising its powers to make directions, the Regulator will usually discuss its intention, and the basis for this, with the Key Individuals or other appropriate representatives of the Recognised Body. It will usually discuss its intention not to make a recognition order with appropriate representatives of the applicant.

      • MIR 6.9.6

        The procedures that the Regulator will follow in exercising its powers to make directions are:

          The Regulator will: Guidance
        1. give written notice to the Recognised Body; The notice will state why the Regulator intends to take the action it proposes to take, and include an invitation to make representations, and the period within which representations should be made (unless subsequently extended by the Regulator).
        2. receive representations from the Recognised Body concerned; The Regulator will not usually consider oral representations without first receiving written representations from the Recognised Body. It will normally only hear oral representations from the Recognised Body on request.
        3. write promptly to Recognised Body who requests the opportunity to make oral representations if it decides not to hear that Person's representations; The Regulator will indicate why it will not hear oral representations and the Regulator will allow the Recognised Body further time to respond.
        4. have regard to representations made;  
        5. (when it has reached its decision) notify the Recognised Body concerned in writing.  

    • MIR 6.10 MIR 6.10 Disciplinary measures

      • MIR 6.10.1

        If the Regulator considers that a Recognised Body has contravened a requirement imposed by the Regulator, or under any provision of the Act whose contravention constitutes an offence the Regulator has power to prosecute, it may:

        (a) publish a statement to that effect; or
        (b) impose on the body a financial penalty of such amount as it considers appropriate.

      • MIR 6.10.2

        The procedures and policies which the Regulator will follow if it proposes to publish a statement or to impose a penalty, and if it decides to publish such statement or impose such penalty, are set out in FSMR.

      • MIR 6.10.3

        In exercising or deciding whether to exercise its power to impose a penalty, the Regulator will also have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.

      • MIR 6.10.4

        If the Regulator considers that a qualifying parent undertaking of a Recognised Body has contravened a requirement of a direction given by the Regulator, or a provision of rules made by the Regulator, it may:

        (a) impose a penalty of such amount as it considers appropriate on the qualifying parent undertaking of the Recognised Body, or any Person who was knowingly concerned in the contravention; or
        (b) publish a statement censuring the Person.

      • MIR 6.10.5

        The procedures which the Regulator will follow if it proposes to take action, and if it decides to take action against a Person, are set out in FSMR.

      • MIR 6.10.6

        In exercising or deciding whether to exercise its power to impose a penalty or publish a statement of censure, the Regulator will also have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.

    • MIR 6.11 Publication of information MIR 6.11 Publication of information

      • MIR 6.11.1

        A Recognised Body must as soon as practicable after a Recognition Order is made in respect of it, publish such particulars of the ownership of the Recognised Body, including the identity and scale of interests of the Persons who are in a position to exercise significant influence over the management of the Recognised Body, whether directly or indirectly, as the Regulator may reasonably require.

      • MIR 6.11.2

        A Recognised Body must as soon as practicable after becoming aware of a transfer of ownership of the Recognised Body which gives rise to a change of Persons who are in a position to exercise significant influence over the management of the Recognised Body, whether directly or indirectly, publish such particulars of any transfer as the Regulator may reasonably require.

      • MIR 6.11.3

        A Recognised Body must publish such particulars of any decision it makes to suspend or remove a Financial Instrument from trading on a market operated by it as the Regulator may reasonably require.