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  • BC-8.9 BC-8.9 Dealing and Managing

    • BC-8.9.1

      Conventional bank licensees must apply the requirements contained in this Section to all customer categories.

      Added: April 2008

    • Best and Timely Execution

      • BC-8.9.2

        Conventional bank licensees must take all reasonable steps to obtain, when executing orders, the best possible result for customers taking into account price, costs, speed, likelihood of execution and settlement, and any other consideration relevant to the execution of the order (subject to Paragraph BC-8.9.5 below).

        Amended: January 2011
        Added: April 2008

      • BC-8.9.3

        Conventional bank licensees must establish and implement effective arrangements for complying with Rule BC-8.9.2 including:

        a) Execution policies for each class of financial instrument;
        b) Maintenance of and disclosure to customers of information regarding execution venues and arrangements for disclosure to customers if orders are to be executed outside regulated markets;
        c) Monitoring of effectiveness of the order execution arrangements and execution policies in order to identify and, where appropriate, correct any deficiencies; and
        d) Maintenance of audit trails to demonstrate to their customers that orders were executed in accordance with the relevant execution policy.

        Added: April 2008

      • BC-8.9.4

        Conventional bank licensees are not required to provide best execution (as defined in Paragraph BC-8.9.5 below) where they have agreed with the customer in writing that they will not provide best execution.

        Amended: January 2011
        Added: April 2008

      • BC-8.9.5

        In determining whether a conventional bank licensee has taken reasonable care to provide the best overall price for a customer in accordance with Rules BC-8.9.2 to BC-8.9.4, the CBB will take into account whether an conventional bank licensee has:

        (a) Executed orders promptly and sequentially;
        (b) Discounted any fees and charges previously disclosed to the customer;
        (c) Disclosed the price at which an order is executed; and
        (d) Taken into account the available range of price sources for the execution of its customers’ transactions. In the case where the conventional bank licensee has access to prices of different regulated financial markets or alternative trading systems, it must execute the transaction at the best overall price available having considered other relevant factors.

        Added: April 2008

      • BC-8.9.6

        Conventional bank licensees may only postpone the execution of a transaction if it is in the best interests of the customer, and the prior consent of the customer has been given, or when circumstances are beyond its control. The conventional bank licensee must maintain a record of all postponements together with the reasons for the postponement.

        Added: April 2008

      • BC-8.9.7

        Factors relevant to whether the postponement of an existing customer order may be in the best interests of the customer include where:

        (a) The customer order is received outside of normal trading hours;
        (b) A foreseeable improvement in the level of liquidity in the financial instrument is likely to enhance the terms on which the conventional bank licensee can execute the order; or
        (c) Executing the order as a series of partial executions over a period of time is likely to improve the terms on which the order as a whole is executed.

        Added: April 2008

    • Non-market Price Transactions

      • BC-8.9.8

        Conventional bank licensees must not enter into a non-market price transaction in any capacity, with or for a customer, if it has reasonable grounds to suspect that the customer is entering into the transaction for an illegal or improper purpose.

        Added: April 2008

      • BC-8.9.9

        For the purposes of Paragraph BC-8.9.8, a non-market price transaction is one where the price paid by the conventional bank licensee, or its customer, differs from the prevailing market price. With respect to transactions in financial instruments traded on a licensed exchange, licensees are reminded that in Bahrain the law prohibits off-market transactions.

        Amended: January 2011
        Added: April 2008

      • BC-8.9.10

        For the purposes of Paragraph BC-8.9.8, examples of improper purposes for transactions include:

        (a) The perpetration of a fraud;
        (b) The disguising or concealment of the nature of a transaction or of profits, losses or cash flows;
        (c) Transactions which amount to market abuse;
        (d) High-risk transactions under the Anti Money Laundering Regulations; and
        (e) "Window dressing", in particular around the year end, to disguise the true financial position of the person concerned.

        Added: April 2008

      • BC-8.9.11

        Rule BC-8.9.8 does not apply to a non-market-price transaction if it is subject to the rules of a recognised investment exchange.

        Added: April 2008

    • Aggregation and Allocation

      • BC-8.9.12

        Conventional bank licensees may only aggregate an order for a customer with an order for other customers, or with an order for its own account, where:

        (a) It is unlikely that the aggregation will disadvantage the customers whose orders have been aggregated; and
        (b) It has disclosed to each customer concerned in writing that it may aggregate orders, where these work to the customer’s advantage.

        Added: April 2008

      • BC-8.9.13

        If a conventional bank licensee has aggregated orders of customers, it must make a record of the intended basis of allocation and the identity of each customer before the order is effected (subject to the "best execution" provisions of Paragraph BC-8.9.2).

        Amended: January 2011
        Added: April 2008

      • BC-8.9.14

        Where an allocation takes place, prices must not be changed. The order must be allocated equally so that no customer or broker is advantaged over any change.

        Amended: April 2013
        Added: April 2008

      • BC-8.9.15

        Conventional bank licensees must have written policies on aggregation and allocation which are consistently applied; these must include the policy that will be adopted when only part of the aggregated order has been filled.

        Added: April 2008

      • BC-8.9.16

        Where a conventional bank licensee has aggregated a customer order with an order for other customers or with an order for its own account, and part or all of the aggregated order has been filled, it must:

        (a) Promptly allocate the financial instruments concerned;
        (b) Allocate the financial instruments in accordance with its stated policy;
        (c) Ensure the allocation is done fairly and uniformly by not giving undue preference to itself or to any of those for whom it dealt;
        (d) Give priority to satisfying customer orders where the aggregation order combines a customer order and an own account order, if the aggregate total of all orders cannot be satisfied, unless it can demonstrate on reasonable grounds that without its own participation it would not have been able to execute those orders on such favourable terms, or at all; and
        (e) Make and maintain a record of:
        (i) The date and time of the allocation;
        (ii) The relevant financial instruments;
        (iii) The identity of each customer concerned;
        (iv) The amount allocated to each customer and to the conventional bank licensee; and
        (v) The price of each financial instrument and allocation.
        Amended: April 2013
        Added: April 2008

    • Excessive Dealing

      • BC-8.9.17

        Conventional bank licensees must not advise any customer to transact with a frequency or in amounts that might result in those transactions being deemed excessive in light of historical volumes, market capitalisation, customer portfolio size and related factors. This Rule does not apply to customers classified as market counterparties.

        Added: April 2008

    • Right to Realise a Retail Customer's Assets

      • BC-8.9.18

        Conventional bank licensees must not realise a retail customer’s assets, unless it is legally entitled to do so, and has either:

        (a) Set out in the terms of business:
        (i) The action it may take to realise any assets of the retail customer;
        (ii) The circumstances in which it may do so;
        (iii) The asset (if relevant) or type or class of asset over which it may exercise the right; or
        (b) Given the retail customer written or oral notice of its intention to exercise its rights before it does so.

        Added: April 2008

    • Margin Requirements

      • BC-8.9.19

        Before conducting a transaction with or for a retail customer, conventional bank licensees must notify the customer of:

        (a) The circumstances in which the customer may be required to provide any margin;
        (b) The form in which the margin may be provided;
        (c) The steps the conventional bank licensee may be required or entitled to take if the customer fails to provide the required margin, including:
        (i) The fact that the customer's failure to provide margin may lead to the conventional bank licensee closing out his position after a time limit specified by the firm;
        (ii) The circumstances in which the conventional bank licensee will have the right or duty to close out the customer's position; and
        (iii) The circumstances, other than failure to provide the required margin, that may lead to the conventional bank licensee closing out the customer’s position without prior reference to him.

        Added: April 2008

      • BC-8.9.20

        Conventional bank licensees must close out a retail customer's open position if that customer has failed to meet a margin call within a maximum of five business days following the date on which the obligation to meet the call accrues, unless:

        (a) The conventional bank licensee has received confirmation from a relevant third party (such as a clearing firm) that the retail customer has given instructions to pay in full; or
        (b) The conventional bank licensee has taken reasonable care to establish that the delay is owing to circumstances beyond the retail customer's control.
        Amended: January 2011
        Added: April 2008

      • BC-8.9.21

        For the purposes of Rule BC-8.9.20, conventional bank licensees may require the closing of a retail customer’s open position in less than five business days, for their own risk management purposes.

        Added: April 2008

      • BC-8.9.22

        Conventional bank licensees must also follow the requirements of Chapter BC-7 concerning the operation of the margin trading system.

        Amended: January 2011
        Added: April 2008

    • Programme Trading

      • BC-8.9.23

        Before a conventional bank licensee executes a programme trade, it must disclose to its customer whether it will be acting as a principal or agent. A conventional bank licensee must not subsequently act in a different capacity from that which is disclosed without the prior consent of the customer.

        Added: April 2008

      • BC-8.9.24

        The term ‘programme trade’ describes a single transaction or series of transactions executed for the purpose of acquiring or disposing of, for a customer, all or part of a portfolio or a large basket of financial instruments.

        Added: April 2008

      • BC-8.9.25

        Conventional bank licensees must ensure that neither they, nor an associate, execute an own account transaction in any financial instrument included in a programme trade, unless they have notified the customer in advance that they may do this, or can otherwise demonstrate that they have provided fair treatment to the customer concerned.

        Added: April 2008

    • Records

      • BC-8.9.26

        Conventional bank licensees must keep a record of each step they undertake in relation to each transaction to demonstrate to the CBB compliance with Section BC-8.9.

        Added: April 2008