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  • BC-8.13 BC-8.13 Appendix

    • BC-8.13.1

      The minimum information that should be contained in promotional material for specific products includes:

      (a) The name of the conventional bank licensee communicating the promotional material;
      (b) The conventional bank licensee’s Category of license;
      (c) The conventional bank licensee’s address;
      (d) A description of the main characteristics of the financial instrument involved or service offered;
      (e) Suitable warning regarding the risks of the financial instrument involved and/or service offered; and
      (f) A clear statement indicating that, if a retail customer (as defined in Section BC-8.4) is in any doubt about the suitability of the agreement which is the subject of the promotion, he should consult his own financial adviser, or else the conventional bank licensee.

      Added: April 2008

    • BC-8.13.2

      The minimum information that should be contained in the terms of business includes:

      (a) The regulatory status of the conventional bank licensee;
      (b) A statement that the licensee is bound by the CBB's regulation and licensing conditions;
      (c) The licensee's name, address, e-mail and telephone number;
      (d) A statement of the products and services provided by the licensee, as permitted by the CBB;
      (e) The total price to be paid by the customer to the conventional bank licensee for its services, or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the customer to verify it;
      (f) Information on any rights the parties may have to terminate the contract early or unilaterally under its terms, including any penalties imposed by the contract in such cases;
      (g) Where appropriate, the customer's investment objectives;
      (h) Where appropriate, the extent to which the conventional bank licensee will consider the customers' personal circumstances when considering suitability (as required under Section BC-8.7) and the details of such matters that will be taken into account;
      (i) Any conflict of interest disclosure as required by Section BC-8.12;
      (j) Any disclosure of soft dollar agreements under Section BC-8.12;
      (k) A statement that clearly indicates the following:
      (i) The customer's right to obtain copies of records relating to his business with the licensee;
      (ii) The customer's record will be kept for 5 years or as otherwise required by Bahrain Law; and
      (l) The name and job title, address and telephone number of the person in the conventional bank licensee to whom any complaint should be addressed (in writing) by the customer.
      Added: April 2008

    • BC-8.13.3

      The minimum information that should be contained in a notice in relation to a warrant includes:
      "A warrant is a time-limited right to subscribe for shares or debentures and is exercisable against the original issuer of the underlying securities. A relatively small movement in the price of the underlying security results in a disproportionately large movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile. It is essential for anyone who is considering purchasing warrants to understand that the right to subscribe which a warrant confers is invariably limited in time, with the consequence that if the investor fails to exercise this right within the predetermined time-scale then the investment becomes worthless. You should not buy a warrant unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges."

      Added: April 2008

    • BC-8.13.4

      The minimum information that should be contained in a notice in relation to a futures transaction includes:
      "Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle the position with cash. They carry a high degree of risk. The 'gearing' or 'leverage' often obtainable in futures trading means that a small deposit or down payment can lead to large losses as well as gains. It also means that a relatively small movement can lead to a proportionately much larger movement in the value of your investment, and this can work against you as well as for you. Futures transactions have a contingent liability, and you should be aware of the implications of this, in particular the margining requirements."

      Added: April 2008

    • BC-8.13.5

      The minimum information that should be contained in a notice in relation to a purchased option includes:
      "Buying options: buying options involves less risk than selling options because, if the price of the underlying asset moves against you, you can simply allow the option to lapse. The maximum loss is limited to the premium, plus any commission or other transaction charges. However, if you buy a call option on a futures contract and you later exercise the option, you will acquire the future. This will expose you to the risks associated with 'futures' and 'contingent liability investment transactions'."

      Added: April 2008

    • BC-8.13.6

      The minimum information that should be contained in a notice in relation to a written option includes:
      "Writing options: if you write an option, the risk involved is considerably greater than buying options. You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying asset which you have contracted to sell (when the options will be known as 'covered call options') the risk is reduced. If you do not own the underlying asset ('uncovered call options') the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure."

      Added: April 2008

    • BC-8.13.7

      The minimum information that should be included in a transaction confirmation includes:

      (a) The conventional bank licensee’s name and address;
      (b) Whether the conventional bank licensee executed the transaction as principal or agent;
      (c) The customer’s name, account number or other identifier;
      (d) Where relevant, a description of the collective investment undertaking or fund, including the amount invested or number of units involved;
      (e) Whether the transaction was a sale or purchase;
      (f) The price or unit price at which the transaction was executed;
      (g) If applicable, a statement that the transaction was executed on an execution only basis;
      (h) The date and time of the transaction or a statement that the time of execution will be provided on request;
      (i) Due date and procedure for settlement of transaction and the bank account;
      (j) The amount the conventional bank licensee charges in connection with the transaction, including commission charges and the amount of any mark-up or mark-down, fees, taxes or duties;
      (k) The amount or basis of any charges shared with another person or statement that this will be made available on request;
      (l) For collective investment undertakings, a statement that the price at which the transaction has been executed is on a historic price or forward price basis, as the case may be;
      (m) The regulated market on which the transaction was carried out or the fact that the transaction was undertaken outside a regulated market; and
      (n) Whether the retail customer’s counterparty was the conventional bank licensee itself or any other person in the conventional bank group.

      Added: April 2008

    • BC-8.13.8

      The minimum information that should be included in a periodic statement includes:

      (a) The number, description and value of each financial instrument;
      (b) The amount of cash held;
      (c) The total value of the portfolio; and
      (d) A statement as to the basis on which the value of each financial instrument was calculated.

      Added: April 2008

    • BC-8.13.9

      The minimum information that should be included in a periodic statement, where the relationship includes portfolio management, includes:

      (a) A statement of which financial instruments, if any, were at the closing date loaned to any third party and which financial instruments, if any, were at that date charged to secure borrowings made on behalf of the portfolio;
      (b) The aggregate of any interest payments made and income received during the account period in respect of loans or borrowings made during that period;
      (c) A management report on the strategy implemented (provided at least yearly);
      (d) Total amount of fees and charges incurred during the period and an indication of their nature;
      (e) Information on any remuneration received from a third party and details of calculation basis;
      (f) Total amount of dividends, interest and other payments received during the period in relation to the customers’ portfolio;
      (g) Details of each transaction which have been entered into for the portfolio during the period;
      (h) The aggregate of money and details of all financial instruments transferred into and out of the portfolio during the period;
      (i) The aggregate of any interest payments, including the dates of their application and dividends or other benefits received by the conventional bank licensee from the portfolio for its own account during that period;
      (j) A statement of the aggregate charges of the conventional bank licensee and its associates; and
      (k) A statement of the amount of any remuneration received by the conventional bank licensee or its associates or both from a third party.

      Added: April 2008

    • BC-8.13.10

      The minimum information that should be included in periodic statements, where the relationship includes contingent liability investment transactions, includes:

      (a) The aggregate of money transferred into and out of the portfolio during the valuation period;
      (b) In relation to each open position in the account at the end of the account period, the unrealised profit or loss to the customer (before deducting or adding any commission which would be payable on closing out);
      (c) In relation to each transaction executed during the account period to close out a customer’s position, the resulting profit or loss to the customer after deducting or adding any commission;
      (d) The aggregate of each of the following in, or relating to, the customer’s portfolio at the close of business on the valuation date:
      (i) Cash;
      (ii) Collateral value;
      (iii) Management fees; and
      (iv) Commissions;
      (e) Option account valuations in respect of each open option contained in the account on the valuation date stating:
      (i) The share, or future or other financial instrument involved;
      (ii) The trade price and date for the opening transaction, unless the valuation statement follows the statement for the period in which the option was opened;
      (iii) The market price of the contract; and
      (iv) The exercise price of the contract.

      Added: April 2008

    • BC-8.13.11

      The minimum requirements that should be met where the conventional bank licensee prepares and publishes investment research include:

      (a) Analysts must not trade in securities or related derivatives ahead of publishing research on the issuer of these securities;
      (b) Analysts must not trade in securities or related derivatives of any issuer that they review in a manner contrary to their existing recommendations except in special circumstances subject to pre-approval by compliance or legal personnel;
      (c) Analysts must not accept inducements by issuers or others with a material interest in the subject matter of investment research; and
      (d) Conventional banks must not promise issuers favorable research coverage, specific ratings or specific target prices in return for a future or continued business relationship, service or investment.
      Amended: January 2011
      Added: April 2008

    • BC-8.13.12

      The minimum requirements that should be met where the conventional bank licensee has a soft dollar agreement under which it deals with customers include:

      (a) The percentage paid under soft dollar agreements of the total commission paid by or at the direction of:
      (i) The conventional bank licensee; and
      (ii) Any other member of the conventional bank licensee’s group which is a party to those agreements;
      (b) The value, on a cost price basis, of the goods and services received by the conventional bank licensee under soft dollar agreements, expressed as a percentage of the total commission paid by or at the direction of:
      (i) The conventional bank licensee; or
      (ii) Other members of the conventional bank licensee’s group;
      (c) A summary of the nature of the goods and services received by the conventional bank licensee under the soft dollar agreements; and
      (d) The total commission paid from the portfolio of that customer.

      Added: April 2008