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  • Specific Conditions for Retail CIUs

    • CIU-1.5.17

      The assets of a Bahrain domiciled retail CIU must comprise only one or more of the following:

      (a) Securities traded on the licensed exchanges:
      i. Shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;
      ii. Bonds or other forms of securitised debt, sukuk including depositary receipts in respect of such securities; and
      iii. Any other securities, including accepted crypto-assets traded actively on recognised exchanges (to be demonstrated to the CBB by the CIU operator) giving the right to acquire or sell any such securities or giving rise to a cash settlement determined by reference to such securities, currencies, interest rates or yields, commodities or other indices or measures.
      (b) Money market instruments listed on a regulated market;
      (c) Sovereign securities such as treasury bonds and sukuk;
      (d) Units of other Bahrain domiciled CIUs or overseas domiciled retail CIUs investing in liquid investments;
      (e) Bank deposits which are repayable on demand or maturing in no more than 12 months;
      (f) Financial derivative instruments, including equivalent cash- settled instruments, listed on a regulated market;
      (g) Over the Counter (OTC) financial derivative provided that
      i. The underlying consists of instruments such as financial indices, interest rates, foreign exchange rates or currencies, in which the retail CIU may invest according to its investment objectives;
      ii. The counterparties to OTC derivative transactions are institutions subject to prudential supervision; and
      iii. The OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the operator’s initiative.
      (h) Real estate in the case of Real Estate Investments Trusts (REITS) provided they are established under the Trust Law and meet the following conditions:
      i. Unless otherwise agreed with the CBB, the REIT must hold a minimum of 2 real estate properties, comprising of at least 80% of the REIT’s NAV;
      ii. A maximum of 20% of the REIT’s NAV may be invested in the development of existing owned property;
      iii. A maximum of 20% of the REIT’s NAV may be invested in other REITs, subject to 10% investment per REIT;
      iv. Other assets of the REIT must be held in cash and cash equivalents;
      v. Invest in undeveloped land and mortgages is not permitted; and
      vi. leverage is limited to a maximum of 50% of its NAV for investment purposes.
      Added: April 2022

    • CIU-1.5.18

      The principal focus of retail CIUs is portfolio diversification and liquidity and as such the investments of a Bahrain domiciled retail CIUs must adhere to prudent limits and standards governing investment portfolio composition, liquidity and risk management. Such limits and standards must be disclosed in the offering documents. The risk management measures must include:

      (a) investment policy on avoidance of excessive risk, for example significant exposure to derivatives, indices or other complex financial instruments;
      (b) avoidance of excessive leverage and single exposure concentrations including for cash with banks; and
      (c) maintenance of adequate cash and liquid funds to meet redemption and distribution needs.
      Added: April 2022

    • CIU-1.5.19

      Bahrain domiciled Exchange Traded Funds (ETFs) are subject to requirements applicable to Bahrain domiciled retail CIUs.

      Added: October 2022