Introduction
UG UG User's Guide
UG-A UG-A Introduction
UG-A.1 UG-A.1 Purpose
Executive Summary
UG-A.1.1
The Central Bank of Bahrain ("the CBB"), in its capacity as the regulatory and supervisory authority for all financial institutions in Bahrain, issues regulatory instruments that licensees and other specified persons are legally obliged to comply with. These regulatory instruments are contained in the CBB Rulebook. Much of the Rulebook’s substantive content was previously issued by the Bahrain Monetary Agency (‘the BMA’), and was carried forward when the CBB replaced the BMA in September 2006.
Amended: January 2007UG-A.1.2
The Rulebook is divided into 7 Volumes, covering different areas of financial services activity. These Volumes are being progressively issued. Volumes 1 and 2, covering
conventional bank licensees andIslamic bank licensees respectively, were issued in July 2004 and January 2005; Volume 3, coveringinsurance licensees , was issued in April 2005. This Volume (Volume 4), was issued in April 2006. Volume 5 (coveringspecialised licensees ), and Volume 6 (capital markets) are being issued progressively. Volume 7 on collective investment undertakings (CIUs) was issued in May 2012.Amended: July 2012
Amended: January 2008
Amended: January 2007UG-A.1.3
This User's Guide provides guidance on (i) the status and application of the Rulebook, with specific reference to Volume 4 (Investment Business); (ii) the structure and design of the Rulebook; and (iii) its maintenance and version control.
Amended: January 2007UG-A.1.4
Volume 4 (Investment Business) covers
investment firm licensees , i.e. those CBB licensees that solely undertakeregulated investment services . It contains prudential requirements (such as rules on minimum capital and risk management); and conduct of business requirements (such as rules on the giving of investment advice and the treatment ofclient money ). Collectively, these requirements are aimed at ensuring the safety and soundness of CBB-licensed investment firms, and providing an appropriate level of protection to the clients of such firms.Amended: January 2007
Amended: January 2008UG-A.1.5
For the sake of clarity, Volume 4 (Investment Business) does not cover requirements that are generally applicable to participants in Bahrain's capital markets, irrespective of whether they are a CBB licensee or not, such as disclosure standards with regards to the issuance of securities or rules against insider trading or other forms of market abuse. Nor does it cover requirements applicable to recognised exchanges (such as the Bahrain Stock Exchange) and their related infrastructure (such as central clearing and depository systems), or the membership rules applicable to members of such exchanges. These other requirements are currently issued separately, in the form of individual instruments issued by the CBB's Capital Markets Supervision Directorate, and the Bahrain Stock Exchange; those issued by the CBB’s Capital Markets Supervision Directorate will be re-issued in 2007/08 as Volume 6 of the CBB Rulebook (see Paragraph UG-A.1.2 above).
Amended: January 2007Legal Basis
UG-A.1.6
This Module contains the CBB's Directive (as amended from time to time) regarding the User's Guide for Volume 4 of the CBB Rulebook, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all
investment firm licensees .Amended: January 2011
Amended: January 2008
Added: January 2007UG-A.1.7
For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.
Added: January 2007UG-A.2 UG-A.2 Module History
Evolution of Module
UG-A.2.1
This Module was first issued in April 2006 by the BMA, as part of the first phase of Volume 4 (Investment Business) to be released. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.
Amended: January 2007UG-A.2.2
When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 4 was updated in July 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.
Added: January 2007UG-A.2.3
A list of recent changes made to this Module is provided below:
Module Ref. Change Date Description of Changes UG-A.1 07/2007 Updated to reflect new CBB Law: various references changed and new Rule A.1.6 introduced categorising this Module as a Directive. UG-1.2 07/2007 New Rules UG-1.2.6 and UG-1.2.7 to reflect the CBB Law; other material reordered as a consequence. UG-A.1.6 01/2008 Corrected that this Module applies only to investment firm licensees (including their approved persons). UG-3.2.1 01/2008 Updated CBB policy re distribution of hard copies of Volumes of Rulebook. Order Form 01/2008 Amended Order Form to reflect new policy re hard copy availability. UG-A.1.6 01/2011 Clarified legal basis. UG-2.1.2 01/2011 Updated to reflect structure of Volume 5. UG-A.1.2, UG-1.2.1 and UG-2.1 07/2012 Various minor corrections to reflect structure of Rulebook, including issuance of Volume 7. UG-1.2.1, UG-1.2.7, UG-2.1.2, UG-2.1.3 and UG-2.2.2 10/2012 Various minor amendments. UG-3.2 and Annex 01/2013 Amended as CBB Rulebook only now available on CBB Website. UG-1.3.4 10/2016 Add section to clarify reference to 'he' 'his' 'she' and 'her'. UG-3.2.2 04/2020 Amended Paragraph. Superseded Requirements
UG-A.2.3
Deleted: January 2007UG-A.2.4
Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Module ES (Executive Summary).
UG-1 UG-1 Rulebook Status and Application
UG-1.1 UG-1.1 Legal Basis
General
UG-1.1.1
Volume 4 (Investment Business) of the CBB Rulebook is issued by the CBB pursuant to the Central Bank of Bahrain and Financial Institutions Law 2006 (‘the CBB Law’). The CBB Law provides for two formal rulemaking instruments: Regulations (made pursuant to Article 37) and Directives (made pursuant to Article 38). Other articles in the CBB Law also prescribe various specific requirements (for example, requirements relating to licensing (Articles 44 to 49), or the notification and approval of controllers of licensees (Articles 52 to 56)).
Amended: January 2007UG-1.1.2
The Purpose Section of each Module specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module’s requirements.
Amended: January 2007UG-1.1.3
Investment firm licensees that are members of the Bahrain Stock Exchange are reminded that they are also subject to the membership and operating rules of that exchange. These rules are issued by the Bahrain Stock Exchange under powers given the Exchange under the Bahrain Stock Exchange Law, Decree No. 4 of 1987 (as amended by Decree No. 21 of 2002). These rules are additional to the requirements contained in Volume 4 (Investment Business).Amended: January 2007CBB's Rulemaking Instruments
UG-1.1.4
Regulations are made pursuant to Article 37 of the CBB Law. These instruments have general application throughout the Kingdom and bind all persons ordinarily affected by Bahraini legislative measures (i.e. residents and/or Bahraini persons wherever situated).
Added: January 2007UG-1.1.5
Because Regulations have wide general application, they are subject to two important safeguards: (i) the CBB is under a duty to consult with interested parties and to review and consider their comments; and (ii) the finalised Regulations only become effective after they are published in the Official Gazette.
Added: January 2007UG-1.1.6
Directives are made pursuant to Article 38 of the CBB Law. These instruments do not have general application in the Kingdom, but are rather addressed to specific
licensees (or categories oflicensees ),approved persons orregistered persons . Directives are binding on those to whom they are addressed.Added: January 2007UG-1.1.7
Unlike Regulations, there is no duty on the CBB to either consult with addressees or publicise a Directive by publishing it in the Official Gazette (save that an addressee must obviously have actual or constructive notice of a Directive). However, as a matter of general policy, the CBB also consults on Rulebook content issued by way of a Directive.
Added: January 2007UG-1.1.8
All of the content of the CBB Rulebook has the legal status of at least a Directive, issued pursuant to Article 38 of the CBB Law. Certain of the requirements contained in the CBB Rulebook may also have the status of a Regulation, in which case they are also separately issued pursuant to Article 37 of the CBB Law and published in the Official Gazette. Where this is the case, then the Rulebook cross-refers to the Regulation in question and specifies the requirements concerned.
Added: January 2007UG-1.1.9
In keeping with the nature of these regulatory instruments, Regulations are used to supplement the CBB Rulebook, either where explicitly required under the CBB Law, or where a particular requirement needs to have general applicability, in addition to being applied to
licensees ,approved persons orregistered persons .Added: January 2007UG-1.2 UG-1.2 Status of Provisions
UG-1.2.1
The contents of the CBB Rulebook are categorised either as Rules or as Guidance. Rules have a binding effect. If a licensee breaches a Rule to which it is subject, it is liable to enforcement action by the CBB and, in certain cases, criminal proceedings by the Office of the Public Prosecution.
Amended: October 2012
Amended: July 2012
Amended: January 2007UG-1.2.2
Where relevant, compliance with Guidance will generally lead the CBB to assess that the rule(s) to which the Guidance relates has been complied with. Conversely, failure to comply with Guidance will generally be viewed by the CBB as tending to suggest breach of a Rule.
Amended: January 2007UG-1.2.3
The categorisation of each Paragraph within the Rulebook is identified by its text format, as follows:
• Rules are in bold, font size 12. The Paragraph reference number is also highlighted in a coloured box.• Guidance is in normal type, font size 11.Amended: January 2007UG-1.2.4
Where there are differences of interpretation over the meaning of a Rule or Guidance, the CBB reserves the right to apply its own interpretation.
Amended: January 2007UG-1.2.5
Rule UG-1.2.4 does not prejudice the rights of an authorised person to make a judicial appeal, should it believe that the CBB is acting unreasonably or beyond its legal powers.
Amended: January 2007UG-1.2.6
All Rulebook content has the formal status of at least a Directive. Some Rulebook content may also have the status of Regulations. Rulebook content that is categorised as a Rule is therefore legally mandatory and must be complied with by those to whom the content is addressed.
Amended: January 2007UG-1.2.7
[This Paragraph was deleted in October 2012].
Deleted: October 2012UG-1.2.8
The CBB’s enforcement powers and processes are set out in Module EN.
Amended: January 2007UG-1.3 UG-1.3 Application
UG-1.3.1
Volume 4 of the CBB Rulebook for the most part applies only to
investment firm licensees , and to individuals undertaking key functions in those licensees (so-called 'approved persons '). (Representative offices are subject to the relevant requirements in Volume 5 of the CBB Rulebook.) Most of the content of Volume 4 therefore only has the formal status of a Directive.Amended: January 2007
Amended: January 2008UG-1.3.2
A few Rules and Guidance have general applicability (and thus also have the formal status of a Regulation): for instance, no one may carry on investment business within or from Bahrain without the appropriate license, and
controllers ofinvestment firm licensees are also subject to various requirements.Amended: January 2007
Amended: January 2008UG-1.3.3
Each Module in Volume 4 (except those listed under the 'Introduction' and 'Sector Guides' headings) contains a Scope of Application Chapter, setting out which Rules and Guidance apply to which particular type of
investment firm licensee or person, for the Module concerned. In addition, each Rule (or Section containing a series of Rules) is drafted such that its application is clearly highlighted for the user. Finally, each Module, in its Purpose Section, specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module’s requirements.Amended: January 2007UG-1.3.4
All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.
Added: October 2016UG-1.4 UG-1.4 Effective Date
UG-1.4.1
Volume 4 (Investment Business) of the CBB Rulebook was first issued in April 2006. Its contents have immediate effect, subject to any specific transition arrangements that may be specified.
Amended: January 2007UG-1.4.2
Module ES (Executive Summary) contains details of the implementation and transition arrangements for Volume 4 (Investment Business).
UG-2 UG-2 Rulebook Structure and Format
UG-2.1 UG-2.1 Rulebook Structure
Rulebook Volumes
UG-2.1.1
The Rulebook is divided into 7 Volumes, covering different areas of financial services activity, as follows:
Volume 1 Conventional BanksVolume 2 Islamic BanksVolume 3 InsuranceVolume 4 Investment BusinessVolume 5 Specialised ActivitiesVolume 6 Capital MarketsVolume 7 Collective Investment UndertakingsAmended: July 2012
Amended: January 2007UG-2.1.2
Volume 5 (Specialised Activities), covers
money changers ;financing companies ;representative offices ;administrators ;trust service providers ,micro-finance institutions and ancillary services providers.Amended: October 2012
Amended: January 2011
Amended: January 2008Rulebook Contents (Overview)
UG-2.1.3
Except for Volumes 5, 6 and 7, the basic structure of each Rulebook is the same. Each Volume starts with a contents page and an introduction containing a User's Guide and Executive Summary. Subsequent material is organised underneath the following headings:
(a) High-level Standards;(b) Business Standards;(c) Reporting Requirements;(d) Enforcement and Redress; and, where appropriate,(e) Sector Guides.Amended: October 2012
Amended: July 2012
Amended: January 2008
Amended: January 2007UG-2.1.4
Volume 5 is organised by the Category of specialised firm concerned, whilst Volume 6 by subject area (authorised exchanges; issuers of securities etc).
Amended: January 2007UG-2.1.5
The material in Volumes 1–4 is contained in Modules, each covering a specific area of requirements (e.g. capital). In turn, each Module is divided into Chapters, Sections and Paragraphs, as detailed below.
UG-2.1.6
Each Volume has its own appendix Volume containing relevant reporting and authorisation forms; a glossary; and any supplementary information. In all cases, the main Volume is called "Part A" and the appendix Volume is called "Part B".
UG-2.2 UG-2.2 Volume Structure
Modules
UG-2.2.1
Rulebook Volumes are subdivided into Modules, arranged in groups according to their subject matter, underneath the headings listed in Paragraph UG-2.1.3 above.
UG-2.2.2
Each Module in a Volume is referenced using a two-or three-letter code, which is usually a contraction or abbreviation of its title. These codes are used for cross-referencing within the text.
Amended: October 2012Chapters
UG-2.2.3
Each Module consists of Chapters, categorised into two types:
• Standard introductory Chapters (referenced with a letter: e.g. UG-A); andUG-2.2.4
The introductory Chapters summarise the purpose of the Module, its history (in terms of changes made to its contents) and, where relevant, lists previously issued circulars and regulations that were replaced by the Rulebook Module. A separate introductory Chapter also prescribes the scope of application of the Module's requirements.
Amended: January 2007Sections and Paragraphs
UG-2.2.5
Chapters are further sub-divided into Sections: these extend the Chapter numbering (e.g. FC-1.1, FC-1.2, FC-1.3 etc). In turn, Sections are sub-divided into Paragraphs; these extend the Chapter and Section numbering (e.g. FC-1.1.1, FC-1.1.2, FC-1.1.3 etc.). Where appropriate, sub-section headings may be used, to guide the reader through a Section; sub-Section headings are italicised and unnumbered, and act purely as an indicator (without limitation) as to the contents of the Paragraphs that follow.
Amended: January 2007Table of Contents
UG-2.2.6
Each Volume's contents page lists all the Modules contained within it (Part A) and the information contained in the relevant appendix Volume (Part B).
UG-2.2.7
The contents page of each Module lists the Chapters and Sections it contains, and the latest version date of each Section in issue.
Amended: January 2007UG-2.3 UG-2.3 Format and Page Layout
Headers
UG-2.3.1
The top of each page in the Rulebook identifies the Volume, Module and Chapter in question.
Footers
UG-2.3.2
The bottom of each page in the Rulebook (on the left hand side) identifies the Module in question, its section and page number. Page numbering starts afresh for each Section: the total number of pages in each Section is shown as well as the individual page number. The bottom right hand side shows an end-calendar quarter issue date. The contents page for each Module, and each Section in a Module, are each given their own issue date. In addition, the Module contents page lists the latest issue date for each Section in that Module. The contents page thus acts as a summary checklist of the current issue date in force for each Section. Further explanation is provided in Section UG-3.1 below.
Defined terms
UG-2.3.3
Defined terms used in the Rulebook are underlined. Each Volume has its own glossary listing defined terms and giving their meaning. Definitions of terms used apply only to the Volume in question. It is possible for the same term to be used in a different Volume with a different meaning.
Cross-references
UG-2.3.4
Any cross-references given in a text state the Module code, followed (where appropriate) by the numbering convention for any particular chapter, section or paragraph being referred to. For example, the cross-reference FC-1.2.3 refers to the third Paragraph in the second Section of the first Chapter of the Financial Crime Module. Many references will be quite general, referring simply to a particular Module, Chapter or Section, rather than a specific Paragraph.
Text format
UG-2.3.5
Each Paragraph is assigned a complete reference to the Module, Chapter, and Section, as well as its own paragraph number, as explained in Paragraph UG-2.3.4 above. The format of the Paragraph reference and text indicates its status as either a Rule or Guidance, as explained in Paragraph UG-1.2.4 above.
UG-2.3.6
When cross-referring to specific Paragraphs, and it is important to make clear the status of the Paragraph in question as a Rule or Guidance, then the words 'Rule' or 'Guidance' may be used instead of 'Paragraph', followed by the reference number (e.g. 'As required by Rule FC-1.1.1, licensees must...').
Amended: January 2007UG-3 UG-3 Rulebook Maintenance and Access
UG-3.1 UG-3.1 Rulebook Maintenance
Quarterly Updates
UG-3.1.1
Any changes to the Rulebook are generally made on a quarterly cycle (the only exception being when changes are urgently required), in early January, April, July and October. When changes are made to a Module, the amended Sections are given a new version date, in the bottom right-hand page.
Amended: January 2007UG-3.1.2
The contents page for each amended Module is also updated: the table of contents is changed to show the new version date for each amended Section (in the ‘Date Last Changed’ column), and the contents page itself is also given its own new version date in the bottom right-hand corner. The Module contents pages thus act as a checklist for hard-copy users to verify which are the current version dates for each Section in that Module.
Amended: January 2007UG-3.1.3
A summary of any changes made to a Module is included in the Module History section of each Module. The table summarises the nature of the change made, the date of the change, and the Module components and relevant pages affected. The Module History can thus be used to identify which pages were updated within individual Sections.
UG-3.1.4
Hard-copy users of the CBB Rulebook can check that they have the latest copy of each Module’s contents pages, by referring to the overall table of contents for each Volume. The Volume table of contents lists the date each Module was last changed; users can use this table to check the date showing in the bottom right-hand corner of each Module’s contents page.
Amended: January 2007UG-3.1.5
The website version of the Rulebook acts at all times as the definitive version of the Rulebook. Any changes are automatically posted to the CBB website, together with a summary of those changes. Licensees are in addition e-mailed every quarter, to notify them of any changes (if any). Hard-copy users are invited to print off the updated pages from the website to incorporate in their Rulebook in order to keep it current.
Amended: January 2007Changes to Numbering
UG-3.1.6
In order to limit the knock-on impact of inserting or deleting text on the numbering of text that follows the change, the following conventions apply:
(a) Where a new Paragraph is to be included in a Section, such that it would impact the numbering of existing text that would follow it, the Paragraph retains the numbering of the existing Paragraph immediately preceding it, but with the addition of an 'A'; a second inserted Paragraph that follows immediately afterwards would be numbered with a 'B', and so on.
For example, if a new Paragraph needs to be inserted after UG-3.1.6, it would be numbered UG-3.1.6A; a second new Paragraph would be numbered UG-3.1.6B, and so on. This convention avoids the need for renumbering existing text that follows an insertion. The same principle is applied where a new Section or a new Chapter needs to be inserted: for example, UG-3.1A (for a new Section), and UG-3A (for a new Chapter).(b) Where a Paragraph is deleted, then the numbering of the old Paragraph is retained, and the following inserted in square brackets: '[This Paragraph was deleted in April 2006.]' (The date given being the actual end-calendar quarter date of the deletion.) The same principle is applied with respect to Sections and Chapters.Amended: January 2007UG-3.1.7
Where many such changes have built up over time, then the CBB may reissue the whole Section, Paragraph, Chapter or even Module concerned, consolidating all these changes.
Amended: January 2007UG-3.2 UG-3.2 Rulebook Access
Availability
UG-3.2.1
The Rulebook is available on the CBB website.
Amended: January 2013
Amended: January 2008
Amended: January 2007Queries
UG-3.2.2
Questions regarding the administration of the Rulebook (e.g. website availability, the updating of material etc) should be addressed to the Rulebook Section of the Regulatory Policy Unit:
Rulebook Section
Regulatory Policy Unit
Central Bank of Bahrain
P.O. Box 27
Manama
Kingdom of Bahrain
Tel: +973-17 547 413
Fax: +973-17 530 228
E-mail: rulebook@cbb.gov.bh
Web: www.cbb.gov.bhQuestions regarding interpretation of the policy and requirements contained in the Rulebook should be addressed to the licensee's regular supervisory point of contact within the CBB.
Amended: April 2020
Amended: January 2013
Amended: January 2007CBB Rulebook Order Form [This form was deleted in January 2013]
Deleted: January 2013ES ES Executive Summary
ES-A ES-A Introduction
ES-A.1 ES-A.1 Purpose
Executive Summary
ES-A.1.1
The purpose of this Module is to:
(a) Provide an overview of the structure of Volume 4 (Investment Business);(b) Provide a summary of each Module; and(c) Outline the transition rules for the implementation of Volume 4.Amended: January 2007ES-A.1.2
The Central Bank of Bahrain ('CBB'), in its capacity as the regulatory and supervisory authority for all financial institutions in Bahrain, has as its mission:
(a) To ensure monetary and financial stability in the Kingdom of Bahrain; and(b) To regulate, develop and maintain confidence in the financial sector.Amended: January 2007ES-A.1.3
As the single regulator, the CBB ensures the consistent application of regulatory standards in banking, insurance and capital markets, as well as encourages an open and cooperative approach in dealing with financial institutions.
Amended: January 2007ES-A.1.4
The supervision of the investment business sector in the Kingdom pays particular regard to the standards set by the International Organisation of Securities Commissions (IOSCO). The CBB plays an important role in meeting stakeholders' expectations — the principal stakeholders of the CBB are the Government of the Kingdom of Bahrain, regulated financial institutions, their clients, IOSCO and other relevant international organisations.
Amended: January 2007ES-A.1.5
To carry out its responsibilities in relation to the investment business sector, the CBB has four supervisory objectives, namely to:
(a) Promote the stability and soundness of the sector;(b) Provide an appropriate degree of protection to investors and clients ofinvestment firms ;(c) Promote transparency and market discipline; and(d) Reduce the likelihood ofinvestment firms being used for financial crime (including money laundering activities).Amended: January 2007Legal Basis
ES-A.1.6
This Module contains the CBB's Directive (as amended from time to time) relating to transition rules and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all
investment firm licensees (including theirapproved persons ).Amended: January 2011
Amended: October 2009
Amended: January 2007ES-A.1.7
For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.
Added: January 2007ES-A.2 ES-A.2 Module History
Evolution of Module
ES-A.2.1
This Module was first issued in April 2006 by the BMA, as part of the first phase of Volume 4 (Investment Business). Any material changes that have subsequently been made to this Module are annotated with the end calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.
Amended: January 2007ES-A.2.2
When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 4 was updated in July 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued for Module ES where the update necessitated changes to substance (as opposed to merely updating 'BMA' to 'CBB', and similar references).
Added: January 2007ES-A.2.3
A list of recent changes made to this Module is provided below:
Module Ref. Change Date Description of Changes ES-A.1 07/2007 New Rule ES-A.1.6 introduced, categorising this Module as a Directive. ES-1.2 07/2007 Text amended to reflect changes to Module UG. ES-1.3 07/2007 Text amended to reflect changes to Module AU. ES-1.4 07/2007 Text amended to reflect changes to Module PB. ES-1.5 07/2007 Updated to reflect issue of Module HC in July 2007. ES-1.11 07/2007 Updated to reflect issue of Module RM in July 2007. ES-1.15 07/2007 Updated to reflect issue of Module BR in July 2007. ES-2.1, ES-2.3 &
ES-2.407/2007 Changes to reflect slight delay in release of Phase 2 contents of Volume 4: implementation deadline for Modules HC, RM and BR — released in July 2007 — now set as 1 January 2008. ES-2.4.1A 07/2008 Further transition period granted for requirements of Chapter BR-1, Prudential Reporting. ES-A.1.6 10/2009 Reference to registered administrators removed. ES-1.1.1 10/2009 Reference to administrator removed. ES-1.1.5 10/2009 Updated to reflect issue of Modules. ES-1.3 10/2009 Updated to reflect changes to Module AU. ES-1.3.9 10/2009 Reference to registration of administrators removed. ES-1.8 10/2009 Updated to reflect changes to Module CA. ES-2.4.1A 10/2009 Updated to reflect issue of Form QPR. ES-1.1, ES-1.3, ES-1.5.3, ES-1.6.1, ES-1.7, ES-1.15-3, ES-2.2.7, ES-2.3.2 07/2010 Updated and corrected typos. ES-1.13 07/2010 Updated to reflect the issuance of Module TC ES-2.5 07/2010 New section added to reflect transition rules for Module TC. ES-A.1.6 01/2011 Clarified legal basis. ES-1.5 04/2011 Amended to reflect new structure of Module HC. ES-1.6.1 01/2012 Deleted reference to reporting accountants to be in line with October 2011 amendment. ES-1.6.3 01/2012 Deleted reference to Module FC. ES-1.14 01/2012 Deleted Section on Module GS (Group Supervision). ES-1.18 01/2012 This Section was deleted as it is included in Chapter BC-3. ES-2.6 01/2012 Added Section on transitional Rules for Section BC-3 dealing with customer complaints procedures. ES-1.3.6 10/2013 Removed reference to Deputy Money Laundering Officer to be aligned with the Rule under Paragraph AU-1.2.2 that was amended in January 2011. ES-1.7.1, ES-1.13.1 and ES-2.5.2 10/2013 Removed reference to appointed representatives. ES-1.8.5 10/2014 Added new guidance for capital for underwriting purposes. Superseded Requirements
ES-A.2.4
This Module does not supersede any previously issued circulars or other regulatory instruments.
Amended: January 2007ES-A.2.5
Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Chapter ES-2.
Amended: January 2007ES-1 ES-1 Structure and Summary of Volume 4
ES-1.1 ES-1.1 Structure of Volume 4 (Investment Business)
ES-1.1.1
Volume 4 of the Rulebook covers the investment business sector, i.e. the provision of
regulated investment services byinvestment firm licensees . It also includes requirements regardingapproved persons .Amended: October 2009ES-1.1.2
Volume 4 excludes representative offices of
overseas investment firm licensee , andancillary services providers : these activities are covered by separate regulations (see AU-A.1.11 and AU-A.1.12). These regulations will later be incorporated into Volume 5 (Specialised Activities) of the CBB Rulebook, to be released later.Amended: July 2010
Amended: January 2007ES-1.1.3
Volume 4 is made up of two volumes: Part A is the main Volume (comprising a range of Modules that contains all applicable Rules and Guidance), whilst Part B is an appendix Volume (containing a glossary of defined terms, CBB authorisation forms, CBB reporting forms and supplementary information).
Amended: July 2010
Amended: January 2007ES-1.1.4
Part A of Volume 4 is organised under the following headings:
• Introduction• High Level Standards• Business Standards• Reporting Requirements• Enforcement and Redress; and• Sector GuidesAmended: July 2010ES-1.1.5
Including this Executive Summary Module, there are plans to issue 23 Modules for inclusion in Part A of Volume 4 (Investment Business). It is planned to release Volume 4 in two phases: the first phase release was in April 2006, and comprised 11 Modules, including most of the key requirements. Remaining Modules will be issued later.
Amended: July 2010
Amended: October 2009
Amended: January 2007ES-1.1.6
Each Module covers a particular subject area — such as capital or conduct of business. The requirements are tailored according to the three categories of
investment firm licensee provided for under the authorisation rules, reflecting the different risk profiles of these categories. Sector Guide Modules, to be released as part of the second phase release, will summarise the key elements of the requirements for each of these 3 categories of investment firm, as well as summarise the additional requirements applicable to those investment firms operating purely on a Shari'a compliant basis.Amended: January 2007ES-1.1.7
Part B of Volume 4 is organised under the following headings:
• Glossary• Authorisation Forms• Reporting Forms• Supplementary InformationAmended: July 2010ES-1.1.8
Defined terms used in the Rulebook are underlined; their definitions can be found in the Glossary. Each Volume has its own Glossary, as definitions of terms used apply only to the Volume in question. It is possible for the same term to be used in a different Volume with a different meaning.
ES-1.1.9
There are three authorisation forms, comprising (i) Form 1 (application for a license); (ii) Form 2 (application for the authorisation of a
controller ); and (iii) Form 3 (application forapproved person status); and (iv) Form 4 (application for registration).Amended: January 2007ES-1.1.10
When completed, Volume 4 will also contain 4 reporting forms: (i) Form QPR (Quarterly Prudential Return); (ii) Form AGR (Annual Group Return); and (iii) Form STR (Suspicious Transaction Report) and (iv) Form ALF (Annual Licence Fee).
Amended: July 2007ES-1.1.11
Finally, space is provided in Part B of Volume 4 for any supplementary information that may be of use to users of the Rulebook. For the time being, Part B contains various additional documents relevant to the Financial Crime Module, notably a copy of Bahrain's anti-money laundering legislation (Amiri Decree Law No. 4 of 2001). It also includes information related to the Client Assets Module (CL) and Enforcement Module (EN).
Amended: July 2010ES-1.2 ES-1.2 Module UG (User's Guide)
ES-1.2.1
The User's Guide Module contains introductory material relevant to users of Volume 4. Specifically, it covers (i) the status and application of the Rulebook (with specific reference to Volume 4); (ii) the structure and design of the Rulebook; and (iii) its maintenance, version control and access. These topics are covered in Chapters UG-1 to UG-3 respectively.
ES-1.2.2
The Module contains mostly Guidance material — that is, material that is not binding on licensees, but instead simply helps inform particular Rules or provides other general information. Most of the Guidance material in Module UG consists of general information.
ES-1.2.3
The only Rules are contained in Sections UG-A.1, UG-1.2 and UG-1.4. Amongst other things, these specify that the Module has the legal status of a Directive, that Rules have a binding effect, and that the contents of Volume 4 apply from its date of issue in April 2006, subject to any transition arrangements specified in Module ES (see Chapter ES-2).
Amended: July 2007ES-1.3 ES-1.3 Module AU (Authorisation)
ES-1.3.1
Module AU covers (i) the licensing of persons undertaking
regulated investment services ; and (ii) the approval of persons undertakingcontrolled functions in licensees ('approved persons ').Amended: January 2007ES-1.3.2
The Module sets out when these two types of authorisation are required, and the associated authorisation conditions that have to be satisfied in order for authorisation to be granted.
Amended: January 2007ES-1.3.3
With respect to licensing, an
investment firm license is required by all persons undertaking, by way of business,regulated investment services within or from the Kingdom of Bahrain.Regulated investment services are fully defined in Section AU-1.4, but in summary they cover the following activities:(a) Dealing infinancial instruments as principal;(b) Dealing infinancial instruments as agent;(c) Arranging deals infinancial instruments ;(d) Managingfinancial instruments ;(e) Safeguardingfinancial instruments (i.e. acustodian );(f) Advising onfinancial instruments ; and(g) Operating acollective investment undertaking (i.e. anoperator ).Amended: January 2007ES-1.3.4
There are 3 categories of
investment firm license , determined by theregulated investment services undertaken.Category 1 investment firms may undertake allregulated investment services .Category 2 investment firms may undertake allregulated investment services , except the activity of dealing infinancial instruments as principal. Finally,Category 3 investment firms may only undertake the activities of arranging or advising onfinancial instruments . OnlyCategory 1 and 2 investment firms may holdclient assets .ES-1.3.5
A licensee may hold itself out as an
Islamic investment firm , but only if all its activities are Shari'a compliant. Islamic investment firms are required to comply with certain additional requirements, such as the need to appoint a Shari'a supervisory board.Amended: July 2007ES-1.3.6
Module AU also deals with the requirements and conditions for
approved persons , i.e. those wishing to undertake acontrolled function in aninvestment firm licensee .Controlled functions are those of:(a)Director ;(b)Chief Executive orgeneral manager ;(c)Head of function ;(d) Compliance officer;(e) Money Laundering Reporting Officer;(f) [This Subparagraph was deleted in October 2013];(g) Member of Shari'a Supervisory Board;(h)Financial instruments trader ; and(i)Investment consultant orinvestment adviser .Amended: October 2013
Amended: October 2009
January 2007ES-1.3.7
The conditions for authorisation of
approved persons are set out in Chapter AU-3.ES-1.3.8 [This Paragraph deleted 07/2007.]
Deleted: July 2007ES-1.3.9
The Module also outlines (in Chapter AU-5) the information requirements and procedures that must be followed as part of the process for:
(a) Licensing;(b)Approved persons .Amended: July 2010
Amended: October 2009
Amended: January 2007ES-1.3.10
Chapter AU-6 covers the license application fees as well as the annual license fees.
Added: July 2010ES-1.4 ES-1.4 Module PB (Principles of Business)
ES-1.4.1
The 10 Principles of Business covered in Module PB are a general statement of the fundamental obligations of all CBB
investment firm licensees andapproved persons . They have the status of Rules; and provide a basis for other, more detailed Rules elsewhere in Volume 4.Amended: January 2007ES-1.4.2
Principles 1 to 10 apply to activities carried out by
licensees , including activities carried out through overseas branches. Principles 1 to 8 also apply toapproved persons , in respect of thecontrolled functions for which they have been approved. Principles 9 and 10 also take into account any activities of other members of the group of which thelicensee is a member.Amended: January 2007Deleted: July 2007ES-1.4.3
The Principles of Business are:
Principle 1 — Integrity
Principle 2 — Conflicts of Interest
Principle 3 — Due Skill, Care and Diligence
Principle 4 — Confidentiality
Principle 5 — Market Conduct
Principle 6 — Customer Assets
Principle 7 — Customer Interests
Principle 8 — Relations with Regulators/Supervisors
Principle 9 — Adequate Resources
Principle 10 — Management, Systems and ControlsES-1.5 ES-1.5 Module HC (High-level Controls)
ES-1.5.1
Module HC outlines the requirements that must be met by
investment firm licensees with respect to:(a) Corporate governance principles issued by the Ministry of Industry and Commerce as The Corporate Governance Code; and(b) Related high-level controls and policies.Amended: April 2011
Amended: July 2007ES-1.5.1A
The Principles referred to in this Module are in line with the Principles relating to the Corporate Governance Code issued by the Ministry of Industry and Commerce.
Added: April 2011ES-1.5.2
The requirements distinguish between different Categories of
investment firm licensee . Because of their limited business activities, and consequent lesser risk to customers,Category 3 investment firms are subject to applicable Guidance Paragraphs included in Chapter HC-10.Amended: April 2011
Amended: July 2007ES-1.5.3
Module HC applies to
Bahraini investment firm licensees , including their overseas branches (where either the same or equivalent provisions to those in Module HC should apply).Overseas investment firm licensees must demonstrate that the same or equivalent arrangements are in place at the parent entity level, and that these arrangements provide for effective high-level controls over activities conducted in the Bahrain branch.Amended: April 2011
Amended: July 2010
Added: July 2007ES-1.6 ES-1.6 Module AA (Auditors and Auditing Standards)
ES-1.6.1
Module AA contains requirements regarding the appointment and functions of auditors of
investment firm licensees . It also contains requirements dealing with accounting standards to be applied byinvestment firm licensees .Amended: January 2012
Amended: July 2010
Amended: January 2007ES-1.6.2
The auditor requirements deal with:
(a) The appointment of auditors;(b) The removal and resignation of auditors;(c) Audit partner rotation;(d) Auditor independence; and(e) Restrictions on the relationship between a licensee and its auditor.Amended: January 2007ES-1.6.3
The Module also covers the CBB's requirements regarding access to auditors as well as auditors' access to outsourcing providers. In addition, the Module outlines requirements for licensees to arrange for their auditors to review their quarterly prudential returns, and compliance with Module CL (Client Assets).
Amended: January 2012
Amended: January 2007ES-1.7 ES-1.7 Module GR (General Requirements)
ES-1.7.1
Module GR covers requirements dealing with areas not covered in other Modules. The areas covered are:
(a) Books and records;(b) Corporate and trade names;(c) Dividends;(d) Business transfers;(e)Controllers ;(f)Close links ;(g) Cessation of business;(h) [This Subparagraph was deleted in October 2013]; and(i) Professional indemnity coverage.Amended: October 2013
Amended: July 2010
Amended: January 2007ES-1.7.2
The above requirements apply to all categories of investment firm licensee, except for the requirements related to the payment of dividends, which apply to
Category 1 investment firms andCategory 2 investment firms and the professional indemnity requirement, which applies toCategory 2 investment firms andCategory 3 investment firms only.Amended: July 2010ES-1.8 ES-1.8 Module CA (Capital Adequacy)
ES-1.8.1
Module CA contains requirements on the minimum levels of capital that must be held by
investment firm licensees , as well as what constitutes capital for regulatory purposes. These requirements are tailored to fit the different risk profiles of the different categories ofinvestment firm licensees . The requirements apply to bothBahraini investment firm licensees and overseasinvestment firm licensees (see Section CA-B.1)Amended: January 2007ES-1.8.2
Investment firm licensees are required to maintain theirregulatory capital in excess of theirregulatory capital requirements at all times. For Category 1 and 2 firms, theirregulatory capital requirement is the higher of theirMinimum Capital Requirement and theirRisk-based Capital Requirement . For Category 3 firms, theirregulatory capital requirement is simply theirMinimum Capital Requirement .Amended: October 2009ES-1.8.3
Minimum Capital Requirements are as follows:(a)Category 1 investment firms : BD 1,000,000(b)Category 2 investment firms : BD 1,000,000 if undertaking the activity of safeguardingfinancial instruments (i.e.custodian ), BD 250,000 in all other cases; and(c)Category 3 investment firms : BD 125,000.Amended: October 2009
July 2007ES-1.8.4
Risk-based Capital Requirements comprise the sum of a firm's Expenditure Requirement, Position Risk Requirement, Counterparty Risk Requirement and Foreign Exchange Risk Requirement. The actual amount of capital that is required to be held varies depending on the size of an institution's cost base and its various exposures. In practice, theRisk Based Capital Requirement ofCategory 2 investment firms , because they are not allowed to deal infinancial instruments as principal (and thus incur position risk), would largely be determined by its Expenditure Requirement (and any currency mismatches between its assets and liabilities).Amended: January 2007ES-1.8.5
In assessing the financial ability of a
Category 1 investment firm licensee tounderwrite transactions, the CBB will consider, amongst other factors, thelicensee's capital adequacy, its capacity to undertake the activity, and its track record in complying with applicable regulatory requirements. Anyunderwriting activities require the prior approval of the CBB's Capital Market Supervision Directorate and are subject to Module OFS (Offering of Securities) of Volume 6 of the CBB Rulebook.Amended: October 2014
Amended: January 2007ES-1.9 ES-1.9 Module BC (Business Conduct)
ES-1.9.1
This Module set out minimum standards of good practice to be applied by
investment firm licensees , when dealing with theirclients . These comprise certain base requirements, supplemented by more detailed requirements in the form of an Investment Business Code of Practice.Amended: January 2007ES-1.9.2
The Investment Business Code of Practice covers various matters, relevant to contact throughout a
client relationship. They are:(a) Overarching principles;(b)Client classification;(c) Marketing and promotion;(d) Accepting clients;(e) Suitability;(f) Disclosure of information;(g) Dealing and managing;(h) Reporting to clients;(i) Complaints;(j) Conflicts of interest;(k) Confidentiality; and(l) An appendix, covering various specific matters to be addressed in promotional material, transaction confirmations and the like.Amended: January 2007ES-1.9.3
These requirements may be modified or supplemented over time, in response to evolving market practices or as issues arise.
ES-1.10 ES-1.10 Module CL (Client Assets)
ES-1.10.1
This Module provides detailed Rules and Guidance with respect to the holding of
client assets byinvestment firm licensees . They are aimed at ensuring the proper protection of such assets, to restrict the risk ofclient assets being commingled withinvestment firm licensee assets (without clients' consent), or otherwise misused.Amended: January 2007ES-1.10.2
As a general rule,
client assets are required to be segregated from a firm's own assets, andclient money must be held in aclient bank account . Various other restrictions and protections apply toclient money , whilst the rules also apply certain reconciliation and reporting requirements.ES-1.10.3
Finally, the Module also contains certain requirements relating to the provision of custody services (Chapter CL-2), the treatment of assets when held as collateral (Chapter CL-3), controls surrounding the application of client
mandates (Chapter CL-4), and rules regarding third party related distribution events (Chapter CL-5).ES-1.11 ES-1.11 Module RM (Risk Management)
ES-1.11.1
Module RM provides detailed requirements on risk management systems and controls required for
investment firm licensees . It builds on the high-level controls requirements contained in Module HC.Amended: July 2007ES-1.11.2
The Module obliges firms to identify the range of risks that they face and to put in place appropriate systems to address those risks. It also requires the establishment of an appropriate framework for identifying, monitoring and managing risks across an
investment firm licensee's operations.Amended: July 2007ES-1.11.3
Module RM applies to
Bahraini investment firm licensees , including their overseas branches (where either the same or equivalent provisions to those in Module RM should apply).Overseas investment firm licensees must demonstrate that the same or equivalent arrangements apply to the whole company, and that these arrangements provide for effective risk management of activities conducted in the Bahrain branch.Added: July 2007ES-1.12 ES-1.12 Module FC (Financial Crime)
ES-1.12.1
Module FC implements the Financial Action Task Force (FATF) recommendations on money laundering and special recommendations on terrorism financing that are relevant to the investment business sector in Bahrain.
ES-1.12.2
The Module contains detailed requirements relating to:
(a) Customer identification;(b) Reporting;(c) Staff awareness and training;(d) The appointment of a money laundering reporting officer;(e) Compliance monitoring;(f) Record-keeping arrangements;(g) Segregation of duties;(h) Special measures for non-cooperative countries; and(i) Contact with relevant authorities.Amended: January 2007ES-1.12.3
Item FC (iv) in Part B of Volume 4 (Investment Business) provides further examples of transactions that may be suspicious or unusual.
ES-1.12.4
In addition, Module FC has a chapter dealing with financial fraud, which imposes certain basic systems and control, and reporting requirements, in this area. These requirements apply to
Category 1 investment firms andCategory 2 investment firms only.Amended: July 2007ES-1.13 ES-1.13 Module TC (Training and Competency)
ES-1.13.1
Module TC contains requirements that have to be met by
investment firm licensees with respect to training and competency of individuals undertakingcontrolled functions (i.e.approved persons ).Amended: October 2013
Amended: July 2010
Amended: January 2007ES-1.13.2
Module TC provides Rules and Guidance to
investment firm licensees to ensure satisfactory levels of competence, in terms of an individual's knowledge, skills, experience and professional qualifications.Amended: July 2010
Amended: January 2007ES-1.13.3
Module TC applies in full to all three categories of
investment firm licensees authorised in Bahrain.Added: July 2010ES-1.13.4
The requirements in the Module cover the recruitment and assessing of competence as well as the training and maintenance of competence. In addition, it includes appendices providing guidance on qualifications and core competencies for
controlled functions as well professional bodies and qualifications.Added: July 2010ES-1.14 ES-1.14 [This Section was deleted in January 2012]
ES-1.14.1
[This paragraph was deleted in January 2012]
Deleted: January 2012ES-1.14.2
[This paragraph was deleted in January 2012]
Deleted: January 2012ES-1.15 ES-1.15 Module BR (CBB Reporting)
ES-1.15.1
Module BR sets out requirements regarding prudential reporting to the CBB, as well as certain pre- and post-notification requirements. It also describes the information gathering powers of the CBB.
Amended: July 2007ES-1.15.2
Module BR, amongst other things, prescribes quarterly prudential reporting to the CBB (Form QPR). All
investment firm licensees are required to submit these: however,Category 3 investment firms are only required to complete a subset of the sections included in Form QPR.Amended: July 2007ES-1.15.3
Module BR also obliges all
investment firm licensees to seek prior approval for certain events, including proposed changes in thelicensee's name, legal status andcontrollers , as well as other events such as carrying out newregulated investment services or opening new offices overseas.Amended: July 2010
Added: July 2007ES-1.15.4
Finally, Module BR also requires the post-notification of various events, such as breaches of CBB requirements; legal, regulatory or other proceedings being taken against the
licensee ; or instances of fraud, errors or other irregularities occurring, that could have a material impact on thelicensee .Added: July 2007ES-1.16 ES-1.16 Module PD (Public Disclosure)
ES-1.16.1
This Module is to be issued as part of the second phase release of Volume 4.
Amended: January 2007ES-1.16.2
When finalised, the Module will contain certain provisions relating to public disclosures, such as the need to publish annual accounts.
ES-1.17 ES-1.17 Module EN (Enforcement)
ES-1.17.1
This Module outlines enforcement powers and processes that may be applied by the CBB to address failures by
investment firm licensees ,approved persons or registered persons. The purpose of such measures is to encourage a high standard of compliance by all those authorised by the CBB, thus reducing risk to licensees' clients, counterparties and the financial system.Amended: January 2007ES-1.17.2
The enforcement measures contained in the Module are of varying severity and will be used in keeping with the CBB's assessment of the contravention, reserving the most serious enforcement measures for the most serious of contraventions.
Amended: January 2007ES-1.17.3
The CBB's enforcement mechanisms include:
(a) Formal requests for information;(b) Investigations;(c) Formal warnings;(d) Directions;(e) Financial penalties;(f) Administration;(g) Cancellation of license; and(h) Cancellation of 'fit and proper' approval.Amended: July 2007ES-1.17.4
A reminder of criminal sanctions contained in the CBB Law is also set out in Chapter EN-10.
Amended: January 2007ES-1.18 ES-1.18 [This Section was deleted in January 2012 as it is included in Chapter BC-3]
ES-1.18.1
[This paragraph was deleted in January 2012 as it is included in Chapter BC-3]
Deleted: January 2012ES-1.18.2
[This paragraph was deleted in January 2012 as it is included in Chapter BC-3]
Deleted: January 2012ES-1.19 ES-1.19 Module CP (Compensation)
ES-1.19.1
This Module provides space, for possible inclusion at a later date, for a description of any investor protection scheme, should such a scheme be developed in cooperation with the industry.
Amended: January 2007ES-1.20 ES-1.20 Sector Guides (Modules C1, C2, C3 and IF)
ES-1.20.1
These Modules will be issued as part of the second phase release of Volume 4.
Amended: January 2007ES-1.20.2
When finalised, these Modules will provide a summary — consisting solely of Guidance material — highlighting the key requirements applicable to the different categories of
investment firm licensees , as well as to thoseinvestment firm licensees that operate solely on Islamic principles.Amended: July 2007ES-2 ES-2 Implementation and Transition Rules
ES-2.1 ES-2.1 30 April 2006
ES-2.1.1
Investment firm licensees issued a license after 30 April 2006 must comply with the requirements contained in the first phase release of Volume 4 (Investment Business) from the date of issue of their license.Amended: January 2007ES-2.1.2
The earliest effective date of Volume 4 (Investment Business), therefore, is 30 April 2006.
ES-2.2 ES-2.2 1 July 2006
ES-2.2.1
Unless otherwise agreed to in writing with the CBB,
investment firm licensees issued a license before 30 April 2006 must comply with the requirements contained in the first phase release of Volume 4 (Investment Business) by 1 July 2006, with the exceptions of Modules CA, BC and CL.Amended: January 2007ES-2.2.2
Therefore, for
investment firms already licensed when Volume 4 was first issued in April 2006, the first implementation date (unless additional transition arrangements have been agreed with in writing with the CBB) is 1 July 2006. A later implementation deadline is given for Modules CA, BC and CL, on account of the wide scope of their requirements: see Section ES-2.3Amended: January 2007ES-2.2.3
The first phase release of Volume 4 comprises Modules ES, UG, AU, PB, AA, GR, CA, BC, CL, FC and EN.
ES-2.2.5
On an exceptional basis, the CBB may provide for grandfathering or additional transitional measures for certain firms, where these are faced with difficulties in meeting their implementation deadlines, provided such arrangements do not cause excessive risk to investors or other licensees.
Amended: January 2007ES-2.2.6
Investment firm licensees who were licensed prior to the publication of Volume 4 (Investment Business) do not need to resubmit an application for a license.ES-2.2.7
Investment firm licensees licensed prior to 30 April 2006 will have their license category, and the scope of their authorisation, confirmed in an exchange of letters.
Amended: July 2010ES-2.3 ES-2.3 1 January 2007
ES-2.3.1
Unless otherwise agreed to in writing,
investment firm licensees issued a license before 30 April 2006 must comply with the requirements contained in Modules CA, BC and CL by 1 January 2007.ES-2.3.2
In other words,
investment firm licensees licensed prior to the introduction of Volume 4 in April 2006 are required to comply with the first phase release of Volume 4 by 1 July 2006, except for Modules CA, BC and CL which have to be complied with from 1 January 2007 onwards (cf. Rules ES-2.2.1 and ES-2.3.1).Investment firm licensees licensed after the introduction of Volume 4 in April 2006, are required to comply with the first phase release of Volume 4 from the date of issue of their license (cf. Rule ES-2.1.1).Amended: July 2010
Amended: July 2007ES-2.3.3 [This Paragraph deleted 07/2007.]
Deleted: July 2007ES-2.3.4 [This Paragraph deleted 07/2007.]
Deleted: July 2007ES-2.4 ES-2.4 1 January 2008
ES-2.4.1
Investment firm licensees licensed prior to 1 July 2007 must comply with the requirements contained in Modules HC, RM and BR by 1 January 2008.Licensees issued a license after 1 July 2007 must comply with these Modules (as well as other content of Volume 4 of the CBB Rulebook), from the date of issue of their license.Amended: July 2007ES-2.4.1A
As the reporting forms under Chapter BR-1, Prudential Reporting, other than the Quarterly Prudential Report which has been issued in March 2009, are under development,
investment firm licensees benefit from a further transition period from the requirements of this Chapter. Licensees will be informed at a later date of the implementation date of Chapter BR-1.Amended: October 2009
Added: July 2008ES-2.5 ES-2.5 Module TC — Training and Competency
ES-2.5.1
The requirements of Module TC for
investment firm licensees are effective from 1st July 2010.Adopted: July 2010ES-2.5.2
Where
approved persons holdingcontrolled functions within theinvestment firm licensee , do not meet the qualifications and core competencies outlined in Appendix TC-1 at the time of the issuance of Module TC, theinvestment firm licensee must ensure that such individuals will meet the requirements of Module TC by 31st December 2011 at the latest.Amended: October 2013
Adopted: July 2010ES-2.6 ES-2.6 Module BC — Business Conduct
ES-2.6.1
The requirements of Chapter BC-3, customer complaints procedures, for
investment firm licensees are effective from 31st March 2012.Added: January 2012