MAE-A MAE-A Introduction
MAE-A.1 MAE-A.1 Purpose
Executive Summary
MAE-A.1.1
Module MAE sets out the Central Bank of Bahrain's regulatory framework governing
licensed exchanges andlicensed market operators (other trading instruments platforms) operating in or from the Kingdom of Bahrain.MAE-A.1.2
The MAE Module seeks to introduce a consistent, effective and harmonised approach in regulation and supervision of
licensed exchanges andlicensed market operators in the Kingdom of Bahrain. It sets out the CBB requirements for their authorisation, the initial as well as ongoing compliance requirements.MAE-A.1.3
The key principles underlying the approach of the CBB in this Module aim:
(a) To promote fair, orderly and transparentmarkets ;(b) To facilitate efficientmarkets for the allocation of capital and the transfer of risks;(c) To reduce systemic risk;(d) To detect and deter manipulation and other unfair trading practices; and(e) To maintain integrity of trading through fair and equitable rules that strike an appropriate balance between the demands of differentmarket participants .MAE-A.1.4
Persons or entities undertaking functions falling within the meaning oflicensed exchanges andlicensed market operators require prior CBB approval. MAE-B.2 provides the definitions forlicensed exchanges andlicensed market operators which are impacted by this Module. These include entities providing the services including those:(a) That provide a platform through which the exchange ofsecurities takes place;(b) Which provide listings ofsecurities for trading;(c) Which provide trade matching services, as these services may result in a transaction between investors; and(d) Which provide a service which leads an investor to the reasonable expectation that they may trade insecurities .MAE-A.1.4A
[This Parapgraph was deleted in April 2022].
Deleted: April 2022
Added: October 2017Legal Basis
MAE-A.1.5
Article 4(4) and Part 2 of the CBB Law provides the power of the CBB to license and exercise regulatory control over financial institutions providing regulated services stated in Article 39, including
markets and exchanges.MAE-A.1.6
As per Article 39(b) of the CBB Law, the CBB shall issue regulations specifying the regulated services. The operation of a
licensed market operator or alicensed exchange is hereby specified as one of the regulated services which require licensing pursuant to Article 40 and Article 44 of the CBB Law.MAE-A.1.7
This Module contains the prior approval requirements for approved persons under Resolution No (23) of 2015.
Added: April 2016MAE-A.1.8
This Module contains Resolution No (1) of 2007 (issued under Article 180 of the CBB Law) amended by Resolution No (26) of 2010 and further amended by Resolution No (1) of 2016 with respect to determining fees categories due for licensees and services provided by the CBB.
Added: April 2016MAE-A.2 MAE-A.2 Module History
Evolution of Module
MAE-A.2.1
This Module was first issued in October 2008. Any material changes that are subsequently made to this Module are annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.
Amended: April 2013MAE-A.2.2
A list of recent changes made to this Module is provided below:
Module Ref. Change Date Description of Changes MAE-1.1.4 to MAE-1.1.6 04/2013 References added to requirements under Resolution No.(16) for the year 2012. MAE-1.2.4 04/2013 Updated name change to Form 3. MAE-1.9.1 and MAE-1.9.1A 04/2013 Provided details of annual fee due to the CBB. MAE-2.4.3 and MAE-2.4.4 04/2013 Added reference to report institutional information (IIS) to the CBB. MAE-5.3.12 04/2013 Added reference to Form 3: Application for Approved Person Status MAE-5.3 04/2013 Expanded the scope of this Section to include all approved persons occupying controlled functions and the various related Rules and Guidance. MAE-1.9 04/2014 Clarified Rules and guidance on annual license fees. Module MAE 04/2016 Various minor corrections to clarify language and link defined terms to glossary. MAE-A.1.7 04/2016 Legal basis updated to reflect Resolution No (23) of 2015. MAE-2.1.1 and MAE-2.1.1A 04/2016 Added requirements dealing with shareholders' meetings. MAE-5.3 04/2016 Amended to be in line with Resolution No (23) of 2015 on Prior Approval Requirements for Approved Persons. MAE-5.3.2A 04/2016 New Paragraph added to ensure segregation of responsibilities in licensees' staffing arrangements. MAE-B.2 07/2016 Section deleted and moved to Glossary. MAE-1.8.4 07/2016 Corrected cross reference. MAE-1.8.6, MAE-4.3.3, MAE-5.4.5, MAE-5.4.7, MAE-6.1.4, MAE-6.1.8, 07/2016 Changed from Rule to Guidance. MAE-1.9.1 07/2016 Deleted legal reference as already included under MAE-A.1.8 MAE-2.1.1 07/2016 Corrected wording of Subparagraphs. MAE-2.3.10 07/2016 Added due date for publication requirement. MAE-2.3.11 07/2016 Clarified accounting standards to be used. MAE-1.10.2 07/2017 Added Paragraph to clarify the cost of publication. MAE-1.10.3 07/2017 Added Paragraph on means of publication. MAE-A.1.4A 10/2017 Added a new Paragraph on Crowd funding platform operators. MAE-A.4.3 10/2017 Amended Paragraph to include crowdfunding platform operator. MAE-B.1.3 10/2017 Added a new Paragraph. MAE-2-11 10/2017 Added a new Section to Introduce new rules for licensed equity crowdfunding platform operators. MAE-2-12 10/2017 Added a new Section on new rules for licensed equity crowdfunding platform operators. MAE-5.3.7B 04/2018 Amended Paragraph. MAE-2.11.17 10/2018 Amended Paragraph to further clarify the scope of exemption. MAE-A.3.9 01/2019 Added a new Paragraph on market making. MAE-2.11.19 01/2019 Deleted Paragraph. MAE-2.11.29A 01/2019 Added a new Paragraph on Cooling-off Period for the Crowd Funding. MAE-2.12.3 01/2019 Amended Paragraph. MAE-4.6 01/2019 Added a new Section on registration of market makers. MAE-1.10.1 10/2019 Amended Paragraph and changed from Rule to Guidance. MAE-2.1.1A 10/2020 Added a new Paragraph on Provision of Financial Services on a Non-discriminatory Basis. MAE-A.1.4A 04/2022 Deleted Paragraph. MAE-A.4.3 04/2022 Deleted Paragraph. MAE-B.1.3 04/2022 Deleted Paragraph. MAE-2.11 & MAE-2.12 04/2022 Deleted Sections and replaced with Module CFP requirements in Volume 5 Ancillary Service Providers. Superseded Requirements
MAE-A.2.3
This Module supersedes the following provisions contained in Circulars, or any other regulatory instruments:
Circular/Other Ref. Provisions Subject MOU between CBB and BSE All Supervision of BSE BSE Internal Regulation Article 5(4) Registration of Brokers and Market Makers and Listing of Companies. Article 5(4) will be superseded only in so far as the board acts not " in accordance with a resolution to be issued by the Minister", but rather "in accordance with the requirements of Module MAE". Article 5(16) Determination of Brokers' Commission
BSE may determine its own fees and commissions, but this will be done by The Board and not through the Minister, and shall be included in the rules of the BSE to be approved by the CBB in terms of this Module.Articles 46 & 49 Final accounts and auditing. The first sentence of Article 46 and the whole of Article 49 is superseded by MAE-2.3 MAE-A.3 MAE-A.3 Interaction with Other Modules
MAE-A.3.1
Persons wishing to act as aClearing House or aDepository should refer to Module CSD (Clearing, Settlement and Central Depository) which sets forth the CBB requirements for the operating of and licensing requirements of aClearing House and/orDepository , as well as Module MIR (Market Intermediaries and Representatives).Amended: April 2016MAE-A.3.2
Issuers wishing to seek approval to list
securities on exchanges licensed under this Module should refer to Resolution No (17) of 2012 regarding the Listing and Trading of Securities and Financial Instruments in a Licensed Exchange issued pursuant to Article 86 of the CBB Law which sets forth the CBB requirements for the listing ofsecurities onlicensed exchanges .Amended: April 2016MAE-A.3.3
Persons wishing to list or trade in securities on exchanges licensed under this Module should refer to Resolution No. (1) of 2004 with Respect to Directives Relating to the Prevention and Prohibition of Money Laundering at the Bahrain Stock Exchange.MAE-A.3.4
Licensed exchanges must in addition to complying with the business standards in this Module, refer to and comply with Module HC (High-level Controls) outlining corporate governance requirements.Amended: April 2016MAE-A.3.5
Licensed exchanges andlicensed market operators must comply with the provisions of Module MIE (Market Surveillance, Investigation and Enforcement), Module MAM (Prohibition of Market Abuse and Manipulation), Module DRA (Dispute Resolution, Arbitration and Disciplinary Proceedings) and Module AML (Anti-Money Laundering & Combating Financial Crime).Amended: April 2016MAE-A.3.6
[This Paragraph was deleted in April 2016.]
Deleted: April 2016MAE-A.3.7
[This Paragraph was deleted in April 2016.]
Deleted: April 2016MAE-A.3.8
Licensed exchanges must in addition implement and comply with the Disclosure Standards issued on 3rd December 2003 and available on the CBB Website.Added: April 2016MAE-A.3.9
Licensed exchanges ,licensed market operators ,market makers andissuers must in addition to complying with themarket making provision under this Module refer to and comply with Module MIR (Market Intermediaries and Representatives) which sets forth the CBB requirements formarket making .Added: January 2019MAE-A.4 MAE-A.4 Division of Responsibilities
MAE-A.4.1
A clear division of responsibilities between CBB as the regulator and the
licensed exchanges or thelicensed market operators as a self regulatory organisation (SRO) is required:(a) To maximise the regulatory effectiveness;(b) To permit flexibility to thelicensed exchanges or thelicensed market operators in their functioning;(c) To achieve greater efficiency and transparency in the enforcement of the laws, rules and regulations; and(d) To minimise the regulatory cost.Amended: April 2016MAE-A.4.2
As a regulator, CBB's role is as follows:
(a) Regulatory supervision;(b) Maintaining and promoting fairness, efficiency and transparency within the capitalmarket ;(c) Acting as an enforcement agency with powers to investigate and take administrative, civil or criminal actions as it may deem appropriate;(d) Approving the rules, by-laws and regulations of thelicensed exchanges or thelicensed market operators , whereby any change in the rules, by-laws and regulations of thelicensed exchange or thelicensed market operator would need prior approval of CBB; and(e) Licensing, supervision, inspection, investigation and enforcement.Amended: April 2016MAE-A.4.3
The
licensed exchange or thelicensed market operator established as an SRO must comply with the requirements laid down under law as well as by the CBB Law, this Module and the other applicable laws and regulations.Amended: April 2022
Amended: October 2017
Amended: April 2016MAE-A.4.4
As an SRO, the main objective of the exchange or the operator is to promote:
(a) Fairness and investor protection;(b) Fair access tomarket facilities and information;(c) The provision of timely and accessible relevantmarket data; and(d) The efficient regulation of its members.Amended: April 2016