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  • MIE-1 MIE-1 Market Surveillance

    • MIE-1.1 MIE-1.1 Market Surveillance

      • Market Surveillance

        • MIE-1.1.1

          The CBB's surveillance function is focused on identifying potential breaches of the relevant laws, rules and regulations and those responsible for the potential breaches. The surveillance function includes the following:

          a) Policy formulation for introducing surveillance systems that bring integrity, safety and stability to the securities market in the Kingdom of Bahrain;
          b) Gather and analyze information for the purpose of spotting abnormal situations in the market;
          c) Detect potential contraventions of relevant laws, rules and regulations and identify those responsible for such contraventions;
          d) Prepare initial analysis report;
          e) Take interim enforcement actions, if warranted;
          f) Pursue preventative action, if required, and avoid market disruptions at the earliest possible time.
          g) [This Subparagraph has been deleted in July 2021].
          Amended: July 2021

        • MIE-1.1.2

          The Market Surveillance, Department of the Capital Markets Supervision Directorate within the CBB is responsible for the market surveillance function relating to the securities market in the Kingdom of Bahrain.

          Amended: July 2021

        • MIE-1.1.3

          The CBB may apply, adopt, determine and implement various measures, mechanisms and requirements, as may be required from time-to-time.

        • MIE-1.1.4

          Licensed exchanges and market operators, licensed clearing houses and depositories, members of SROs and other capital market service providers must have appropriate systems and procedures for the detection of potential cases of unlawful transactions and contraventions of the CBB Law, rules and regulations and report to the CBB at the earliest stage possible.

          Amended: July 2021

    • MIE-1.2 MIE-1.2 Information Gathering

      • MIE-1.2.1

        The CBB may exercise its powers under Part 7 and Part 9 of the CBB Law for obtaining information, data, documents and explanations from:

        (a) Self-Regulatory Organizations (SROs), including licensed exchanges, licensed clearing houses and depositories, and related parties;
        (b) Members of SROs and related parties;
        (c) Listed companies and issuers of securities;
        (d) Any other person who is in the possession of information or documents relevant for the purpose of conducting specific preliminary investigations by the CBB.
        Amended: July 2021

      • Type of Information

        • MIE-1.2.2

          For the purpose of this Module, information includes:

          (a) Any books, records or registers required to be maintained by a capital market service provider (including members of SROs, listed companies and issuers of securities) and related parties under the CBB Law, rules and regulations and any other law, rules and regulations;
          (b) Information, books, records or documents known to or in the possession of a capital market service provider (including members of SROs, listed companies and issuers of securities) and related party;
          (c) [This Subparagraph has been deleted in July 2021];
          (d) [This Subparagraph has been deleted in July 2021]
          (e) Information, books, records or documents maintained by or known to or in the possession of any other relevant person.
          Amended: July 2021

        • MIE-1.2.3

          In this Module, a reference to disclosing information includes, in relation to information that is contained in a document, a reference to producing the document.

        • MIE-1.2.4

          As per Articles 111 and 112 of the CBB Law, the CBB may demand any information, documents, statistics or reports from any licensee, listed company or any person who has issued debt instruments in the Kingdom within a specified time.

          Amended: July 2021

      • Acquisition and Disposal of Securities or Futures Contract

        • MIE-1.2.5

          Without prejudice to the generality of rule MIE-1.2.4:

          (a) The CBB may, where it considers it necessary for the protection of investors, require a capital market service provider to disclose to the CBB in relation to any acquisition or disposal of securities or futures contracts:
          (i) The name of the person from or through whom or on whose behalf the securities or futures contracts were acquired; or
          (ii) The name of the person to or through whom or on whose behalf the securities or futures contracts were disposed of;
          and the nature of the instructions given to the licensee or licensed exchange, or licensed clearing house and depository in respect of the acquisition or disposal.
          (b) The CBB may require a person who has acquired, held or disposed of securities or futures contracts to disclose to the CBB whether he acquired, held or disposed of those securities or futures contracts, as the case may be, as custodian or trustee for, or on behalf of, another person (whether or not as a nominee), and if so:
          (i) The name of that other person; and
          (ii) The nature of any instructions given to the first-mentioned person in respect of the acquisition, holding or disposal.
          (c) The CBB may require a licensed exchange to disclose to the CBB in relation to an acquisition or disposal of securities, or futures contracts on the licensed exchange, the names of the members of that licensed exchange who acted in the acquisition or disposal.
          (d) The CBB may require a licensed clearing house and/or depository for a securities market or futures market to disclose to the CBB in relation to any dealing in securities on that securities market, or trading in futures contracts on that futures market, the names of the members of the licensed clearing house and/or depository who were concerned in any act or omission in relation to the dealing or trading.
          Amended: July 2021

      • Exercise of Certain Powers in Relation to Securities

        • MIE-1.2.6.1

          Where the CBB considers that:

          (i) It may be necessary to prohibit under the Markets & Exchanges (MAE) Module dealing in securities of, or made available by, a company or an issuer of securities;
          (ii) A person may have contravened any of the provisions of the Prohibition of Market Abuse and Manipulation (MAM) Module in relation to securities of, or made available by, a company; or
          (iii) A person may have contravened any of the provisions of the Disclosure Standards or Take-overs, Mergers, & Acquisitions (TMA) Module in relation to securities in a company;

          The CBB may require an officer of a company, or an issuer of securities, to disclose to the CBB any information of which he is aware and which may have affected any dealing that has taken place, or which may affect any dealing that may take place, in securities of or made available by, the company or the issuer of securities.

          Amended: July 2021

        • MIE-1.2.6.2

          Where the CBB believes on reasonable grounds that a person is capable of giving information concerning any of the following matters:

          (i) Any dealing in securities of, or made available by, a company or an issuer of securities;
          (ii) Any advice given or any report or analysis issued or published concerning such securities, by any capital market service provider to deal in securities, or a representative of such a holder;
          (iii) The financial position of any business carried on by a person who is or has been (either alone or together with another person or other persons) the holder of a capital market service provider to deal in securities and who has dealt or given advice or issued or published a report or an analysis concerning such securities;
          (iv) The financial position of any business carried on by a nominee controlled by a person referred to in paragraph (iii) or jointly controlled by two or more persons at least one of whom is a person referred to in that paragraph; or
          (v) An audit of, or any report of an auditor concerning any book of the capital market service provider to deal in securities, being a book relating to dealings in such securities.

          the CBB may require the person to disclose to the CBB the information that the person has about the matter.

          Amended: July 2021

      • Exercise of Certain Powers in Relation to Futures Contracts

        • MIE-1.2.7

          (a) Where the CBB considers that:
          (i) It may be necessary to give a direction or take any action in relation to any trading in futures contracts under the Markets & Exchanges (MAE) Module;
          (ii) A person may have contravened any of the provisions of the Prohibition of Market Abuse & Manipulation (MAM) Module in relation to futures contracts.
          (b) Where the CBB believes on reasonable grounds that a person is capable of giving information concerning the following matters:
          (i) Any trading in futures contracts;
          (ii) Any advice given publicly or privately, or any report or analysis issued or published concerning such futures contracts by the capital market service provider to trade in futures contracts, or a representative of such a holder;
          (iii) The financial position of any business carried on by a person who is or has been (either alone or together with any person or other persons) the capital market service provider to trade in futures contracts and has traded in or given advice or issued or published a report or an analysis concerning such futures contracts;
          (iv) The financial position of any business carried on by a nominee controlled by a person referred to in paragraph (iii) or jointly controlled by two or more persons, at least one of whom is a person referred to in that paragraph; or
          (v) An audit of, or any report of an auditor concerning any book of the capital market service provider to trade in futures contracts, being a book relating to trading, clearing or settlement in such futures contracts.
          the CBB may require the person to disclose to the CBB the information that the person has about that matter.
          Amended: July 2021

      • Self-Incrimination

        • MIE-1.2.8

          (a) A person is not excused from disclosing information to the CBB under a requirement made of him under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6, MIE-1.2.6A or MIE-1.2.7, on the grounds that the disclosure of the information might tend to incriminate him.
          (b) Where a person claims before making a statement disclosing information that he is required to disclose by a requirement made of him under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6, MIE-1.2.6A or MIE-1.2.7, that the statement might tend to incriminate him, that statement shall not be used by the CBB to support any CBB disciplinary measures against him.

      • Savings for Advocates and Solicitors

        • MIE-1.2.9

          (a) Nothing in Section 1.2 shall compel the disclosure by an advocate and solicitor of information containing a privileged communication made by or to him in that capacity.
          (b) An advocate and solicitor who refuses to disclose the information referred to in paragraph (a) shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom, or by or on behalf of whom, that privileged communication was made.

      • Immunities Under CBB Law

        • MIE-1.2.10

          (a) The CBB shall not bring any civil or criminal proceedings, other than proceedings for an offence under rule MIE-1.2.11 against any person for disclosing any information to the CBB, if he had done so in good faith in compliance with a requirement of the CBB under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6, 1.2.6A or MIE-1.2.7.
          (b) Any person who complies with a requirement of the CBB under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6, MIE-1.2.6A or MIE-1.2.7 shall not be treated by the CBB as being in breach of any restriction upon the disclosure of information or thing imposed by any prescribed written law, or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.

      • Offences

        • MIE-1.2.11

          (a) A person who, without reasonable excuse, refuses or fails to comply with a requirement of the CBB under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6 or MIE-1.2.7, may be guilty of an offence of concealing information, or providing false information, or obstructing a current investigation, or an investigation likely to be conducted by the CBB in accordance with Part 9 of the CBB Law, punishable under Articles 163 and 170 of the CBB Law.
          (b) A person who, in purported compliance with a requirement of the CBB under rules MIE-1.2.4, MIE-1.2.5, MIE-1.2.6 or MIE-1.2.7, discloses information or makes a statement that is false or misleading in a material particular may be guilty of an offence punishable under Articles 163 and 170 of the CBB Law.
          (c) It may be a defence to prosecution for an offence under paragraph (b) if the defendant proves that he believed on reasonable grounds that the information or statement was not misleading.
          Amended: July 2021

      • Copies of or Extracts from Documents to be Admitted as Evidence

        • MIE-1.2.12

          (a) The CBB shall treat copies of or extracts from a document produced under this Module that are provided to be a true copy of the document, or the relevant part of the document, as if they were the original document, or the relevant part of the original document.
          (b) For the purposes of paragraph (a), evidence that a copy of or extract from a document is a true copy of the document or of a part of the document may be given by a person who has compared the copy or extract with the document or the relevant part of the document and may be given orally or by an affidavit sworn, or by a declaration made before a person authorised to take an affidavit or statutory declarations.

    • MIE-1.3 MIE-1.3 Information from Self-Regulatory Organizations (SROs)

      • MIE-1.3.1

        Without prejudice to the generality of rule MIE-1.2.4 and apart from using reports, notifications, communications, information, records, data and documents and explanations already provided to the CBB by the licensed exchanges, licensed market operators and licensed clearing houses, and central depositories, the CBB may also use methods of obtaining information mentioned in paragraph MIE-1.3.2, in addition to the usual methods of obtaining information from licensees.

      • MIE-1.3.2

        The methods of obtaining information referred to in paragraph MIE-1.3.1, which may be used by the CBB, may include but not be limited to:

        (a) Online connectivity
        The CBB may require the licensed exchanges, licensed market operators, licensed clearing houses and central depositories to establish and maintain online connectivity with the CBB for the purpose of receiving on a continuous basis, as well as on a periodical basis (including real-time, intra-day, daily, weekly, monthly, quarterly and/or annually), such market transaction information, market referential information and any other data or information. For this purpose, the CBB may require a direct online connectivity to the trading system, clearing and settlement facilities and depository facilities. The CBB may collect, validate, transform, consolidate and load such information and other information received from various sources for the purpose of market surveillance, research and regulatory analysis into the CBB's systems and records.
        (b) Periodic and Emergency Meetings
        The CBB may conduct periodic meetings and emergency meetings with the licensed exchanges, market operators, licensed clearing houses and central depositories. The CBB may obtain information, reports, documents and data during or pursuant to such periodical or emergency meetings, and use the same for to satisfy the supervisory objectives of the CBB.
        (c) Periodic and Event Based Reports (Electronic Form or Physical Form)
        The CBB may stipulate periodic and event-based reports in addition to other reporting requirements applicable to licensed exchanges, market operators, licensed clearing houses and central depositories under the MAE Module and CSD Module respectively; and other rules and regulations. The CBB requires these reports either in electronic form or in physical form.
        (d) Inspection
        The CBB may conduct an inspection under the MAE Module or CSD Module, either an overall inspection or a special purpose inspection of a licensed exchange or market operator, or licensed clearing house or central depository, and use the information, data, reports, records and documents obtained through such inspection for the purpose of the CBB's market surveillance, investigation and enforcement functions.
        (e) Information Provided to Public Investors
        The CBB may also use the information made available by licensed exchanges, market operators, licensed clearing houses or central depositories to the public investors.
        (f) Referrals from SROs
        If a licensed exchange, market operator, licensed clearing house or central depository (SRO) discovers any conduct in violation or contravention of the CBB Law, rules and regulations, business rules of such SRO, or any other applicable laws, rules and regulations, the concerned SRO shall, apart from taking action based on its own findings and investigations on the matter, refer the potential contraventions to the CBB. Such referrals shall contain or be followed by a detailed investigation report on the matter and the evidence obtained by the SRO.
        (g) Investigation Report
        The CBB may require a licensed exchange, market operator, licensed clearing house or central depository to conduct an investigation on any matter considered appropriate by the CBB for the purpose of the CBB's market surveillance, investigation and enforcement functions, and to submit a detailed investigation report on the matter required by the CBB to be investigated, along with the evidence collected during the investigation, for the findings and conclusions of such investigation.
        (h) Formal Request for Information
        As part of the CBB’s ongoing supervision, the CBB may, by direction, specifically request information or temporary or ad-hoc reporting from a licensee under Article 111 of the CBB Law, or from persons related to any licensee under Article 113 of the CBB Law, and the recipients of such request are bound to provide the information requested within the time specified by the CBB.
        Amended: July 2021

    • MIE-1.4 MIE-1.4 Information from Members of SROs and Other Capital Market Service Providers

      • MIE-1.4.1

        Without prejudice to the generality of rule MIE-1.2.4 and apart from using reports, notifications, communications, information, records, data, documents and explanations already provided to the CBB by the capital market service providers the CBB may also use the methods of obtaining information mentioned in paragraph MIE-1.4.2, in addition to the other ongoing obligations and reporting obligations of the respective capital market service provider for the purpose of the CBB's market surveillance, investigation and enforcement function.

        Amended: July 2021

      • MIE-1.4.2

        The methods of obtaining information referred to in paragraph MIE-1.4.1 which may be used by the CBB may include, but not be limited to:

        (a) Formal Request for Information
        As part of the CBB's ongoing supervision, the CBB may, by direction, specifically request information or temporary or ad-hoc reporting from a licensee under Article 111 of the CBB Law, or from persons related to any licensee under Article 113 of the CBB Law, and the recipients of such request are bound to provide the information requested within the time specified by the CBB.
        (b) Meetings
        Apart from the normal meetings, periodical prudential meetings, or any other special purpose meeting, the CBB may convene a meeting with a CBB licensee for the purpose of obtaining specific information.
        (c) Periodic Reports and Event-Based Reports (in Electronic Form or Physical Form)
        The CBB may use the periodic reports and event-based reports submitted by a capital market service provider to the CBB or to an SRO (including a licensed exchange or market operator and a licensed clearing house or central depository). For example, the CBB may use a Suspicious Transaction Report made by a capital market service provider under the Anti-Money Laundering and Combating Financial Crime Module (AML Module), or the Prohibition of Market Abuse and Manipulation Module (MAM Module) for the purpose of obtaining information. The CBB may require these reports either in electronic form or physical form.
        (d) Inspection
        The CBB may conduct an inspection and use the information obtained through such inspection.
        (e) Additional Responsibilities to Auditors
        As per Article 63 of the CBB Law, the CBB may request from the external auditors of a capital market service provider to increase the scope of audit and provide additional information to the CBB and the information and reports provided by the external auditors can be used by the CBB.
        (f) Notifications, Registrations, Filings and other Communications
        The CBB may use any information contained in any of the notifications, registrations, filings and other communications received from the CBB licensees and related parties for the purpose of the market surveillance, investigation and enforcement functions.
        (g) Record of Telephone Conversations and Electronic Communications
        The CBB may also use the records of telephone conversations and electronic communications that are required to be maintained by a capital market service provider or for the purposes of the CBB’s market surveillance, investigation and enforcement functions.
        Amended: July 2021

    • MIE-1.5 MIE-1.5 Information from Listed Companies and Issuers of Securities

      • MIE-1.5.1

        As per Article 112 of the CBB Law, the CBB may require any listed company or issuer of securities, or any person acting on their behalf, to provide such information as the CBB deems necessary for discharging its duties and responsibilities under this Law.

      • MIE-1.5.2

        Without prejudice to the generality of paragraph MIE-1.5.1, the CBB may, in addition to using reports, notifications, announcements, annual reports, reports, communications, records, data and explanations received from any listed company or issuer of securities, also use methods mentioned in paragraph MIE-1.5.3 for obtaining information in addition to the usual methods of obtaining information from listed companies and issuers of securities.

      • MIE-1.5.3

        The methods of obtaining information referred to in paragraph MIE-1.5.2 which may be used by the CBB to obtain information from listed companies and issuers of securities include, but are not limited to:

        (a) Formal Request for Information
        The CBB may require any listed company or issuer of securities to provide such information as the CBB deems necessary within the time specified by the CBB.
        (b) Inspection
        The CBB may conduct an inspection and use the information obtained through such inspection in discharging its supervisory responsibilities.
        (c) Additional Responsibilities to Auditors
        As per Article 63 of the CBB Law, the CBB may request from the external auditors of a listed company or issuer of securities to increase the scope of audit and provide additional information to the CBB, and the information and reports provided by the external auditors can be used by the CBB.
        (d) Notifications, Registrations, Filings and other Communications
        The CBB may also use any information contained in any of the notifications, registrations, filings and other communications received from listed companies and issuers of securities and related parties for the purpose of discharging its supervisory duties.
        (e) Meetings
        The CBB may convene a meeting with any issuer or listed company for the purpose of discussing matters relating to the market surveillance, investigation and enforcement functions of the CBB.
        (f) Periodic Reports
        The CBB may use the periodic and other reports submitted by the listed companies and issuers for the purpose of the CBB's market surveillance, investigation and enforcement functions.
        Amended: July 2021

    • MIE-1.6 MIE-1.6 Referrals from Other Domestic Authorities

      • MIE-1.6.1

        The CBB may use information contained in referrals received from other domestic authorities, including but not limited to the Ministry of Industry, Commerce & Tourism (MOICT) and the Financial Intelligence Directorate within the Ministry of Interior (MOI) based on the discovery made by them regarding potential cases of contravention of the CBB Law, rules and regulations and other applicable laws, rules and regulations.

        Amended: July 2021

    • MIE-1.7 MIE-1.7 Referrals from Overseas Authorities

      • MIE-1.7.1

        The CBB may receive referrals from overseas authorities, either pursuant to the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU), or other multilateral/bilateral arrangements, or otherwise, leading to potential cases of contravention of the CBB Law, rules and regulations, or any other applicable laws, rules and regulations.

        Amended: July 2021

    • MIE-1.8 MIE-1.8 Complaints from the Public and Information from Other Sources

      • MIE-1.8.1

        Complaints from the public and customers of the CBB licensees are received by the CBB in the complaint forms available on the CBB's official website and such complaints which relate to potential cases of contravention of the CBB Law, rules and regulations, or SROs' business rules are also used by the CBB for the purposes of the CBB’s market surveillance, investigation and enforcement functions.

        The CBB’s surveillance, investigation and enforcement functions also uses information disseminated through the media, including newspapers, television, newsletters, internet, research reports and other media.

        Amended: July 2021

    • MIE-1.9 MIE-1.9 Reports from Experts

      • MIE-1.9.1

        Article 121 of the CBB Law enables the CBB to appoint qualified investigators (including professional firms) and Article 63 of the CBB Law enables the CBB to request additional duties from external auditors.

        The CBB may at its discretion, require a CBB licensee or a listed company or an issuer of securities, or any other relevant person to provide a report by an expert in order to support the CBB's market surveillance, investigation and enforcement functions. The costs associated with such appointment of an expert shall be borne by persons required to appoint an expert.

      • MIE-1.9.2

        The factors the CBB will consider when deciding whether to use an expert include:

        (a) If the CBB's objectives for making further enquiries are predominantly for the purposes of fact finding; i.e. gathering historic information or evidence for determining whether enforcement action may be appropriate, the CBB's information gathering and investigation powers under Part 7 of the CBB Law are likely to be more effective and more appropriate than appointing an expert.
        (b) If the CBB's objectives include obtaining expert analysis or recommendations (or both) for say, the purposes of seeking remedial action, it may be appropriate to appoint an expert instead of or in conjunction with the CBB's other available powers.

      • MIE-1.9.3

        The CBB shall normally make clear both to the persons referred to in rule MIE-1.9.1and to the expert, the nature of the concerns that led the CBB to decide to appoint an expert, and the possible uses of the results of the report. A report the CBB commissions for purely diagnostic purposes may identify issues which could lead to the appointment of an investigator and/or enforcement action.

      • MIE-1.9.4

        The CBB shall:

        a) Require persons referred to in rule MIE-1.9.1 to appoint experts only for specific purposes, rather than for general enquiry;
        b) Not use the procedure as a matter of routine in relation to particular persons;
        c) Use the procedure only after having considered the alternatives;
        d) Normally use the procedure because of the added value to be gained from use of an expert, because of their particular expertise or knowledge, not because of CBB's resource constraints;
        e) Take into account cost implications, including whether the likely cost of an expert's report is proportionate and will provide enough benefit, having regard to the issue in question and the resources of the persons referred to in rule MIE-1.9.1;
        f) Take into account the expected benefit to the persons referred to in rule MIE-1.9.1; and
        g) Use the procedure in a focused, proportionate way and ensure that reports are scoped accordingly.

        This policy does not preclude the use of the same procedure for generically similar purposes in different cases, for example, to review systems and controls of persons referred to in rule MIE-1.9.1 or to obtain verification of information provided to the CBB.

      • Who the CBB will Nominate or Approve when Using Experts

        • MIE-1.9.5

          When considering whether to nominate or approve an expert to make a report, the CBB will have regard to such factors as whether the proposed person appears to have:

          (a) The skills necessary to make a report on the matter concerned;
          (b) The ability to complete the report within the time required;
          (c) Relevant specialised knowledge on the matter to be reported on;
          (d) Any professional difficulty or potential conflict of interest in reviewing the matters to be reported on, including but not limited to questions reflecting on the quality or reliability of work previously carried out by the expert;
          (e) Independence, bearing in mind the closeness of any existing professional or commercial relationship, to give an objective opinion on such matters as:
          (i) Matters already reported on by the expert (e.g. on the firm's financial statements or in relation to a firm's systems and controls);
          (ii) Matters that are likely to be contentious and may result in disciplinary or other enforcement actions against the persons referred to in rule MIE-1.9.1, its management, shareholders or major shareholders; or
          (iii) Matters that the expert has been involved in, in another capacity.

        • MIE-1.9.6

          In appropriate circumstances it may be cost effective for the CBB to nominate or approve the appointment of an expert who has already acted for, or advised the persons referred to in rule MIE-1.9.1. For example, the CBB may nominate or approve the appointment of a firm's auditor to prepare a report, taking into account where relevant, the considerations set out in paragraph MIE-1.9.2.

    • MIE-1.10 MIE-1.10 Detection of Potential Cases of Contraventions

      • MIE-1.10.1

        The CMSD captures all the relevant information, reports, data and documents received from various sources and stores them in its records and systems for the purpose of regulatory analyses and identifies potential cases of contravention of the CBB Law, rules and regulations, and other applicable laws, rules and regulations. On-line and off-line alerts are generated based on the information available and analysis made of potential cases of contraventions and such alerts are further examined by the Market Surveillance Department at the CMSD, to evaluate the potential evidences indicating suspicions of contraventions.

        Amended: July 2021

    • MIE-1.11 MIE-1.11 Determination of Preliminary Investigation

      • MIE-1.11.1

        If the analysis of the known facts and potential evidence indicates contraventions the CMSD shall consider whether a sufficient, credible source of facts and evidence suggests contravention of the CBB Law, rules and regulations and/or an enforcement action is warranted. Some of the factors that could be considered include, but are not limited to:

        (a) The laws, rules or regulations that could potentially be considered as having been contravened or violated;
        (b) The severity and/or seriousness of such contravention or violation;
        (c) The potential magnitude of such contravention or violation;
        (d) The potential losses involved or harm to an investor or investors;
        (e) Whether the affected group is particularly vulnerable or at risk;
        (f) Whether the conduct is ongoing;
        (g) Whether the conduct can be investigated efficiently;
        (h) Whether SROs or other authorities might be better suited to investigate the conduct.
        Amended: July 2021

      • MIE-1.11.2

        After conducting an analysis referred to in paragraph MIE-1.11.1, the Director of the CMSD shall be consulted regarding any further analysis that should be undertaken, before determining whether a preliminary investigation of the potential cases of contravention shall be undertaken. Approval of the Director of the CMSD shall be sought for opening a preliminary investigation.

        Amended: July 2021

    • MIE-1.12 MIE-1.12 Preliminary Investigation

      • Information from Third Parties During Preliminary Investigation

        • MIE-1.12.1

          As per Article 123 of the CBB Law, the CBB may require any person who is in possession of information or documents relevant to an investigation conducted by the CBB, to promptly present such information and documents to the CBB.

        • MIE-1.12.2

          Pursuant to a preliminary investigation referred to in section MIE-1.11, the CMSD, or any official of the CBB authorised in this regard, may take copies or extracts from such documents referred to in rule MIE-1.12.1 and also require the person producing such a document, or any other relevant person to provide an explanation, including written explanations, of the contents of the document.

        • MIE-1.12.3

          If a person required under rule MIE-1.12.1 to produce the document required fails to produce such a document, but he has information about the whereabouts of such a document, then he must indicate to the CMSD, or any official of the CBB authorised in this regard, where the document is located and who is in possession of the document.

      • Access to Premises, Information and Documents

        • MIE-1.12.4

          As per Articles 114 and 124 of the CBB Law, the CMSD, or any other CBB staff who are authorised to undertake a preliminary investigation referred to in section MIE-1.11, may enter and inspect the premises, offices, or locations of any capital market service provider to obtain any information or necessary documents or data.

          Amended: July 2021

        • MIE-1.12.5

          If necessary, the CMSD or the authorised CBB staff may retain any documents obtained by virtue of the provisions of the previous paragraph for a period not exceeding six months. However, if the procedures of a trial of any person commenced in connection with committing a crime within the period of the specified six months and the procedures of the said trial continued beyond this period, and the mentioned documents prove to be of relevance to such procedures, then the CMSD or the authorised CBB staff may retain such documents up to the end of the said trial procedures, or to any other date determined by the Competent Court.

        • MIE-1.12.6

          As per Article 123 of the CBB Law, it shall be the duty of every person who is in possession of information or documents relevant to a preliminary investigation conducted by the CBB to:

          (a) Allow the staff of the CMSD or the authorised CBB staff to have access to the premises, offices and locations occupied by such persons at all reasonable times for the purpose of preliminary investigation.
          (b) Extend the staff of the CMSD or the authorised CBB staff facilities for examining any books, accounts and other documents in the custody or control (whether kept manually or in a computer, or in any other form) of such person, required for the purposes of the preliminary investigation.
          (c) Provide to such staff of the CMSD or the authorised CBB staff copies of any books, records, documents, information, data and explanation which in the opinion of the staff of the CMSD are relevant to the preliminary investigation.

        • MIE-1.12.7

          If the staff of the CMSD or the authorised CBB staff fail to enter and inspect the premises, offices, or locations of any SRO, or member of an SRO or any other capital market service provider, to obtain any information, or documents, or data, then the CMSD shall seek approval for formal investigation, and the CMSD investigator appointed to conduct the formal investigation may seek a court order, as per Article 124 of the CBB Law, to carry out the following:

          (a) Entering and inspecting specific premises and obtaining relevant information, data, or documents.
          (b) Copying or taking extracts of any relevant document, information or data.
          (c) Compelling any person employed by any SRO, or member of an SRO or any other capital market service provider, to give an explanation, or to specify the whereabouts of any documents, information, or data.

          Compelling force may be used, where necessary.

          Amended: July 2021

        • MIE-1.12.8

          The CMSD should evaluate the facts and evidence gathered during the preliminary investigation to determine whether it is appropriate to:

          (a) Open a formal investigation considering the factors mentioned in section MIE-2.2.4; or
          (b) Close the preliminary investigation without any recommendation for enforcement actions; or
          (c) Initiate appropriate enforcement actions, without opening up a formal investigation, based on the findings of the preliminary investigation, and facts and evidence of the case.
          Amended: July 2021

        • MIE-1.12.9

          In respect of cases where it is determined to open a formal investigation and if it is considered appropriate to initiate appropriate interim enforcement measures swiftly, before further damage is done and remedial actions are taken as early as possible, the CMSD shall evaluate and initiate appropriate interim enforcement measures that are required to be taken, pending the outcome of the formal investigations on the case.

        • MIE-1.12.10

          After determining the outcome of the preliminary investigation and recommended course of interim or final enforcement measures, the CMSD staff authorised to conduct the preliminary investigation shall submit the preliminary investigation report containing the findings of the preliminary investigation, facts and evidence of the case along with the recommended course of action, based on the outcome of the preliminary investigation mentioned in rule MIE-1.12.7.

          Amended: July 2021

        • MIE-1.12.11

          The CMSD shall decide on the course of action of the preliminary investigation mentioned in rule MIE-1.12.7 and also, if required, decide on the interim or final enforcement actions and seek the approval of H.E. the Governor for the same.

        • MIE-1.12.12

          The procedure and proceedings of the enforcement actions shall be governed by chapter MIE-3 of this Module.

    • MIE-1.13 MIE-1.13 Preventive Surveillance Actions

      • MIE-1.13.1

        The CBB seeks to proactively prevent contraventions or unfair practices or improper conduct and protect the interests of the public investors and securities market at the earliest possible time and the CBB may take preventive surveillance measures. Such preventive surveillance measures may include but not be limited to:

        (a) Interim Enforcement Actions
        Interim enforcement actions can be taken based on the information, facts and evidence available to the CMSD and such action can be initiated at the earliest possible time as part of the market surveillance function. Details of such interim enforcement actions are given in chapter MIE-3 of this Module.
        (b) Directives Under Article 38
        The CBB may issue directives to any capital market service provider, or any market participant, or any other relevant person as a preventive surveillance measure. Such directives under Article 38 of the CBB Law may be issued where the CBB believes that it is necessary or expedient in the interest of the public investors or securities market, or for the protection of investors, to take such action as it considers necessary, and such preventive surveillance measures can be imposed either market-wide or be made available to individual securities or issuers or an SRO, or any member of an SRO or any other capital market service provider, or market participants or any relevant persons.
        (c) Imposition of Trading Limits, Margins and Trading Restrictions
        The CMSD may, as a pro-active surveillance measure in emergency situations, impose limits or restrictions or measures. Such measures may include but not be limited to trading limits, position limits, additional margins, trading restrictions, suspending trading of any securities, freezing of accounts, suspending clearing/settlement of any transaction(s), or off-setting the suspected transactions, or any other prudential limits for the purposes of protecting the interests of investors and the securities market.
        Amended: July 2021