• CRA-12 CRA-12 Conduct of Business Obligations

    • CRA-12.1 CRA-12.1 General Scope and Application

      • CRA-12.1.1

        This Section sets out the Conduct of Business Obligations which licensees must adhere to.

        Added: April 2019

      • CRA-12.1.2

        This Section shall apply to all licensees offering regulated crypto-asset services except for Section CRA-12.5 which shall apply solely to licensees executing clients' orders.

        Added: April 2019

    • CRA-12.2 CRA-12.2 Conflicts of interest

      • General Obligations

        • CRA-12.2.1

          Licensees must adopt appropriate and transparent reporting lines within its organisation in order to ensure that issues involving risks of non-compliance with conflicts of interest Rules are given the necessary priority.

          Added: April 2019

        • CRA-12.2.2

          Licensees must establish, implement and maintain effective organisational and administrative arrangements appropriate to the size of the licensee and the nature, scale and complexity of its business, to prevent conflicts of interest from adversely affecting the interests of its clients.

          Amended: April 2023
          Added: April 2019

        • CRA-12.2.3

          The circumstances which should be treated as giving rise to a conflict of interest should cover cases where there is a conflict between the interests of the licensee or certain persons connected to the licensee or the group of which the licensee forms part, or from the performance of services and activities, and the duty the licensee owes to a client; or between the differing interests of two or more of its clients, to whom the licensee owes in each case a duty.

          Added: April 2019

        • CRA-12.2.4

          Licensees must establish, implement and maintain an effective conflicts of interest policy set out in writing and which is appropriate to the size of the licensee and the nature, scale and complexity of its business, to prevent conflicts of interest from adversely affecting the interests of its clients. The conflicts of interest policy must, at a minimum, include the following:

          (a) The identification of, with reference to the specific services and activities carried out by or on behalf of the licensee, the circumstances which constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of one or more clients;
          (b) Procedures to be followed and measures to be adopted in order to manage such conflicts and to prevent such conflicts from damaging the interests of clients.
          Amended: April 2023
          Added: April 2019

        • CRA-12.2.5

          Licensees must assess and periodically review, at least annually, the conflicts of interest policy established and must take all appropriate measures to address any deficiencies.

          Amended: April 2023
          Added: April 2019

        • CRA-12.2.6

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.2.7

          Licensees must keep and regularly update a record of the situations or service carried out by or on behalf of the licensee in which a conflict of interest entailing a risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing regulated crypto-asset service, may arise. Senior Management must receive on a periodic basis, and at least annually, written reports on situations referred to in this Rule.

          Added: April 2019

      • Operational Independence

        • CRA-12.2.8

          Licensees must take all appropriate steps to identify, and to prevent or manage conflicts of interest between the licensee, including their managers, employees, or any person directly or indirectly linked to them by control and their clients or between the interests of one client and another, including those caused by the receipt of inducements from third parties or by a licensee’s own remuneration and other incentive structures.

          Amended: April 2023
          Added: April 2019

        • CRA-12.2.9

          The Board of Directors of a licensee must define, oversee and be accountable for the implementation of governance arrangements that ensure effective and prudent management of the licensee including the segregation of duties within that licensee and the prevention of conflicts of interest, and in a manner that promotes the integrity of the market and the interest of clients.

          Added: April 2019

      • Remuneration Policy

        • CRA-12.2.10

          Licensees must define and implement remuneration policies and practices under appropriate internal procedures taking into account the interests of all its clients. The remuneration policy must be approved by the Board of Directors of the licensee and be periodically reviewed, at least annually.

          Added: April 2019

        • CRA-12.2.11

          In defining its remuneration policies, a licensee must ensure that:

          (a) Clients are treated fairly and their interests are not impaired by the remuneration practices adopted by the licensee in the short, medium or long term; and
          (b) Remuneration policies and practices do not create a conflict of interest or incentive that may lead relevant persons to favour their own interests or the licensee's interest to the potential detriment of its clients.
          Amended: April 2023
          Added: April 2019

      • Inducements Rules

        • CRA-12.2.12

          Licensees providing its clients with advice on an independent basis or portfolio management must not accept and retain fees, for itself, commissions or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of the services to clients. All fees, commissions or monetary benefits received from third parties in relation to the provision of advice on an independent basis and portfolio management must be transferred in full to the client.

          Where the licensee receives minor non-monetary benefits that are capable of enhancing the quality of service provided to a client and are of a scale and nature such that they would not be deemed to impair compliance with the licensee's duty to act in the best interest of the client must be clearly disclosed and be excluded from the application of this Rule.

          Amended: April 2023
          Added: April 2019

        • CRA-12.2.13

          Licensees must set up and implement a policy to ensure that any fees, commissions or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of advice on an independent basis and portfolio management are allocated and transferred to each individual client.

          Added: April 2019

        • CRA-12.2.14

          Licensees must inform clients about the fees, commissions or any monetary or non-monetary benefits transferred to them, such as through the periodic reporting statements provided to the client.

          Added: April 2019

        • CRA-12.2.15

          The Board of Directors must adopt and at least annually review the general principles of the inducements policy, and must be responsible for, and oversee, its implementation. The Board of Directors must also ensure that the compliance officer is involved in the establishment and the subsequent reviews of the inducements policy.

          Amended: April 2023
          Added: April 2019

        • CRA-12.2.16

          Licensees must not receive any remuneration, discount or non-monetary benefit for routing client orders to a particular trading venue which would infringe the requirements on conflicts of interest or inducements.

          Added: April 2019

      • Personal Transaction

        • CRA-12.2.17 CRA-12.2.17

          Licensees must establish, implement and maintain adequate arrangements which prevent any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information or to other confidential information relating to clients or transactions with or for clients by virtue of an activity carried out by him on behalf of the licensee.

          Added: April 2019

          • CRA-12.2.18

            Licensees must have a written policy governing employee dealing in crypto-assets, either through their own account or through related accounts, to eliminate, avoid, manage or disclose actual or potential conflicts of interests which may arise from such dealings.

            Added: April 2023

          • CRA-12.2.19

            For the purposes of CRA-12.2.18, the term “related accounts” refers to accounts of the employee’s spouse(s), children(s) of the employee or any other account(s) in which the employee holds any beneficial interest.

            Added: April 2023

          • CRA-12.2.20

            The written policy governing employee’s dealing in crypto-assets must specify the conditions under which an employee may deal in crypto-assets for their own account and related accounts (in particular, those who possess non-public information must be prohibited from dealing in the relevant crypto-assets). A copy of the policy must be provided to every employee at the time of joining as well as on periodic basis.

            Added: April 2023

          • CRA-12.2.21

            Transactions of employees’ own account and related accounts must be actively monitored by the compliance officer and procedures to detect irregularities and ensure that the handling by the licensee of these transactions is not prejudicial to the interest of the licensee’s other clients.

            Added: April 2023

          • CRA-12.2.22

            Any transactions for the employees own account and related accounts must be separately recorded and clearly identified in the records of the licensee.

            Added: April 2023

    • CRA-12.3 CRA-12.3 Sale Processes and Selling Practices

      • General Principles

        • CRA-12.3.1

          Licensees must:

          (a) Seek from its clients information relevant to the crypto-asset or regulated crypto-asset service requested;
          (b) In the completion of any document, make it clear that all the answers or statements regarding the client’s personal details and circumstances are the client’s own responsibility. The client should always be required to assume responsibility for the completed document and be advised that incomplete and/or inaccurate information may prejudice the client’s rights;
          (c) Not withhold from the client any written evidence or documentation relating to the crypto-asset or regulated crypto-asset service without adequate and justifiable reasons being disclosed in writing and without delay to the client;
          (d) Not recklessly, negligently or deliberately mislead a client in relation to the real or perceived advantages or disadvantages of any crypto-asset or regulated crypto-asset service;
          (e) Ensure that all instructions from, or on behalf, of a client are processed properly and promptly;
          (f) Have proper regard for the wishes of a client who seeks to terminate any agreement with it to carry out business;
          (g) [This Subparagraph was deleted in April 2023].
          (h) Not exert undue pressure or undue influence on a client;
          (i) Give advice only on those crypto-assets or regulated crypto-asset services in which the licensee is knowledgeable and seek or recommend other specialist advice when necessary; and
          (j) Treat all information supplied by the client with complete confidentiality.
          (k) [This Subparagraph was deleted in April 2023].
          Amended: April 2023
          Added: April 2019

        • CRA-12.3.2

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.3

          For the purposes of CRA-12.3.1(j), the requirement to maintain all client information confidential shall not apply to:

          (a) The disclosure of client information for such purposes, or in such circumstances as the CBB; or
          (b) [This Subparagraph was deleted in April 2023].
          (c) The disclosure of client information pursuant to any requirement imposed under any applicable law or court order in the Kingdom of Bahrain.
          Amended: April 2023
          Added: April 2019

        • CRA-12.3.4

          Where a licensee deals with a person who is acting for a client under a power of attorney, the licensee must:

          (a) obtain a certified true copy of the power of attorney;
          (b) ensure that the power of attorney allows the person to act on the client's behalf; and
          (c) operate within the limitations set out in the power of attorney.
          Added: April 2019

        • CRA-12.3.5

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

      • Assessment of Clients' Suitability and Appropriateness

        • CRA-12.3.6

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

      • Suitability

        • CRA-12.3.7

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.8

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.9

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.10

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.11

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.12

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.13

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.14

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

      • Appropriateness

        • CRA-12.3.15

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.16

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

        • CRA-12.3.17

          [This Paragraph was deleted in April 2023].

          Deleted: April 2023
          Added: April 2019

    • CRA-12.4. CRA-12.4. Accepting Client and Contractual Agreement with Client

      • Terms of Business

        • CRA-12.4.1

          Licensees must provide clients with their terms of business, setting out the basis on which the regulated crypto-asset services are to be conducted.

          Added: April 2019

        • CRA-12.4.2

          The terms of business in relation to providing regulated crypto-asset services to a client must take the form of a client agreement.

          Added: April 2019

        • CRA-12.4.3

          The terms of business must include the rights and obligations of parties to the agreement, as well as other terms relevant to the regulated crypto-asset services.

          Added: April 2019

        • CRA-12.4.5

          An application form in relation to regulated crypto-asset services will be deemed to be a client agreement, provided the form includes the principal terms and conditions of the service, such that the client is provided sufficient information to allow him to understand the basis on which the service is to be conducted.

          Added: April 2019

        • CRA-12.4.6

          The client agreement must be provided in good time prior to providing the regulated crypto-asset services, and it must set out or refer to, among other matters, the rights and obligations of the parties to the agreement, and the terms on which the service is to be conducted.

          Added: April 2019

        • CRA-12.4.7

          For the purposes of Paragraph CRA-12.4.6, "good time" should be taken to mean sufficient time to enable the client to consider properly the service or on offer before he is bound.

          Amended: April 2023
          Added: April 2019

      • Client Understanding and Acknowledgement

        • CRA-12.4.8

          Licensees must not enter into a client agreement unless they have taken reasonable care to ensure that their client has had a proper opportunity to consider the terms.

          Amended: April 2023
          Added: April 2019

        • CRA-12.4.9

          Licensees must obtain their client's consent to the terms of the client agreement as evidenced by a signature or an equivalent mechanism.

          Added: April 2019

        • CRA-12.4.10

          The client agreement must contain the signature of both parties to the agreement. A copy of the signed client agreement must be provided by the licensee to the client.

          Added: April 2019

        • CRA-12.4.11

          Licensees must keep records of client agreements and any documents referred to in the client agreement the entire period the agreement is in force. Upon termination of the agreement, for whatsoever reason, the client agreement must be retained for a period of at least 5 years from the date of closure of the client account.

          Amended: April 2023
          Added: April 2019

    • CRA-12.5 CRA-12.5 Execution of Clients' Orders

      • CRA-12.5.1

        Licensees must take sufficient steps to obtain, when executing orders, the best possible result for its clients taking into account the best execution factors of price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

        Added: April 2019

      • CRA-12.5.2

        Whenever there is a specific instruction from a client, the licensee must execute the order following the specific instruction. The licensee shall be deemed to have satisfied its obligations to take all reasonable steps to obtain the best possible result for a client to the extent that it executes an order or a specific aspect of the order following specific instructions from a client relating to the order or the specific aspect of the order.

        Added: April 2019

      • Order Execution Policy

        • CRA-12.5.3

          Licensees must establish and implement an order execution policy to allow it to obtain, for its client orders, the best possible result.

          Added: April 2019

        • CRA-12.5.4

          Licensees must ensure that the trading venue or entity it selects will enable it to obtain results for its clients that are at least as good as the results that it reasonably could expect from using alternative entities.

          Added: April 2019

        • CRA-12.5.5

          Licensees must provide appropriate information to their clients on their order execution policy. That information must explain clearly, in sufficient detail and in a way that can easily be understood by clients.

          Added: April 2019

        • CRA-12.5.6

          Licensees must notify clients of any material changes to its order execution arrangements or order execution policy.

          Added: April 2019

      • Monitoring and Review

        • CRA-12.5.7

          A licensee must review, at least on an annual basis, its order execution policy and order execution arrangements.

          Added: April 2019

        • CRA-12.5.8

          A licensee must demonstrate to its clients, at their request, that it has executed their orders in accordance with the licensee's order execution policy and it must also ensure that it is able to demonstrate to the CBB upon request that the licensee is in compliance with this Module.

          Amended: April 2023
          Added: April 2019

      • Client Order Handling Rules

        • CRA-12.5.9

          When carrying out client orders, a licensee must implement procedures and arrangements which provide for the prompt, fair and expeditious execution of client orders, relative to the trading interests of the licensee.

          Added: April 2019

        • CRA-12.5.10

          A licensee must not misuse information relating to pending client orders, and shall take all reasonable steps to prevent the misuse of such information by any of its relevant persons.

          Added: April 2019

        • CRA-12.5.11

          A licensee must not carry out a client order or a transaction for own account in aggregation with another client order unless the following conditions are met:

          (a) It is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of a client whose order is to be aggregated;
          (b) It is disclosed to each client whose order is to be aggregated that the effect of aggregation may work to its disadvantage in relation to a particular order;
          (c) An order allocation policy must be established and effectively implemented, provided for the fair allocation of aggregated orders and transactions, including how the volume and price of orders determines allocations and the treatment of partial executions.
          Amended: April 2023
          Added: April 2019

        • CRA-12.5.12

          Where a licensee has aggregated transactions for own account with one or more clients' orders, such licensee must not allocate the related trades in a way that is detrimental to a Client.

          Added: April 2019

        • CRA-12.5.13

          Where a licensee aggregates a client order, with a transaction for own account and the aggregated order is partially executed, the licensee must allocate the related trades to the client in priority to itself, except where the licensee is able to demonstrate on reasonable grounds that without the combination it would not have been able to carry out the order on such advantageous terms, or at all, in which event it may allocate the transaction for own account proportionally, in accordance with its order allocation policy.

          Amended: April 2023
          Added: April 2019

      • Selection of Trading Venues by Licensees

        • CRA-12.5.14

          Licensees must not structure or charge its commission in such a way as to discriminate unfairly between trading venues.

          Added: April 2019