Amendments to the AIFC FSFR (Annex 1)
AIFC FINANCIAL SERVICES FRAMEWORK REGULATIONS (FSFR)
In this Appendix, a blue font and underlining indicates new text and strikethrough indicates deleted text, unless otherwise indicated.
39. Exemption for Authorised Market Institutions
An Authorised Investment Exchange is exempt from the General Prohibition in respect of any Regulated Activity:
which is carriedon as a part of the Authorised Investment Exchange's business as an investment exchange; or
which is carriedon for the purposes of, or in connection with, the provisionby the Authorised Investment Exchange of services designed to facilitate the provision of clearing services by anotherPerson.
An Authorised Clearing House is exempt from the General Prohibition in respect of any Regulated Activity:
which is carried on for the purposes of, or in connection with, the provision of clearing services by the Authorised Clearing House; or
which is carried on for the purposes of, or in connection with, the provision by the Authorised Clearing House of services designed to facilitate the provision of clearing services by another Person.
An Authorised Virtual Currency Trading Facility is exempt from the General Prohibition in respect of any Regulated Activity:
which is carried on as a part of the Authorised Virtual Currency Trading Facility's business as an virtual currency trading; or
which is carried on for the purposes of, or in connection with, the provision by the Authorised Virtual Currency Trading Facility of services designed to facilitate the provision of clearing services by another Person.
55. Persons eligible for Membership
Subject to such further admission criteria as the AFSA may prescribe by Rules, an Authorised Market Institution may only admit as a Member:
an Authorised Firm;or
a Recognised Non-AIFCMember;
An Authorised Person engaged in the activity of Operating a Virtual Currency Business may only admit as a Member a Person who satisfies admission criteria set out in its Membership Rules and which is either:
an Authorised Firm;
a Recognised Non-AIFC Member; or
a body corporate or an individual (natural person) that carries on the activity solely as principal.
AFSA power to impose requirements on an Authorised Market Institution
Without limiting the powers available to the AFSA under Part 8 (Supervision of Authorised Persons), the AFSA may direct an Authorised Market Institution to do or not do specified things that the AFSA considers are necessary or desirable or to ensure the integrity of the AIFC financial markets, including but not limited to directions:
requiring compliance with any duty, requirement, prohibition, obligation or responsibility applicable to an Authorised Market Institution; or
requiring an Authorised Market Institution to act in a specified manner in relation to a transaction conducted on or through the facilities operated by an Authorised Market Institution, or in relation to a specified class of transactions; or
requiring an Authorised Market Institution to act in a specified manner or to exercise its powers under any rules that the Authorised Market Institution has made; or
excluding the application of any requirements for engaging in the activity of Operating a Virtual Currency Business imposed by the rules; or
imposing on an Authorised Person engaged in the activity of Operating a Virtual Currency Business any additional requirements that the AFSA considers appropriate.
AFSA power to give directions to an Authorised Market Institution
Without limiting the application of section 95 (Exercise of supervisory powers by the AFSA), the AFSA may direct an Authorised Market Institution to:
close the marketor facilities operatedby an Authorised Market Institution in a particular manner or for a specified period; or
suspend transactions on the marketor through the facilities operatedby the Authorised Market Institution; or
suspend transactions in Securities or Virtual Currencies conducted on the market or through the facilities operated by the Authorised Market Institution; or
prohibit trading in Securities or Virtual Currencies conducted on the market or through the facilities operated by the Authorised Market Institution; or
defer for a specified period the completion date of transactions conducted on the market or through the facilities operated by the Authorised Market Institution; or
prohibit a specified Person from undertaking any transactions on the facilities operated by the Authorised Market Institution; or
do any act or thing, or not do any act or thing, in order to ensure an orderly
market, or reduce risk to the AFSA’s objectives.
Schedule 3: Market Activities
3. Operating a Virtual Currency Trading Facility
Operating a Virtual Currency Trading Facility means operating a facility which functions regularly and brings together multiple third parties (whether as principalor agent):
buying, selling or exchanging Virtual Currencies for a Real (Fiat) currency, and/or
exchanging one Virtual Currency for another Virtual Currency,
in its facility and in accordance with its non-discretionary rules – in a way that results in a contract.
Guidance
The following activities do not constitute Operating a Virtual Currency Business–
trading of Virtual currencies for its own investment purpose;
the issuance of Virtual Currencies by a Person and their administration (including sale, redemption);
any other activity or arrangement that is deemed by the AFSA to not constitute Operating a Virtual Currency Business, where necessary and appropriate in order for the AFSA to pursue its objectives.