fmdq codified rule book money market
TRANSCRIPT
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November 2013
Codified Rule Book for Money Market
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Table of Contents
Introduction ..................................................................................................................................................................................................................................... 4
Key Definitions ................................................................................................................................................................................................................................. 5
Codified Rule Book for Money Market ............................................................................................................................................................................................ 6
General Standards........................................................................................................................................................................................................................ 6
Powers Exercisable................................................................................................................................................................................................................... 6
Committees .............................................................................................................................................................................................................................. 6
Rule Interpretation .................................................................................................................................................................................................................. 6
Rule Applicability...................................................................................................................................................................................................................... 6
Rule Amendments .................................................................................................................................................................................................................... 6
Authorisations & Approvals for Membership .............................................................................................................................................................................. 7
Eligible Institutions ................................................................................................................................................................................................................... 7
Eligibility Criteria ...................................................................................................................................................................................................................... 7
Technical Requirements ........................................................................................................................................................................................................... 7
Organisation Requirements ..................................................................................................................................................................................................... 8
Termination of Membership (Suspension and Revocation of Licence) ................................................................................................................................... 9
Obligations & Rights ................................................................................................................................................................................................................... 10
Market Making ....................................................................................................................................................................................................................... 10
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Manipulative or other Fraudulent Devices ............................................................................................................................................................................ 10
Trading & Execution ................................................................................................................................................................................................................... 11
Types of Transactions ............................................................................................................................................................................................................ 11
Trading Hours ......................................................................................................................................................................................................................... 15
Trading Parameters ................................................................................................................................................................................................................ 15
Trading Halt ............................................................................................................................................................................................................................ 16
Other Trading Practices ......................................................................................................................................................................................................... 16
Clearing & Settlement ................................................................................................................................................................................................................ 17
Trade Reporting ..................................................................................................................................................................................................................... 17
Trade Confirmation ................................................................................................................................................................................................................ 17
Trade Settlement ................................................................................................................................................................................................................... 18
Dispute Resolution ..................................................................................................................................................................................................................... 19
Mediation ............................................................................................................................................................................................................................... 19
Arbitration .............................................................................................................................................................................................................................. 20
Reference ....................................................................................................................................................................................................................................... 25
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Introduction
In a bid to develop the Nigerian wholesale money market, it has become pertinent that a comprehensive code of conduct and operating rules be instituted to guidethe two-way quote market in trading money market instruments activities.
Adherence to these rules and tenets of professionalism by market participants is necessary to demonstrate a well-functioning market with minimal need foroversight by the Central Bank of Nigeria (CBN). These rules shall be binding on all trading members that are Money Market Dealers (MMDs).
FMDQ has adopted the existing Financial Markets Dealers Association (FMDA) rules which complement the provisions of the Central Bank of Nigerias 2007 MoneyMarket Dealership System in Nigeria: Operational Procedure. FMDQ intends to re-work some parts of these rules after its launch.
Each trading member is responsible for the activities of its personnel (both dealing and support staff). These rules are therefore addressed, not only to the
management of the trading members, but to the dealers and the relevant operational support staff. Management should clearly document the authorities and
responsibilities within which dealing and support staff should operate. These shall include:
General dealing policy including reporting procedures Persons authorised to deal Products to be dealt in
Risk management (counterparty, position and stop-loss limits etc.) and internal controls Confirmation and settlement procedures Relationships with member firms Other relevant guidelines as considered appropriateManagement should ensure that individual dealers are aware of their responsibility to act professionally at all times. It is the responsibility of management and staffto ensure that they are aware of legal requirements applicable to the transactions they undertake and to abide e with them.
These rules shall be read in conjunction with, and shall not be superior to any Laws and Enactments of the Federal Republic of Nigeria or any directive(s) of theCBN and other regulatory/ monetary authorities.
While steps have been taken to ensure that these rules are as comprehensive, these rules may not be exhaustive. It is our hope that both the letter and the spirit ofthe rules will be adhered to.
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Key DefinitionsAcronym Description
AMCON Asset Management Corporation of Nigeria
CBN The Central Bank of Nigeria
CSCS Central Securities Clearing System
DMB Deposit Money Bank
DH Discount House
FGN Federal Government of Nigeria
FBB Fixed-Buy-Back
FMDQ Financial Markets Dealers Quotations
IPHC Initial Pre-Hearing Conference
MMD Money Market Dealers
MVPS Market Value of Purchased Securities
MPC Monetary Policy Committee
MSA Mediation Submission Agreement
NMRA Nigerian Master Repo Agreement
OBB Open-Buy-Back
O/N Overnight
Repo Repurchase Agreement
RTGS Real Time Gross Settlement
SEC Securities and Exchange Commission
SDF Standing Deposit Facility
SLF Standing Lending Facility
TDC Treasury Dealership Certificate
TRF Term Repurchase Facility
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Codified Rule Book for Money Market
Rule SectionRule
Sub-SectionRuleCode
Rule Reference Detail
GeneralStandards
PowersExercisable
1111 Institutional Arrangements
i. Trading members shall be supervised by the CBN on all issuesrelating to primary dealership
ii. A trading member shall apply administrative and institutionalarrangements that allow for transparent and safe operations
iii. Appointment of a trading member shall be terminated by theCBN, upon the breach of any of the provisions of the guidelines
CBN GPD Sec. 5 (i-
iii)
Committees1121 i. FMDQs Executive Regulation & Supervision Committee and the
FMDQ Board Regulation & Supervision Committee shall rule ondisputes/infractions referred to it by trading member, customer orthe Market Surveillance Unit of FMDQ on matters relating to
dealing relationships, market standards and conduct of the tradingmembers
FMDQ
RuleInterpretation
1131 i. The operational procedure (Money Market Dealership System inNigeria April 24, 2007) should be read along with the CBNsGuidelines for Dealership in Money Market Instruments publishedin January 2007. The two documents are available on the CBN
website
CBN MMDS Sec.
1.3
RuleApplicability
1141 i. Following the appointment of Money Market Dealers (MMDs),the CBN operational guidelines stated above are required to guidethe money market activities
CBN MMDS Sec.
1.1
RuleAmendments
1151 i. FMDQ shall file with the Securities and Exchange Commission(SEC), three copies of a report of any proposed amendment orrepeal of or any addition to its rules within 30 days (or such shorterperiod as SEC may authorise) before any action is taken on such SEC SRR Sec.
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Rule SectionRule
Sub-SectionRuleCode
Rule Reference Detail
amendments, revocation or addition by its members or by anygoverning body thereof
192(1)
1152 ii.
FMDQ shall copy CBN on all proposed amendment or repeal oraddition to its rules FMDQ
Authorisations& ApprovalsforMembership
EligibleInstitutions
1211 i. All Deposit Money Banks (DMBs) that are appointed by CBN asMMDs
CBN CABD
EligibilityCriteria
1221 i. A trading member shall be either a bank or a Discount House(DH)
ii. A trading member is required to maintain a minimum capital baseof N3.00 billion and comply with the liquidity and other regulatory
requirements of the CBN
CBN
CBN
GPD Sec. 4 (i-
iii)
GCRC Sec. II
(4)
TechnicalRequirements
1241 i. A trading member shall abide by the guidelines, rules andregulations on primary dealership and any other requirements that
may be stipulated by the Central Bank of Nigeria from time to
time
ii. A trading member shall operate a current account with the CBNfor the purpose of dealing in money market instruments
iii. A trading member shall ensure that its account is properlymaintained at all times, and shall not be overdrawn for any reason
iv. A trading member shall be linked to the CBN on-line tradingsystem
v. A trading member shall have secure internet access and dedicatedtelephone lines for dealing with CBN
vi. A trading member shall have voice recording machines
CBN GPD Sec. 4 (i-
vi)
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Rule SectionRule
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Rule Reference Detail
OrganisationRequirements
1261 A trading member shall have Chief Dealer/Financial MarketsOfficer/Dealers whose sole/primary responsibilities shall include:
i. Monitoring market performanceii. Monitoring incoming electronic trade instructionsiii. Processing or executing trades either by telephone or onlineiv. Analysing research compiled by investment analysts to identify
market opportunities
v. Advising fund /investment managers and stockbrokers on significantchanges in market and recommending buy /sell actions
vi. Deciding on the products to buy and sell, using careful judgementand research to try and predict how the markets are likely to move
vii.Preparing reports to summarise trading activitiesviii.Ensuring details of any problems or delays in processing instructions
are reported to the relevant authorityix. Regularly monitoring global economic and political developments
that can affect prices
x. Constantly networking to maintain strong relationships with analysts,investment managers and brokers
xi. Compliance with legal requirements, industry regulations,organisational policies and professional code
CBN CFB AppendixC
1262 Required Certifications Skills and Competencies for Chief Dealer/Financial Markets Officer/Dealers:
i. Broad knowledge about securities market with detailed knowledgerelating to the specific area you are trading in
ii. Quick thinking and ability to perform under pressureiii. Accurate and excellent attention to detailiv. Swift reactions to changing market conditions
v. Good analytical skills, with the ability to digest and summarize
CBN CFB AppendixC
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Rule SectionRule
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multiple sources of information
vi. Accountable for actions and decisionsvii.Resilient and ability to operate in a lively, fast-paced environmentviii.Self-confidentix. Discrete and ethicalx. Well-organisedxi. Outstanding business communication and interpersonal skills
1263 Generic Skills for Chief Dealer/Financial Markets Officer/Dealers:i. Articulate, clear communicatorii. Strong client service ethiciii. Excellent IT and numeracy skillsiv. Driven to work in a team setting
CBN CFB AppendixC
1264 Minimum QualificationsA first degree and relevant professional certifications such as ACI orTreasury Dealership Certificate (TDC)
CBN CFB AppendixC
1265 Minimum Experiencei. Minimum of 12 years post qualification experience for chief dealer
out of which 8 years have been spent in treasury related functionii. Minimum of 2 years treasury experience for dealers
CBN CFB AppendixC
TerminationofMembership(SuspensionandRevocation of
1281 i. The FMDQ may suspend members, acting in a manner contraryto these guidelines, from dealing in the money market. Suspension,
which will be preceded by a written warning, may arise if three
reported cases of misconduct are established against the erring
party
ii. The written warning will be issued after the second offence. The
FMDQ GTMM Sec.2.2
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Licence) period of suspension may not exceed six calendar months. The
CBN will be advised of this suspension from the market
Obligations &Rights
MarketMaking
1311 Quoting trading members shall
i. give two-way quotes for standard amount and spread withoutundue delay, during trading hours (Current practice is thattrading members give one-way quote for a specifiedamount)
ii. deal, for at leastthe specified amount, if calling trading memberfinds one of its quotes attractive
FMDQ GTMM Sec.
2.3.1
1312 Calling trading members shall
i. decide promptly what to do on the quote supplied by the quotingtrading member, during trading hours.ii. call a quoting trading member as many times as it desires during
trading hoursiii. close one deal per quote or phone call, if it finds one of the
quoting trading members rates attractive.iv. reserve the right not to deal if it finds the quotes unattractive
FMDQ GTMM Sec.
2.3.2
Manipulativeor otherFraudulentDevices
1321 i. Trading members are expected to be professional in their dealingsii. They shall refrain from engaging in any activity that could impact
negatively on the money marketiii. Trading members are in a position of the highest trust and
responsibility and shall always conduct themselves in a manner asto be worthy of this
CBN MMDS Sec.5.1
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Rule SectionRule
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Rule Reference Detail
Trading &Execution
Types ofTransactions
1411 A. Inter-bank Transactionsi. Unsecured placements & takings i.e. Overnight, Call, Tenored
(Current practice is that minimum of 24 hours notice is
required by a trading member to re-price or liquidate calltransactions)
ii. Secured placements and takings i.e. Open-Buy-Back (OBB) andFixed-Buy-Back (FBB)
iii. The pledged Treasury bills for OBB transactions shall not betreated as a sale, but shall remain in the books of the trading
members that pledged the treasury bills as part of their other
assets and not reported as liquid assets
iv. The tenors of the inter-bank transactions shall range fromovernight to 364 days (Current practice is that trading
members active transactions range from overnight to 30
days)
B. Repo (Repurchase Agreement)i. A repo is a borrowing or funding transaction whereby the first party
borrows money from the second party, using the asset as collateral.At the end of the agreed period, the first party repays the secondparty, the repo interest and repurchases the asset
Market
Practice
CBN CTOT
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1412 CBN and Trading MembersTransactions
A. Standing Lending Facility:i. The CBN Standing Lending Facility (SLF) is an overnight
advance available to trading members
ii. The SLF rate is set by the Monetary Policy Committee (MPC) ofthe CBN and is published on the CBN website. It is theapplicable Pricing Rate pursuant to section 2 of the NMRA
B. Standing Deposit Facilityi. The CBN Standing Deposit Facility (SDF) is the deposit facility
for trading members to place overnight excess funds with theCBN
C.Term Repurchase Facility
i. Term repos can be transacted with the CBN for periods and atrates as published on the CBN website. The term repo rate is the
applicable Pricing Rate pursuant to section 2 of the NMRA
CBN
CBN
CBN
GEDWO Sec.
27 & 32
GCRC Sec III
(5)
GCRC Sec III
(6)
1413 Purchase & Repurchase Pricesi. The purchase price is the price at which the purchased securities
are to be transferred from seller (borrower) to buyer (lender) onthe purchase date
ii. The price will be calculated using appropriate market yields andafter applying the appropriate margin ratio
iii. The repurchase price is the price at which the purchased securitiesare to be transferred from buyer to seller on the repurchase date.It is calculated using a money market formula with the applicablerate being either the rate as applied to the SLF (in the case of anSLF transaction) or the relevant term repo rate (in the case of a
TRF transaction)
CBN GCRC Sec IV
(8-9)
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1414 Purchased Securitiesi. The CBN will accept the following securities for the standing
lending and term repo facilities:
Nigerian Treasury bills Federal Government of Nigeria bonds CBN bills Asset Management Corporation of Nigeria (AMCON) bonds
ii. The maturity dates of all securities to be used must be at least 3business days after the repurchase date of the transaction
CBN GCRC Sec IV
(10-11)
1415 Market Value of Purchased Securities (MVPS)i. The MVPS will be based on yields as obtained from generally
recognised sourcesii. Up-to-date secondary market yields will be obtained from FMDQiii. In the absence of secondary market yields for AMCON bonds,the CBN will use the equivalent modified duration of FGN bond
yieldsiv. A margin may be added if the CBN considers that the AMCON
bond should trade at premium (in yield) to FGN bonds
CBN GCRC Sec IV
(17,19)
1416 Margin Ratioi. The CBN will apply a margin ratio to compensate for the risk that
the value of securities could fall during the period of the repoii. For securities with a term-to-maturity of less than 5years, the
margin ratio will be 1.05, and for securities of greater than 5years,the margin ratio will be 1.10
iii. Where there is a combination of securities provided (i.e. someshorter than 5years and some longer than 5years), the marginratio will be a weighted-average of the securities provided
iv. In recognition of the fall in price of a bond after the coupon isdue together with the requirement for the buyer to transfer the
CBN GCRC Sec IV
(12-14)
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coupon to the seller, where a bond provided has an incomepayment date that falls within the period of the repo, then theapplicable margin ratio for such transaction will be increased byone half of the coupon rate applicable to the bond
1417 Margin Maintenancei. CBN may request that a trading member make a margin transferii. The CBN may make such a request in the circumstances where
the MVPS together with the market value of margin transfers(cash and securities transferred when meeting previous margintransfers) falls below 102 percent of the aggregate of therepurchase prices of all repo transactions undertaken between theCBN and the particular trading member
iii. Margin transfer can be made in either cash (cash margin) or insecurities (margin securities)
iv. The CBN may require that all margin transfer be in the form ofmargin securities
v. The value of the margin transfer must be such that the ratio ofMVPS plus margin transfer divided by the aggregate of allrepurchase prices, restores the margin ratio to the ratio applicableat the commencement of the repos (the ratio may be a weighted-average in circumstances where some securities have a term-to-maturity of less than five years and some have more than fiveyears
vi. When the CBN gives notice of a margin transfer, the tradingmember must transfer to the CBN, the cash margin and/ormargin securities by 3pm on the day after which the margin
transfer was requested
CBN GCRT Sec. IV
(20-24)
1418 Treatment of Coupon Paymentsi. Where a transaction extends over the income payment date (i.e.
coupon payment date), the buyer (CBN) shall credit the seller(trading member) with income received on the same day that it
CBN GCRC Sec. IV
(25)
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receives the income
1419 Substitution of Securitiesi. Substitution of securities under the standing lending and term
repo facilities is not allowed
CBN GCRC Sec. IV(26)
TradingHours
1421 Inter-bank Transactionsi. Trading hours shall be between 10.00am to 2.00pm every working
day (Current practice is 9.00am to 6.30pm)
FMDQ GTMM Sec.
2.11
1422 CBN/Trading Members Transactions
i. The standing lending facility is available between the hours of2.00pm and 3.30pm every working dayii. The term repo facility is available between the hours of 9.00amand 3.30pm every working day
CBN GCRT Sec. 5
& 6
TradingParameters
1431 Standard Amount
i. Inter-bank transactions: There is no standard amount for inter-bank transaction
ii. Transactions under SLF and term repo can be conducted inamounts (based on the face values) of a minimum of N100million and in multiples of N1 million thereafter
Market
Practice
CBN
GCRT Sec. 5
& 6
1432 Spreadi. There is no standard spread for the inter-bank transactions Market
Practice
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Rule SectionRule
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Rule Reference Detail
Trading Halt1461 FMDQ may declare a trading halt in circumstances where trading
activity:i. is being or could be undertaken by persons possessing
unpublished price-sensitive information that relates to that
securityii. is being influenced by a manipulative or deceptive trading
practice; or
iii. may otherwise give rise to an artificial price for that securitywhere the bond market becomes illiquid due to some externalevent
FMDQ IIMMA Sec.4.5
Other TradingPractices
1471 Mode of Communication
i. Current practice is that dealings are done on telephoneMarketPractice
1472 Concluding a Deal
i. A deal shall be consummated when the calling trading memberconfirms placing or taking a specified amount quoted for at the
bid or offer rate indicated by the quoting trading member
ii. A trading member shall not refuse to deal after quoting a rate, ifthe calling trading member decides to place or take at either of the
rates quoted
FMDQ GTMM Sec.
2.13
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Rule SectionRule
Sub-SectionRuleCode
Rule Reference Detail
Clearing &Settlement
TradeReporting
1511 Standing Lending Facility & Term Repo Facility:
i. A trading member wishing to access funds through the SLF andTRF must submit a request to Central Securities Clearing System
(CSCS) for it to transfer securities from the account of the tradingmember to the account of the CBN
ii. The trading member shall provide to the Market LiquidityManagement Office, Financial Markets Department, CBN Lagos,
in line with current deadlines, a copy of the confirmation that the
securities have been transferred
CBN GCRC Sec.(IV)
28
TradeConfirmation
1521 i. Current practice is that confirmation of trades by tradingmembers are done by telephone and exchange of letters
Market
Practice
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TradeSettlement
1541 A. Unsecured Transactionsi. The standard settlement date is T + 0 or as mutually agreed
by the trading members for the unsecured transactions
ii.
Unsecured transactions (O/N & Call) shall be settled throughthe Real Time Gross Settlement (RTGS)
B. Secured Transactionsi. The securities and funds (principal) are transferred by the
trading members on T+0 for the OBB, or as mutually agreed
for FBB & repo on the trade initiation day
ii. On maturity day, the equivalent funds (principal + interest)and securities shall be transferred between trading members
iii. Secured transactions are settled through the CBNs T24platform
C. CBN Standing Lending & Deposit Facilitiesi. Standing lending and deposit facilities settle on T+0 basis
D. Reposi. Once the CBN receives acknowledgement from CSCS that
the collaterals (FGN bonds) have been moved, it will credit
the trading members T24 account with the purchase price of
the repo
ii. On the repurchase date, the trading members T24 account atthe CBN will be debited with the repurchase price and thepurchased securities will be transferred to the trading
members account at the CSCS
Market
Practice
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DisputeResolution
Mediation1611 Initiation
i. A trading member must file a request for mediation to FMDQii. FMDQ shall contact the other trading member to confirm if they
agree to mediate or arbitrate the dispute
FMDQ
1612 Selectioni. FMDQ shall assist in the selection of a mediator (a financial markets
expert) by providing the trading members a list of mediators fromwhich to choose along with a detailed report on mediatorsbackground (disclosure report) for each mediator
ii. The trading members shall select a mediator that they all agree towork with
FMDQ
1613 Sessionsi. The trading members, their representatives and the mediator must
sign FMDQs Mediation Submission Agreement (MSA) before themediation can take placeii. FMDQ shall schedule and communicate the mediation date and
locationiii. The trading members shall discuss all the areas of dispute under the
mediators guidance
FMDQ
1614 Settlementi. If the trading members agree to settle, FMDQ shall draft an
enforceable agreement for both trading members to sign
FMDQ
1615 Impasse
i. If the trading members do not reach a settlement, an arbitration casecan be filed, or, if one was previously filed, request can be made tocontinue the case
FMDQ
http://www.finra.org/ArbitrationAndMediation/Mediation/Process/InitiateaMediation/http://www.finra.org/ArbitrationAndMediation/Mediation/Process/MediatorSelectionhttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/MediationSessionshttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/Settlementhttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/Impassehttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/Impassehttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/Settlementhttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/MediationSessionshttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/MediatorSelectionhttp://www.finra.org/ArbitrationAndMediation/Mediation/Process/InitiateaMediation/ -
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1616 Feesi. Trading members shall be required to pay administrative fees for
mediating through FMDQ and are responsible for the mediator's feeand attendant expenses
FMDQ
Arbitration1621 Filing a Claim
i. The trading member (claimant) initiating the arbitration shall submita Statement of Claim, which includes a description of the dispute,the parties involved, relevant facts and remedies requested either bymail or online to FMDQ
ii. Claimant shall also submit the appropriate filing fee as may bedetermined by FMDQ
FMDQ
1622 Answering a Claimi. FMDQ shall notify trading member (respondent) of the case by
sending or serving respondent a case packet by mail. If therespondent is registered with FMDQ, the respondent must arbitratewith claimant
ii.A respondent shall respond to an arbitration claim by filing ananswer that specifies the relevant facts and available defenses to thestatement of claim
iii.A respondent shall have 48 hours to research the claim, prepare andserve a response
FMDQ
1623 Selectioni. FMDQ shall analyse the claim, the nature of the dispute and the
type of financial instruments involved, and decide how many
arbitrator(s) will be requiredii. FMDQ will provide list of possible arbitrators with a detailed report
on each arbitrators background (a disclosure report) for the case toboth trading members of the dispute
iii.Both trading members shall be allowed to determine the arbitratorsfor the case
FMDQ
http://www.finra.org/ArbitrationAndMediation/Arbitration/Process/FileClaimhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/AnswerClaimhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/ArbitratorSelectionhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/ArbitratorSelectionhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/AnswerClaimhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/FileClaim -
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Rule Reference Detail
1624 Pre-Hearing Conferencesi. FMDQ will schedule an Initial Pre-Hearing Conference (IPHC) with
the arbitrator(s) and trading members representatives. The IPHCwill hold over the telephone or other electronic means such as
VOIP etc.ii. FMDQ will notify the trading members and arbitrator(s) of the date
and time of the IPHC at least 72 hours prior to the conferenceiii.FMDQ shall provide arbitrators with any written submissions
pertaining to the issues or disputes to be addressed at the conferenceprior to a IPHC
iv.At the IPHC, the panel will schedule evidentiary hearing dates; setdiscovery date, briefing date and motions deadlines; and, addressother preliminary matters
v.At the conclusion of the IPHC, the chairperson shall sign theHearing Scheduling Order on behalf of the panel and submit it tothe FMDQ for distribution to the trading members
FMDQ
1625 Discovery - Exchange of documents/ information & identify witnesses
i. Trading members must produce all documents required or agreed tobe produced
ii.Trading members are required to serve on each other copies ofdocuments in their possession that they intend to present at thehearing and to identify witnesses they intend to call at least 72 hoursprior to the first scheduled hearing date
iii.Any trading member that is unable to provide required documentsshall state the reasons in writing
iv.Trading members may shorten or lengthen the exchange deadlinesby agreement
v.The witness lists will also be sent to the arbitrators by FMDQ forreview prior to a hearing
FMDQ
http://www.finra.org/ArbitrationAndMediation/Arbitration/Process/PrehearingConferenceshttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/Discoveryhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/Discoveryhttp://www.finra.org/ArbitrationAndMediation/Arbitration/Process/PrehearingConferences -
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1626 Hearingsi. The trading members and arbitrators shall meet in person to
conduct the hearing in which the trading members shall presentarguments and evidence in support of their respective cases
ii.Arbitrators may proceed in the absence of a trading member if itfails to appear at a hearing after having been duly notified of thetime, date and place of the hearing by FMDQ
Witnessesi. Unless all parties agree otherwise, the panel shall not allow fact
witnesses whilst expert witnesses shall be permitted to attend allhearings
Starting the hearingi. Hearings shall be held at FMDQ office, or any other location as may
be agreedii. FMDQ will handle all logistics for the hearing and communicate to
the trading members and the arbitrators
Record of the Hearingi. All hearings shall be digitally recordedii. Arbitrator(s) shall employ an attendance list to track the attendance
of the trading members, representatives and witnesses; and anexhibit list (claimants exhibits and respondents exhibits) to trackthe trading members exhibits in order to ensure complete record ofthe hearing
Exclusion of Evidence During the Parties Presentationi. Arbitrator(s) may exclude from the hearing any documents not
exchanged during the discovery periodii. Arbitrator(s) may exclude from the hearing witnesses not identified
during the discovery period
Executive Sessionsi. Executive sessions (separate discussions among the arbitrators) shall
be held outside the presence of the trading members and theirrepresentatives and witnesses
ii. All executive sessions shall be off the record
FMDQ
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Exiting the Hearing Roomi. At the conclusion of a hearing, a pre-designated panel member shall
collect all accepted exhibits and return them to FMDQ as theofficial record
ii. FMDQ shall release all case-related materials to arbitrator(s) ifdiscussions are adjourned1627 Decision
i. Arbitrator(s) shall review the hearing record, the pleadings andsubmissions and their notes before they deliberate the facts of thecase and render a written decision called an award
ii.Arbitrator(s) may also request that the trading members submitpost-hearing briefs to help clarify issues
Rendering the Awardi. Arbitrator(s) shall be required to render an award within 24 hours
from the date the hearing is concludedForm of the Award
i. All awards must be in writing and signed by all the arbitrators. Anarbitrator who disagrees with the award may note the dissent
ii.All awards rendered are legally binding and final and are not subjectto review or appeal within FMDQunless there is a challenge fromthe Oversight Committee
Awarding Fees and Costsi. Arbitrator(s) shall decide which trading member shall pay the costs
incurred as a result of the arbitrationArbitrator Immunity
i. Arbitrators shall have immunity from civil liability that may arise outof their conduct while serving as arbitrators
Penaltyi. Trading members must comply with the award within 24 hours. Any
trading member that does not comply in a timely manner may besuspended by FMDQ
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Challenging Arbitration Decisioni. A trading member may challenge an arbitration decision by
requesting the Oversight Committee to set the award aside as voidii. The motion must be made within 24 hours of the award
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Reference
S/N Acronym Description
1 GTMM Guidelines for Two-Way Quote Trading in Money Market (Inter-bank Placements/Deposits)2 GPD Guidelines for Primary Dealership in Money Market Instruments (July 18, 2006)3 CABD CBN Circular on Appointment of Deposit Money Banks and Discount Houses as Money Market Dealers (May
25, 2012)
4 GEDWO Guidelines on the Expanded Discount Window Operations20085 CTOT CBN Circular on Treatment of Open-Buy-Back Transactions by Banks20036 GCRC Guidelines for the Conduct of Repurchase Transactions under CBN Standing FacilitiesApril 20127 IIMMA Inspection and Instruction Manual of FMDQ OTC Members Activities - November 2011