the dfsa sourcebook - thomson .the dfsa sourcebook . regulatory policy and process (rpp sourcebook)

Download The DFSA Sourcebook - Thomson .The DFSA Sourcebook . Regulatory Policy and Process (RPP Sourcebook)

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The DFSA Sourcebook

Regulatory Policy and Process

(RPP Sourcebook)

(FEBRUARY 2015 EDITION)

Appendix 2

RPP SOURCEBOOK CONTENTS

1 INTRODUCTION ..................................................................................... 1 1-1 PURPOSE .................................................................................................................... 1 1-2 STATUS ....................................................................................................................... 2 1-3 UPDATING THE RPP ................................................................................................... 2 1-4 DEFINED TERMS ........................................................................................................ 2 1-5 DFSAS REGULATORY MANDATE ............................................................................ 3 1-6 DFSAS OBJECTIVES AND GUIDING PRINCIPLES .................................................. 3 1-7 DFSAS REGULATORY STRUCTURE ........................................................................ 4

SUPERVISION ............................................................................................................. 4 MARKETS .................................................................................................................... 4 ENFORCEMENT .......................................................................................................... 5 POLICY AND LEGAL ................................................................................................... 5

2 AUTHORISATION - BECOMING REGULATED .................................... 6 2-1 DFSAS APPROACH TO AUTHORISATION ............................................................... 6

INTRODUCTION .......................................................................................................... 6 2-2 ASSESSING THE FITNESS AND PROPRIETY OF AUTHORISED PERSONS .......... 6

INTRODUCTION .......................................................................................................... 6 BACKGROUND AND HISTORY .................................................................................. 7 LOCATIONS OF OFFICES .......................................................................................... 8 CLOSE LINKS .............................................................................................................. 8 LEGAL STATUS OF AUTHORISED FIRMS ................................................................ 8 OWNERSHIP AND GROUP ......................................................................................... 8 CONTROLLERS .......................................................................................................... 9 RESOURCES, SYSTEMS AND CONTROLS ............................................................. 10 AUTHORISED FIRMS - COLLECTIVE SUITABILITY OF INDIVIDUALS OR OTHER PERSONS CONNECTED TO THE AUTHORISED FIRM .............................. 10 AUTHORISED MARKET INSTITUTIONS OTHER CONSIDERATIONS ................. 11

2-3 ASSESSING THE FITNESS AND PROPRIETY OF AUTHORISED INDIVIDUALS, PRINCIPAL REPRESENTATIVES AND KEY INDIVIDUALS ..................................... 14 INTRODUCTION ........................................................................................................ 14 INTEGRITY ................................................................................................................ 14 COMPETENCE AND CAPABILITY ............................................................................ 15 FINANCIAL SOUNDNESS ......................................................................................... 16

2-4 WAIVERS DURING AUTHORISATION...................................................................... 16 2-5 START-UP ENTITIES IN THE DIFC ........................................................................... 16

WHAT ARE "START UP ENTITIES"? ....................................................................... 16 THE DFSA'S RISK-BASED APPROACH TO START UP ENTITIES: BROAD RISK CATEGORIES ............................................................................................................ 17 FINANCIAL RISK ....................................................................................................... 17 GOVERNANCE RISK ................................................................................................. 17 BUSINESS/OPERATIONAL RISK ............................................................................. 18 COMPLIANCE RISK .................................................................................................. 18 MAIN INFORMATION REQUIREMENTS ................................................................... 18

2-6 APPLICATION FOR A RETAIL ENDORSEMENT ..................................................... 19 2-7 APPLICATION FOR AN ISLAMIC ENDORSEMENT ................................................. 20 2-8 APPLICATION FOR AN ENDORSEMENT TO OPERATE A MULTILATERAL

TRADING FACILITY OR ACT AS A TRADE REPOSITORY ..................................... 20 2-9 APPLICATION TO BE A REPRESENTATIVE OFFICE ............................................. 21 2-10 REGISTERING AS A DNFBP .................................................................................... 21

RPP SOURCEBOOK CONTENTS

2-11 APPLICATION TO BE A REGISTERED AUDITOR ................................................... 21 2-12 APPLICATION TO BE AN AUDIT PRINCIPAL .......................................................... 22

3 SUPERVISION - BEING REGULATED .................................................. 23 3-1 DFSAS APPROACH TO SUPERVISION .................................................................. 23

INTRODUCTION ........................................................................................................ 23 SUPERVISION PHILOSOPHY ................................................................................... 23 RISK MANAGEMENT CYCLE ................................................................................... 24 RISK MATRIX - IMPACT AND PROBABILITY RATINGS ......................................... 24 RISK-BASED CLASSIFICATION OF FIRMS ............................................................. 25 RISK MITIGATION ..................................................................................................... 25 DFSAS RELATIONSHIP WITH FIRMS ..................................................................... 25 NOTIFICATIONS TO THE DFSA ............................................................................... 26 CO-OPERATION WITH OTHER REGULATORS ....................................................... 27

3-2 SUPERVISION OF AUTHORISED FIRMS ................................................................. 27 GROUP SUPERVISION ............................................................................................. 28 DOMESTIC FIRMS GROUP WITH DIFC HEAD OFFICE .......................................... 28 SUBSIDIARY OF A NON-DIFC FIRM ........................................................................ 29 BRANCH OF A NON-DIFC FIRM ............................................................................... 29 PERIODIC RETURNS FOR AUTHORISED FIRMS.................................................... 30 ON-GOING RISK ANALYSIS ..................................................................................... 30 REVIEW OF RISK MANAGEMENT SYSTEMS .......................................................... 31 DESK BASED REVIEWS ........................................................................................... 31 ON-SITE VISITS ......................................................................................................... 31 PERIODIC COMMUNICATIONS ................................................................................ 32 EXTERNAL AUDITOR REPORTS, STATEMENTS AND TRIPARTITE MEETINGS .. 33 REQUIRING INFORMATION AND DOCUMENTS ..................................................... 33 REQUIREMENTS RELATING TO CHANGE IN CONTROL ....................................... 33 DFSA APPROVAL ..................................................................................................... 33 APPLICATION FOR A CHANGE OF SCOPE OF LICENCE ...................................... 34 NOTIFICATION TO THE DFSA RELATING TO A MAJOR ACQUISITION ............... 35 APPLICATION FOR A WITHDRAWAL OF LICENCE ............................................... 36

3-3 SUPERVISION OF REPRESENTATIVE OFFICES .................................................... 37 3-4 SUPERVISION OF DNFBPS ...................................................................................... 37 3-5 SUPERVISION OF REGISTERED AUDITORS .......................................................... 38 3-6 SUPERVISION OF AUTHORISED MARKET INSTITUTIONS ................................... 38

INTRODUCTION ........................................................................................................ 38 OFFICIAL LIST OF SECURITIES .............................................................................. 38 GROUP SUPERVISION ............................................................................................. 38 APPLICATION FOR A CHANGE IN CONTROL ........................................................ 39 DIRECTIONS POWER ............................................................................................... 39

4 SUPERVISORY AND ENFORCEMENT POWERS ................................ 41 4-1 INTRODUCTION ........................................................................................................ 41 4-2 POWER TO REQUEST INFORMATION AND DOCUMENTS .................................... 42 4-3 POWER TO ACCESS PREMISES ............................................................