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Location: Central Bank of Bahrain Volume 6—Capital Markets > Part A > Institutions > MAE — Markets and Exchanges > MAE-4 Instruments, Transactions and Contracts > MAE-4.6 Registration of Market Maker > Eligibility > MAE-4.6.1
  • Eligibility

    • MAE-4.6.1

      A licensed exchangeG or licensed market operatorG must ensure that a licenseeG meets the following requirements prior to being registered as a market makerG :

      (a) The licenseeG is incorporated in the Kingdom of Bahrain;
      (b) The licenseeG must be licensed by the CBB as a Bank or as an Investment Firm(Category 1 or Category 2) or as a Broker-DealerG under CBB Rulebook Volume 6; and
      (c) The licenseeG is a member of the licensed exchangeG or licensed market operatorG .
      Added: January 2019

    • MAE-4.6.2

      A licensed exchangeG or licensed market operatorG must formulate its own objective eligibility criteria for registration of market makerG . The criteria, at the minimum, must include;

      (a) Capital requirement;
      (b) Infrastructure requirements;
      (c) Trading and market makingG experience;
      (d) Business continuity arrangements;
      (e) Risk management policy including settlement guarantee mechanism;
      (f) Rights and obligations of the market makerG including quoting obligations, inventory size, order type and minimum order size; and
      (g) Terms and conditions under which market making may be terminated;
      Added: January 2019

    • MAE-4.6.3

      A licensed exchangeG or licensed market operatorG may have regard to the following matters in determining whether an applicant has satisfied the eligibility criteria:

      (a) Adequate financial capital and qualified technical and administrative staff to practice market makingG ;
      (b) Separation between market makingG and any other activities that the memberG is licensed to practice in terms of organisational, technical, financial and administrative arrangements. Evidence thereof may be submitted by the memberG through the following;
      (i) The adopted mechanism to separate the market makingG from other licensed activities;
      (ii) The staff assigned to perform market makingG activities;
      (iii) Experience and qualification of technical and administrative staff assigned to perform market makingG activities;
      (c) Details of risk management systems and internal control procedures.
      Added: January 2019

    • MAE-4.6.4

      A licenseeG , as specified in Paragraph MAE-4.6.1, desirous of undertaking market makingG activity must apply to the licensed exchangeG or licensed market operatorG for registration as a market makerG .

      Added: January 2019

    • MAE-4.6.5

      A licenseeG must demonstrate to the satisfaction of the licensed exchangeG or licensed market operatorG that it is suitably qualified to undertake market makingG activity.

      Added: January 2019

    • MAE-4.6.6

      A licensed exchangeG or licensed market operatorG may, prior to issuing its consent for registration of a memberG as a market makerG , may conduct on-site inspection of the memberG to ensure the availability of requisite systems, processes and infrastructure for undertaking market makingG activity.

      Added: January 2019

    • MAE-4.6.7

      If the licensed exchangeG or licensed market operatorG is satisfied that the memberG is eligible to carryout market makingG activities, the licensed exchangeG or licensed market operatorG may appoint the memberG as a market makerG and enter into a market maker agreementG with the memberG specifying the date of commencement of its term as market makerG .

      Added: January 2019

    • MAE-4.6.8

      The market maker agreementG referred to in Paragraph MAE-4.6.7 may at the minimum, include the following terms and conditions:

      (a) Rights and obligations of the market makerG ;
      (b) Duration of the market maker agreementG ;
      (c) Conditions under which market maker agreementG may be terminated;
      (d) Time window during trading hours that the market makerG should be obliged to ensure presence on the order book;
      (e) The maximum spread between the bid and offer price that market makerG should maintain; and
      (f) Minimum, maximum and normal order size with agreed specifications.
      Added: January 2019

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