Regulatory update - OTC Leveraged Products implementation

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has implemented changes to its regulatory framework that applies to Authorised Persons offering over-the-counter leveraged products (“OTC Leveraged Products”) to Retail Clients. The amendments to the Conduct of Business Rulebook (“COBS”) and Fees Rules (“FEES”) formalise, through Rulebook provisions, existing conditions placed on the licences of Authorised Persons currently offering such products.

The Rulebook changes, and a small number of other regulatory enhancements, have been benchmarked against standards established by peer regulators and international standard-setting bodies and have been implemented following a period of public consultation. There is a six-month transition period for Authorised Persons currently offering OTC Leveraged Products to Retail Clients to comply with the three new requirements relating to:

1. Margin close-out requirements
2. Referrals by unregulated third-parties and
3. The use of credit cards and/or credit facilities

In addition to the Rulebook changes, the FSRA has also issued supplementary, non-Rulebook guidance that will help Authorised Persons and potential applicants understand the FSRA’s minimum expectations in relation to the experience and qualifications of individuals proposed for senior positions and further operational considerations in this area.

To view the detailed documents on ADGM FSRA’s enhancements to its requirements for OTC Leveraged Products please click on the following links:

• FSRA Rules (OTC Leveraged Products)
• FSRA FEES Rules (OTC Leveraged Products)
• FSRA Supplementary Guidance (OTC Leveraged Products)