The Financial Supervision Commission (“FSC”) adopted new Ordinance No 38 as of May 21st 2020 on the requirements for the investment intermediaries` activities (“the Ordinance”). Its aim is to provide more clear and precise rules for the activities of the investment intermediaries.
The ordinance repeals the previous ordinance on the requirements for the investment intermediaries` activities and the ordinance on the requirements for margin transactions, short sales, and securities` loans. The rules of the repealed ordinances compatible with the latest amendments of the legislation, are kept in the new ordinance.
Its provisions specify the requirements for the managing and supervision bodies of the investment intermediaries, as well as for the personnel with key functions.
The new ordinance lays down the rules for the internal organization of the investment intermediaries, the provision of information to the FSC and the record-keeping. The requirements for the compliance check unit have also been determined.
The ordinance specifies the rules for provision of investment services and the requirements for securities` brokers and investment consultants. It provides detailed rules about the suitability assessments upon provision of services to clients.
The ordinance lists the additional requirements for tied agents and for the investment intermediary activities as a registration agent.
It also specifies the rules for cross-selling practices, for the contents of the margin transactions and short sales, for daily record-keeping and for the procedures related to these operations.
One could find definitions for some of the terms used in the ordinance in its supplementary provisions, i.e. “robo advice”, “margin transaction” etc.
