Bahrain Market Intermediaries and Representatives License

The Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’) provides the legal framework for the provision of Market Intermediaries and Representatives License. The regulatory authority, which grants the authorization for such a firm, is the Central Bank of Bahrain (CBB’s) Capital Markets Supervision Directorate (‘CMSD’).

A Bahrain Market Intermediaries and Representatives License is a license which allows a licensed member to carry out regulated activities that include but are not limited to the following:

  1. Undertaking or providing services related to arranging or trading in securities, whether as principal or as an agent;
  2. Undertaking or providing any services related to the clearing or settlement of securities transactions, whether as principal or agent;
  3. Undertaking or providing services related to the depositing of securities with a clearing house and licensed depository.

Permitted Activities

The following are the license categories under the Market Intermediaries and Representatives License and permitted activities under each category:

  1. Licensed discount broker – undertake only collecting of the investors or clients order which is required to be executed on the licensed exchange through a licensed broker or broker-dealer.
  2. Licensed broker – The licensed brokers may undertake:
    1. Trading in securities as agent;
    2. Arranging transactions in securities as an agent
  3. Licensed broker-dealer – The licensed broker-dealers may undertake:
    1. Trading in securities as principal;
    2. Trading in securities as agent;
    3. Arranging transactions in securities as principal and agent;
    4. Managing securities’ portfolios;
    5. Depositing of securities;
    6. Advising on securities businesses;
    7. Providing market research and analysis.
  4. Licensed clearing member – may undertake any regulated activities stipulated under Module CSD in general, and in particular:
    1. Facilitating the deposit of securities;
    2. Clearing and settlement of securities transactions as principal;
    3. Clearing and settlement of securities transactions as agent;
    4. Facilitating registration of dealings in deposited securities;
    5. Provide custody services to deposited securities;
    6. Facilitating netting of transactions in deposited securities;
    7. Facilitating securities lending, including repurchase agreements and other economically equivalent transactions;
    8. Finality of settlement;
    9. Facilitating margin trading; or
    10. Ensure achievement of Delivery versus Payment.
  5. An authorised external trading member – undertake only the activities of a licensed broker or broker-dealer outside the Kingdom of Bahrain.
  6. An authorised proprietary trading member – must submit the application made for membership of the licensed exchange together with the approval of membership of such exchange.

Legal Requirements

Sr.

No

ElementRequirement(s)
Entity RequirementsIn accordance to the Central Bank of Bahrain (CBB) Rulebook, the legal status of the entity making the application can be:

  1. A Bahraini joint stock company (BSC)
  2. A Bahraini company with limited liability (‛WLL’);
Director’s RequirementsDepending on the entity type, the following are the requirements:

  1. WLL – One manager or more, to be appointed from among the partners or non-partners by the founders for the first time and by the general assembly thereafter, shall manage the company.
  2. BSC (Public) – The number of the board members shall be at least five members appointed for a period of three years renewable.
  3. BSC (closed) – The number of the board members shall not be less than three and membership term shall not exceed three years renewable
Shareholder requirements
  • An EMI entity will need at least one shareholder
  • Corporate shareholding is also allowed.
Auditor
  • The Auditor must be a réviseur d’entreprises agréé (approved statutory auditor) approved by CSSF
  • Any change in the réviseurs d’entreprises agréés (approved statutory auditors) shall be authorised in advance by the CSSF
Minimum Capital Requirements
  • The PSL Law requires a minimum capital of EUR 350,000 for an Electronic Money Institution.
  • The Company must at all times respect the own funds as set out by the Law

Ongoing Obligations

  1. EMIs shall draw up their annual accounts and, if appropriate, their consolidated accounts in accordance with the law of 19 December 2002 concerning the trade and companies register, as well as the accounting and annual accounts of companies, as amended, “the law of 10 August 1915 on commercial companies, as amended,”6 and Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards.

About Valsen Fiduciaries

Valsen Fiduciaries is a licensed independent global service provider of a broad range of fiduciary, administrative, legal, corporate secretarial and support services.

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The Valsen Advantage

  • We will advise you on the optimal legal structure for your requirements, size, expectations and circumstances. We have extensive knowledge of a wide range of securities dealer licenses in all major jurisdictions.
  • Valsen will assist to complete every form for each process in the best way we know how (Based on our many years’ experience with various regulators and service providers across the world)
  • We are very hands on in the post filing period checking with re regulator and service providers and updating you regularly. Any queries raised by the regulators and service providers during processing will be quickly synthesized by us and we shall craft the right responses to move the process forward fast.
  • We have a full in-house compliance support for all compliance requirements with the regulator and service providers

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