Clearing Operations in Commodities Markets Regulations

Sets the rules for clearing operations in licensed commodities markets, covering the clearing entity and its members, clearing procedures and obligations, and the Authority’s supervision and penalties.

Summary

Decision No. 11/R of 2015 regulates central clearing of futures and options traded on licensed UAE commodities markets. Article 2 allows clearing activity in such a market only under a licence from the Authority, now the Capital Market Authority (CMA). The licensed commodities central clearing party (CCP) becomes counterparty to every contract by novation and nets members' obligations each day. The decision was issued on 2 March 2015 and took effect the day after publication in the Official Gazette (Article 23). It is in force as amended several times: Decision No. 39/R of 2015 rewrote parts of Articles 1, 4, 5 and 10, Decision No. 15/Chairman of 2016 added recognition of foreign CCPs (Article 3 bis) and sanctions on directors, Decision No. 15/Chairman of 2019 cut the close-out period to one day, Decision No. 27/Chairman of 2020 allowed bank guarantees as collateral, and Decision No. 7/Chairman of 2023 amended the default waterfall.

Article 3 sets the licensing conditions: a UAE joint-stock or free zone company whose core business is clearing, paid-up capital and reserves of at least AED 50 million, a licence fee of AED 200,000 paid in advance, compliance with IOSCO clearing principles, approved governance, at least one third of the board (minimum two) independent, and Authority approval of shareholders, chairman, directors and CEO. Article 4 requires a chief compliance officer (who is also money laundering reporting officer), internal auditor, chief risk officer and chief technology officer, each approved by the Authority and none holding two of these posts. The Authority decides within 15 days of a complete application, with an appeal within 15 days and a six-month bar on reapplying (Article 6); licences run to 31 December and renewal costs AED 100,000 (Article 7).

Article 10 holds the operating rules. Margins must cover 99% confidence, a one-day close-out and three-year back-tested peak exposure. A fully funded default fund must cover the default of the two largest clearing members and be stress-tested at least daily. Defaults are met from the defaulter's margin, its guarantee, its default fund contribution, the CCP's own capital (at least AED 10 million) and then other members' contributions. The CCP files reviewed quarterly reports within 45 days and audited annual accounts within three months, needs prior approval for ownership, capital and constitutional changes, and keeps records for ten years. Articles 13 to 21 cover inspection, liquidation and penalties.

Who it applies to

Companies licensed or seeking a licence to act as central clearing party for futures and options on UAE commodities markets, foreign CCPs seeking recognition to serve UAE customers, clearing members and their customers, and the CCP's board, executive management and approved staff.

Contents

English official text in 23 articles. Open the full text or jump to a provision:

1. Article 1 — [1]
2. Article 2
3. Article 3
4. Article 4
5. Article 5
6. Article 6
7. Article 7
8. Article 8
9. Article 9
10. Article 10
11. Article 11
12. Article 12
13. Article 13
14. Article 14
15. Article 15
16. Article 16
17. Article 17
18. Article 18
19. Article 19
20. Article 20
21. Article 21
22. Article 22
23. Article 23

Key provisions

Obligations and deadlines

• File auditor-reviewed quarterly reports within 45 days of each quarter-end and audited annual accounts within three months of year-end.
• Obtain the Authority's prior approval before changing capital, constitutional documents, shareholders or activities, or merging.
• Stress-test the default fund at least daily and keep it sufficient to cover the two largest clearing members.
• Keep all clearing, margin and contract records for at least ten years with protected backups.
• Apply for licence renewal at least one month before 31 December and pay AED 100,000.

Penalties

Under Article 21 the Authority may warn the commodities CCP, fine it up to the maximum set by law, or suspend it for up to one year. It may revoke the licence for loss of a licensing condition, serious breach, unpaid renewal fees or fines, bankruptcy, winding-up, a licence obtained on incorrect information, or failure to start business within three months; the revocation is published at the CCP's expense. Directors, the CEO and accredited employees face a warning, suspension of up to two months or cancellation of their approval.

History and citations

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