CMA Decision No. 22/Chairman of 2016 · UAE Federal
Regulates central clearing counterparty business: licensing of CCPs, how a CCP functions, its obligations, and the CMA’s control, inspection and penalty powers over it.
Decision No. 22/Chairman of 2016 is the regulation for central clearing counterparties (CCPs) in the UAE securities market. Article 2 prohibits anyone from carrying on CCP activity without a licence from the Authority, now the Capital Market Authority (CMA). A CCP steps in as counterparty to every trade on the market through novation, nets members' rights and obligations, and sends the settlement report to the depository and settlement bank. The decision was issued on 18 July 2016 and took effect the day after publication in the Official Gazette (Article 28). It remains in force as amended by Decisions No. 16/Chairman of 2021 (board risk committee and collateral rules) and 36/Chairman of 2023 (market members as clearing members), and the text carries a further amendment to Article 16 by Decision No. 35/R.M of 2019.
Article 3 sets the licensing conditions: a UAE-incorporated company whose main purpose is CCP business, paid-up capital of at least AED 50 million, a licence fee of AED 200,000, approved premises, systems, internal controls, a risk management manual and governance controls, approved founders and controlling shareholders, and at least one third of the board (minimum two) independent. Foreign CCPs may seek recognition to serve UAE clients in a foreign market if licensed and supervised at home by an IOSCO MMoU signatory (Article 4). The application fee is AED 10,000, the Authority decides within 15 days of a complete file (silence means rejection), the licence runs to 31 December each year and renewal costs AED 100,000 (Articles 5 to 7).
The core prudential rules are in Articles 12 to 15. Margins must cover a 99% confidence level, a two-day close-out and the largest exposure over the past three years; members fund a default fund large enough to cover the default of the largest member or of the second and third largest combined; and the CCP's own contribution must be at least 25% of its paid capital. A default is met in a fixed waterfall: the defaulter's margin, its guarantee, its default fund contribution, the CCP's contribution, then other members' contributions. Articles 16 to 19 add reporting (quarterly reports within 45 days, audited annual accounts within three months), prior approval for ownership and capital changes, ten-year record keeping and IOSCO-based risk management. Articles 20 to 25 cover inspections, liquidation, bankruptcy of members and penalties.
Companies licensed or seeking a licence to operate as a central clearing counterparty for UAE securities markets, foreign CCPs seeking recognition to serve UAE clients, clearing members (brokers, custodian banks and approved market members) and the CCP's board, executive management and approved employees.
English official text in 28 articles. Open the full text or jump to a provision:
| Article 2 | Central clearing counterparty activity may not be carried on without a licence issued by the Authority. |
| Article 3 | Licensing conditions: UAE company with CCP as its main purpose, paid-up capital of at least AED 50 million, AED 200,000 licence fee, approved systems, risk manual, governance, fit and proper owners, and independent board members. |
| Article 4 | Foreign CCPs licensed and supervised at home may be recognised to serve UAE clients in a foreign market if their regulator signed the IOSCO MMoU or a bilateral MoU with the Authority. |
| Articles 6–7 | The Authority decides within 15 days of a complete application, silence counting as rejection; licences expire each 31 December and renewal requires an application a month ahead and an AED 100,000 fee. |
| Article 13 | Margins must cover a 99% confidence level, two-day close-out and three-year back-tested peak exposure; the default fund must cover the largest member or second and third largest combined; the CCP's own contribution is at least 25% of paid capital. |
| Article 14 | Sets the default waterfall: defaulting member's margin, its guarantee, its default fund contribution, the CCP's contribution, then complying members' default fund contributions. |
| Article 15 | Collateral may be liquid low-risk securities subject to haircuts and not re-pledged, cash held with a licensed bank, or unconditional bank guarantees issued by a Central Bank licensee. |
| Article 16 | Requires reviewed quarterly reports within 45 days, audited annual accounts within three months, prior approval for constitutional, capital, ownership and M&A changes, immediate notice of member defaults, and ten-year record retention. |
| Article 18 | Requires an IOSCO-compliant risk management manual covering credit, counterparty, market, operational, legal, liquidity and concentration risks, with daily liquidity assessment. |
| Article 24 | If a clearing member is declared bankrupt, trades the CCP entered into before the judgment remain valid and the CCP may enforce guarantees even after the judgment. |
| Article 25 | Allows warnings, fines up to the legal maximum and licence cancellation for loss of conditions, material breach, unpaid fees, bankruptcy, false information or failure to start business within three months. |
Under Article 25 the Authority may issue a warning or impose a financial penalty up to the maximum set by law, and may cancel the CCP's licence for loss of a licensing condition, material breach, non-payment of the renewal fee or penalties, bankruptcy, dissolution, a licence obtained on false information, or failure to start business within three months. A cancellation decision is published at the CCP's expense in two daily newspapers. Board members, the CEO and approved employees face a warning, suspension of up to two months or cancellation of their approval.
This regulation governs market infrastructure, not the businesses we usually form. It matters to our clients in two ways: brokers and custodian banks that become clearing members must meet the CCP's margin and default fund calls, and investors holding listed UAE securities benefit from the CCP standing behind every trade. Polaris is not licensed by the CMA and does not provide clearing or brokerage services. When a client group includes a licensed broker or plans one, we explain where these rules sit, coordinate with its licensed compliance advisers, and keep the group's corporate records, ownership changes and approvals in order, since Article 16 requires prior CMA approval for changes in ownership of a CCP.
| Amended by | CMA Decision No. 16/Chairman of 2021; CMA Decision No. 36/Chairman of 2023; Decision No. 35/R.M of 2019 |
| Cites | Former Listing of Securities Regulations · Former SCA Law |
“Cites” and “Cited by” are built automatically from references in the full texts held in this library; they cover only instruments in the library.
Amendment 16/Chairman of 2021 to Central Clearing Party (CCP) Regulation
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