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  • Part V – Exchange Traded Derivative Services Rules

    • A. General Requirements

      1.Only VASPs Licensed by VARA to carry out Exchange Services may provide ETD Services.
      2.VASPs Licensed by VARA to carry out Exchange Services shall only offer ETD Services if explicitly authorised to do so by VARA and such authorisation is expressly stipulated in the VASP's Licence.  
      3.VASPs that are authorised by VARA to provide ETD Services, must comply with this Part V of the Exchange Services Rulebook, as well as any conditions or restrictions imposed by VARA as stipulated in their Licence, at all times when providing ETD Services.
      4.
      Trading own account. As stated in Part VII of the Market Conduct Rulebook, VASPs are prohibited from actively investing their own, or their Group's portfolio of Virtual Assets or any other assets. For the avoidance of doubt, investing in ETDs is included in this prohibition. As such, in addition to all Rules in Part VII of the Market Conduct Rulebook, VASPs authorised to carry out ETD Services must— 
       
      a.not buy, sell or otherwise actively invest in any ETDs available through the VASP's ETD Services or any other service for their, or their Group's own account; and
      b.comply with the reporting requirements set out in the Compliance and Risk Management Rulebook in respect of all Entities in their Group that actively invest their own, or the Group's, portfolio of Virtual Assets or any other assets by buying, selling or otherwise trading any ETDs available through the VASP's ETD Services.
       
      5.Operational Exposure. VASPs authorised by VARA to provide ETD Services shall ensure that the VASP's exposure in respect of all ETD Services is included in the VASP's calculation of its Operational Exposure as required in Part VI.C of the Company Rulebook.
      6.
      Market. VASPs must have particular consideration for the market of the Underlying Assets for which it provides ETD Services. Such consideration shall include, but not be limited to, the following in respect of each Underlying Asset for which it provides ETD Services—
       
      a.price history;
      b.
      liquidity, including the following— 
       
      i.on both the VASP's own platform and other relevant venues;
      ii.both spot and derivatives positions;
       
      c.market depth;
      d.likelihood and/or susceptibility to market and/or price manipulation; and
      e.stability of pricing within and across all available venues.
       
      7.
      VA Standards. To the extent not already covered in the VASP's VA Standards, VASPs must consider the issuance schedule and tokenomics of each of the Virtual Assets which are Underlying Assets of ETDs for which it provides ETD Services including, but not limited to, all of the following— 
       
      a.circulating supply; 
      b.future supply; and
      c.concentration of owners.
       
      8.
      VASPs shall only provide ETD Services in respect of Virtual Assets which comply with the VASP's VA Standards, as required in Part VIII of the Market Conduct Rulebook, and Rule ‎V.A.6 above.

    • B. VARA approval and powers

      1.All VASPs Licensed by VARA to carry out Exchange Services that wish to provide ETD Services must apply to VARA for approval to carry out ETD Services. 
      2.
      VASPs seeking authorisation from VARA to provide ETD Services shall adhere to the licensing process as prescribed by VARA from time to time which may include, but not be limited to, the VASP demonstrating, to VARA's satisfaction, compliance with the following requirements— 
       
      a.full details of the types of ETDs to be offered by the VASP as part of the ETD Services; 
      b.appropriate policies, procedures, systems and controls to manage the risks associated with the ETD Services to be provided by the VASP, which shall include, but not be limited to, all systems and controls required in this Part V of the Exchange Services Rulebook;
      c.details of all terms and conditions upon which the VASP proposes to offer ETD Services to clients, including a copy of the template ETD Services Agreement to be used by the VASP; 
      d.risk disclosures, product descriptions, product terms and margin requirements;
      e.descriptions of close-out, liquidation and loss mutualisation procedures; 
      f.details of any Insurance Fund and other risk management tools;
      g.client communications and press releases; 
      h.marketing and/or client acquisition campaigns, including any referral schemes;
      i.information relating to the VASP's financial condition;
      j.compliance with any disclaimer requirements imposed by VARA; and/or
      k.any other requirements stipulated by VARA.
       
      3.
      Where VARA considers that it has reasonable cause and/or it is necessary for performing its functions and fulfilling its objectives under the Dubai VA Law, VARA may, in its sole and absolute discretion, amend the Rules in this Part V of the Exchange Services Rulebook and/or impose any additional conditions or restrictions on any VASP providing ETD Services, from time to time. Such additional conditions or restrictions may include, but shall not be limited to, the following— 
       
      a.Capital and Prudential Requirements in addition to those in Part VI of the Company Rulebook;
      b.additional requirements for any classification of investor including, but not limited to, Retail Investors; 
      c.additional requirements for any ETD or type of ETD; 
      d.additional requirements or restrictions on the Underlying Assets for which ETD Services can be provided;
      e.require a VASP to cease or temporarily suspend ETD Services for any ETD or type of ETD;
      f.impose limits on the value, size or exposure of any single ETD position or the total value of ETD Services that may be provided; and/or
      g.amend as may be necessary, any conditions imposed by VARA as stipulated in a VASP's Licence.
       
      4.
      Notwithstanding a VASP having authorisation from VARA to provide ETD Services, where VARA considers that it has reasonable cause and/or it is necessary for performing its functions and fulfilling its objectives under the Dubai VA Law, VARA shall have the power, in its sole and absolute discretion, to instruct a VASP to take any of the following actions at any time, and the VASP must comply with such instructions within the time period specified by VARA— 
       
      a.suspend ETD Services for any specific ETDs, type of ETDs, clients or Underlying Asset; 
      b.close-out and/or liquidate existing ETD positions for any specific ETDs, type of ETDs, clients or Underlying Asset; 
      c.increase ETD Initial Margin and/or ETD Maintenance Margin for any specific ETDs, type of ETDs, clients or Underlying Asset;
      d.increase the amounts held in any Insurance Fund, or implement an Insurance Fund if not already a requirement;
      e.amend or adjust any close-out, liquidation, risk management and/or insurance mechanisms;
      f.have and maintain additional insurance; and/or
      g.increase the VASP's Operational Exposure requirements.
       
      5.
      VARA will endeavour to provide as much notice as possible prior to any action under Rule ‎V.B.4 being required. However, should any such action be deemed necessary by VARA to avoid severe market impact, VARA may mandate VASPs to take such actions immediately.

    • C. Client suitability and assessment

      1.
      VASPs providing ETD Services shall only provide ETD Services to clients that satisfy all of the following requirements (the "ETD Clients")— 
       
      a.the VASP has assessed the client and deems the client, based on reasonable grounds, to understand all major risks associated with the ETDs and ETD Services that will be provided to the client; 
      b.the VASP has assessed the client and deems the client, based on reasonable grounds, to have the ability to meet all financial obligations in relation to the ETDs and ETD Services that will be provided to the client;
      c.the client has accepted the ETD Services Agreement; 
      d.the client has been provided with all disclosures related to ETD Services, required to be provided by the VASP in this Part V of the Exchange Services Rulebook; and
      e.the VASP is not aware, and has no grounds on which it ought reasonably to be aware, that the client is serving any ban or suspension from accessing or using ETD Services, or similar services, on any venue either inside or outside of the Emirate.
       
      2.
      Where ETD Services are provided to Retail Investors, VASPs shall consider the following factors as a minimum when undertaking the suitability assessment and determination of the client's understanding of the major risks associated with the ETDs and ETD Services, required in Rule ‎V.C.1.a above, in respect of each Retail Investor—
       
      a.their knowledge and experience in trading in ETDs;
      b.their investment objectives and financial rationale for entering into ETDs; 
      c.their financial position including, but not limited to, the proportion of their net worth which the client intends to trade in ETDs;
      d.whether the client's risk appetite is aligned with the proportion of their net worth which they intend to trade in ETDs; 
      e.whether the client's risk appetite is aligned with the risk and reward profile of the ETDs which they intend to trade; and
      f.the client's ability to bear sudden and significant losses. 
       
      3.VASPs providing ETD Services shall collect all necessary information from clients for the purpose of assessing the client's suitability in accordance with this Rule ‎V.C of the Exchange Services Rulebook. VASPs are entitled to rely on information provided by the client, unless they are aware, or ought reasonably to be aware, that the information is manifestly out of date, inaccurate, or incomplete. 
      4.Where a VASP has assessed that any ETD or ETD Services are not suitable for a particular client or classification of client at any time, the VASP shall ensure that the client cannot access those ETD Services or trade in the ETDs with immediate effect. The requirement in this Rule ‎V.C.4 applies both at the time of carrying out the initial client suitability assessment required in Rule ‎V.C.1 of this Part V of the Exchange Services Rulebook, and on an ongoing basis.
      5.VASPs providing ETD Services must ensure that full and orderly records of all client suitability assessments are kept for at least eight (8) years.
      6.
      Training and educational tools. To the extent that VASPs providing ETD Services provide training and/or educational tools to clients, in order to improve the clients’ level of knowledge and understanding of the risks associated with ETDs and the ETD Services, such training and/or educational tools must not be designed solely for the purposes of the client passing an assessment without developing such knowledge and understanding. When designing such training and/or educational tools, in order to comply with this Rule ‎V.C.6, VASPs must consider the following— 
       
      a.the client's level of understanding both prior to and after accessing any information and/or educational tools provided by the VASP; 
      b.the nature and complexity of the information and/or educational tools; and
      c.whether it is necessary to impose a delay between the client completing such training and/or educational tools before undertaking the suitability assessment.
       
      7.
      VASPs providing ETD Services shall establish, implement, and maintain policies and procedures to ensure that they comply with this Rule ‎‎V.C at all times.

    • D. Segregation of ETD Services

      1.VASPs providing ETD Services must ensure that only ETD Clients can access and/or use the ETD Services. 
      2.VASPs providing ETD Services shall not expose any client who is not an ETD Client to any loss mutualisation that may originate from the ETD Services provided by the VASP.
      3.VASPs providing ETD Services must ensure that only ETD Clients are required to contribute assets or funds to any Insurance Fund.
      4.VASPs providing ETD Services must only use Virtual Assets and cash balances in the ETD Trading Account of an ETD Client as ETD Margin, in accordance with the terms of the ETD Services Agreement. 
      5.VASPs providing ETD Services must ensure that each client's ETD Trading Account is segregated from all other trading accounts of that client held with the VASP. 
      6.
      To the extent that a client's assets in any other account held with the VASP may be used to settle a client's liabilities in respect of ETD Services, including but not limited to where spot positions may be used to settle any liabilities owed by the client in respect of ETD Services, the VASP must— 
       
      a.provide full details of when such assets may be used to settle the client's liabilities in respect of ETD Services; and
      b.
      obtain the client's explicit prior acknowledgement and consent to such risk prior to the client opening each ETD position, such consent cannot be provided on an ‘opt-out’ basis and must be an explicit prior acknowledgement and consent to such risk by the client.

    • E. Client communication and disclosures

      1.In addition to all other requirements in the Regulations, Rulebooks and/or Directives, VASPs providing ETD Services must ensure that all communications and disclosures in relation to the ETD Services or any ETDs are fair, clear and not misleading and are compliant with the Marketing Regulations. VASPs should have regard for the Guidance provided by VARA on the term "prominent disclaimer" when interpreting Rule ‎V.E.2 below.
      2.
      VASPs providing ETD Services shall— 
       
      a.provide regular updates to clients on their ETD positions, their ETD Initial Margin, and any ETD Maintenance Margin; 
      b.include a prominent risk disclosure statement on the VASP's website relating to the risks associated with ETD Services;
      c.include a prominent disclaimer on the VASP's website that VARA's approval of the VASP to provide ETD Services is not an endorsement of either (i) any specific ETD or (ii) any type of ETDs, offered by the VASP, and must not be construed or considered as such; and
      d.regularly test, monitor, and review communications to ensure that they comply with this Rule ‎V.E.2. 
       
      3.Retail Investors. To the extent that a VASP provides ETD Services to Retail Investors, the VASP must ensure that all communications and disclosures required under this Rule ‎‎V.E are provided in a way which can reasonably be understood by such Retail Investors, including a greater explanation of the risks and liabilities associated with ETDs and the ETD Services. This should also include a link to the disclosures, and where applicable, the educational section of the VASP's website, as well as information on the regulatory status of the VASPs platforms.
      4.
      As required under Rule ‎‎V.D.6 of this Exchange Services Rulebook above, in the event that a client's liabilities in respect of any ETD Services may have an impact on any assets held by the client with the VASP which are not related to ETD Services, the VASP must obtain the client's explicit prior acknowledgement and consent to such risk. Such consent cannot be provided on an ‘opt-out’’ basis and must be an explicit prior acknowledgement and consent to such risk by the client.

    • F. ETD Services Agreement

      1.
      In addition to all requirements in Part III of the Market Conduct Rulebook, the ETD Services Agreement must include the following information—
       
      a.the client's classification as a Retail Investor, Qualified Investor or Institutional Investor;
      b.disclosures and product descriptions appropriate for the knowledge, experience and client classification;
      c.all terms and conditions for the ETDs and ETD Services provided by the VASP; 
      d.how ETD trades are recorded and confirmed with the client;
      e.the leverage limits that apply to the different types of ETDs;
      f.a description of the VASP's close-out, liquidation and/or loss mutualisation policies and procedures including all rights the VASP has to take ownership or otherwise direct the use of the client's assets, and the circumstances in which such rights may be exercised;
      g.the terms of the Insurance Fund (including the way the Insurance Fund is funded) and any other risk management mechanism and/or tool;
      h.
      an explanation of the ETD Services and the risks the client may be exposed to when accessing or using the ETD Services, including but not limited to—
       
      i.that the client may lose all or part of the ETD Margin deposited in the ETD Trading Account; 
      ii.whether there is the potential that the client may experience a negative equity balance in the client's ETD Trading Account, and all consequences as a result of such negative equity balance;
      iii.whether the VASP will require the client to post ETD Maintenance Margin to the ETD Trading Account if the ETD Margin falls below the prescribed levels, or if the VASP increases the ETD Margin requirement, including the amount of prior notice the VASP will give the client in order for the client to meet such requirements; 
      iv.when and how the VASP will require the client to post additional ETD Margin to the ETD Trading Account; 
      v.the right of the VASP to close out or liquidate the client's ETD positions if the ETD Margin falls below the prescribed level in the ETD Services Agreement; 
      vi.when and how the VASP may close out or liquidate the client's ETD positions with the assets in the ETD Trading Account; and
      vii.when and how the VASP may close out or liquidate the client's ETD positions with the assets in any other account held by the client with the VASP.
       
      i.explicit consent from the client that they understand, acknowledge and accept each of the risks listed in Rule ‎V.F.1.h of this Exchange Services Rulebook; 
      j.the applicable levels and form of ETD Margin and the circumstances in which the ETD Margin requirements can be amended or changed by the VASP, including the amount of prior notice the VASP will give the client in order for the client to meet such requirements;
      k.a breakdown of the commissions, charges and fees charged by the VASP relating to ETD Services and when they are payable; and
      l.a clear description of how the VASP will respond to any trading halt, suspension, delisting, or other market disruption event relating to Underlying Assets.
       
      2.
      VARA may require any additional information to be included in, or amendments to made to, ETD Services Agreements, as it deems appropriate from time to time.
       

    • G. Margin and leverage limits

      1.VASPs providing ETD Services must ensure that each client has the appropriate amount of ETD Initial Margin in the ETD Trading Account, in accordance with the terms of the ETD Services Agreement, prior to allowing the client to buy or otherwise have a position in any ETD. 
      2.To the extent that a VASP may require a client to provide ETD Maintenance Margin in respect of any ETD provided by the VASP, the VASP providing ETD Services must ensure that each client has deposited and/or maintains the required level of ETD Maintenance Margin in accordance with the terms of the ETD Services Agreement at all times.
      3.
      VASPs providing ETD Services may only accept the following types of assets as ETD Margin in the ETD Trading Account—
       
      a.the Underlying Asset of the ETD only where the Underlying Asset is a Virtual Asset;
      b.the Virtual Asset in which the ETD will be settled (if applicable); 
      c.AED or USD; 
      d.Virtual Assets referencing AED or USD, as approved by VARA; and/or
      e.any other assets deemed acceptable and approved by VARA.
       
      4.VASPs providing ETD Services must establish procedures to assess the quality and value of the ETD Margin deposited in the ETD Trading Account by the client. The quality and valuation procedures must be approved by VARA as part of the VASP's authorisation to provide ETD Services. Any material changes to such procedures must be pre-approved by VARA. 
      5.ETD Margin remains Client Money and/or Client VAs. VASPs must comply with Part IV Client Money Rules and Part V Client Virtual Asset Rules of the Compliance and Risk Management Rulebook when holding or controlling ETD Margin.
      6.VASPs providing ETD Services must establish and impose maximum leverage limits which are suitable for each individual client and consistent with the ETD Margin. 
      7.VASPs providing ETD Services must ensure that if a client has opened more than one ETD Trading Account with the VASP, all ETD Margin and leverage limits are monitored and maintained at the client level and across all accounts.
      8.Retail Investors. Pursuant to the definition of ETD Initial Margin, VASPs shall not permit Retail Investors to use or access ETD Services with greater than 5-to-1 leverage, as the minimum requirement for ETD Initial Margin is twenty percent (20%). Notwithstanding this minimum limit, VASPs must require higher ETD Initial Margin in the event this is not suitable for any individual client or for any ETD when offered to Retail Investors.
      9.
      VASPs providing ETD Services must monitor and regularly review the outcome that Retail Investors are experiencing when trading in ETDs through the ETD Services. Such review must consider, but not be limited to— 
       
      a.the total number of Retail Investors using the VASP's ETD Services that have experienced losses since the last review period; and
      b.the percentage of Retail Investors using the VASP's ETD Services that the total number in Rule ‎V.G.9.a represents.
       
      10.If any such review identifies disproportionate losses suffered by Retail Investors, the VASP must identify the cause of such disparity and implement an action plan to address such causes that are within the VASP's control. 
      11.Institutional Investors and Qualified Investors. For Institutional Investors and Qualified Investors, VASP must have and implement policies for determining the maximum level of leverage that may be provided. 
      12.
      All VASP must take into account all of the following factors when setting maximum leverage limits for all classifications of investors— 
       
      a.trade size; 
      b.settlement type; 
      c.volatility of the Underlying Asset; 
      d.speed of the VASPs liquidation engine;
      e.likelihood of a client having a negative equity balance;
      f.types of ETD Margin provided by the client; and
      g.
      (in respect of Options), whether the writer of the Option owns the Underlying Asset referenced in the ETD at the time the Option is entered into. For these purposes the term ‘writer’ means the Entity who has the obligation to buy or sell the Underlying Asset.
       

    • H. Perpetual ETDs.

      1.VASPs providing ETD Services which include any ETD that does not have a fixed expiry date (the "Perpetual ETD") must ensure that the funding rate for each Perpetual ETD is calculated no less than three (3) times per day.
      2.VASPs must comply with Rule ‎V.J.7 of this Exchange Services Rulebook below in respect of all price feeds used to comply with Rule ‎V.H.1.
      3.VASPs providing ETD Services must have procedures in place to ensure that the funding of any Perpetual ETD is provided by the client required to provide such funding, to the other client receiving such funding, on a regular basis during the course of each day, based on the outcome of the funding rate calculation referenced in Rule ‎‎V.H.1 above. 
      4.
      VASPs providing ETD Services which include any Perpetual ETD, must provide Retail Investors with access to a predictive funding rate payment chart, in respect of Perpetual ETDs, to assist Retail Investors in determining and assessing potential future exposure and liabilities in relation to such Perpetual ETDs. VASPs must include a prominent disclaimer explaining that such predictive funding rate payment chart is provided for educational purposes only, and does not constitute investment advice.

    • I. Insurance Funds

      1.VASPs providing ETD Services must establish and maintain an Insurance Fund, unless otherwise approved by VARA.
      2.VASPs providing ETD Services must establish and maintain a minimum amount, below which the size of the Insurance Fund must not fall, under any circumstances. 
      3.VASPs must ensure the minimum amount required in Rule ‎V.I.2 is sufficient to cover potential and actual negative equity balances in the ETD Trading Accounts of clients that cannot be resolved through the close-out mechanism required under Rule ‎V.J of this Exchange Services Rulebook, under extreme but plausible market conditions. 
      4.
      The Insurance Fund may only consist of one, or a combination of, the following assets—
       
      a.Underlying Assets to which the ETD Services relate only where the Underlying Assets are Virtual Assets;
      b.Virtual Assets in which ETD Services are settled; 
      c.AED and USD; 
      d.Virtual Assets referencing AED or USD, as approved by VARA; and
      e.any other assets deemed acceptable and approved by VARA.
       
      5.VASPs providing ETD Services must establish procedures to assess the quality and value of the assets and funds held in the Insurance Fund. The quality and valuation procedures must be approved by VARA. Any material changes to such procedures must be pre-approved by VARA. 
      6.The Insurance Fund may be made up of contributions from ETD Clients or from the VASP itself.
      7.VASPs providing ETD Services must establish the minimum size and contribution to the Insurance Fund and the criteria to calculate the contribution that should be made by ETD Clients (if applicable) to the Insurance Fund. The contributions of each client must be proportionate to the exposures of that client. 
      8.
      VARA may, in its sole and absolute discretion, disapply the requirement for a VASP to establish and maintain an Insurance Fund to the extent that a VASP can demonstrate to VARA's satisfaction that the nature of the ETDs, ETD Services and/or the VASP's loss prevention mechanisms remove, or significantly mitigate, the risk of any ETD Client having a negative equity balance in respect of any ETD or ETD Service provided by the VASP.
       

    • J. Monitoring, notification and close-out

      1.Monitoring system. VASPs providing ETD Services must have and implement a comprehensive and robust monitoring, notification and close-out system for all open client ETD positions provided through the ETD Services, at all times. When designing and implementing such systems, VASPs providing ETD Services must act in the best interests of their clients, and ensure that the system is designed to assist their clients to prevent, to the furthest extent possible, avoidable losses and losses in excess of any values in the ETD Trading Account.
      2.Early notification. VASPs providing ETD Services must monitor on an ongoing basis the ETD Trading Account of each client, and promptly notify the client that the amount of ETD Margin in the ETD Trading Account is at risk of falling below the required level, as specified in the ETD Services Agreement for any ETD position. 
      3.When notifying the client under Rule ‎‎V.J.2, the VASP must act in the best interest of clients and ensure that the timing of the notification is designed to assist the client in maintaining the required level of ETD Margin at all times, and to avoid a close-out under Rule ‎‎V.J.6 below. The notification must include a full re-statement of the applicable risks required to be stated in the ETD Services Agreement in Rule ‎V.E.1. of this Exchange Services Rulebook.
      4.If a VASP requires a client to contribute ETD Maintenance Margin, the VASP must act in the best interest of their client when notifying the client under Rule ‎‎V.J.2 and ensure that the timing of the notification is designed to assist the client in contributing ETD Maintenance Margin of the required level to avoid a close-out under Rule ‎‎V.J.6 below.
      5.Margin call. VASPs providing ETD Services must monitor the ETD Trading Account of each ETD Client on an ongoing basis, and promptly notify the client if the amount of ETD Margin in the ETD Trading Account has fallen below the required level, as specified in the ETD Services Agreement for any ETD position. 
      6.Close-out. VASPs providing ETD Services must monitor the ETD Trading Account of each ETD Client on an ongoing basis. In the event the amount of ETD Margin in the ETD Trading Account has fallen below the required level specified in the ETD Services Agreement, and the client has not remedied such shortfall after having received the notifications required under Rules ‎V.J.2 and Rule ‎‎V.J.4, the VASP providing ETD Services must close out all necessary ETD positions of the client required to ensure, to the furthest extent possible, the client does not purposefully incur liabilities in excess of the amounts in ETD Trading Account where avoidable.
      7.Price feeds. VASPs providing ETD Services must ensure the reliability of all price feeds and/or other information used in relation to the ETD Services including, but not limited to, that VASPs must not rely on one source of information, and must validate the price and/or other information used in relation to the ETD Services from multiple sources. Such sources must be sufficiently diversified and independent of each other such that an error in, or failure of, one source, will not cause an error in, or failure of, another source.

    • K. Negative account balance and use of Insurance Fund

      1.If the client's ETD Trading Account has a negative equity balance following the conclusion of the close-out procedure and mechanism, the client shall be required to make good the shortfall in the ETD Trading Account. Until the shortfall is made up, the VASP must not permit the client to enter into any further ETD positions or ETD Services.
      2.Use of Insurance Fund. If the client does not make good any shortfall and the ETD Trading Account has a negative equity balance following the conclusion of the close-out procedure and mechanism, the funds in the Insurance Fund, or any other risk management mechanism approved by VARA, may be utilised to settle the client's liabilities.
      3.Mutualisation of losses. Only after all of the above provisions are exhausted may a VASP providing ETD Service mutualise any shortfall or losses resulting from a defaulting client's ETD position amongst non-defaulting clients of the ETD Services.
      4.
      Any such mutualisation of losses under Rule ‎‎V.K.3 must be applied as an equal percentage to all non-defaulting clients of the VASP's ETD Services, so as to not disproportionately disadvantage clients with smaller account balances.

    • L. Records, reporting and notification

      1.
      Records. VASPs providing ETD Services must maintain full and orderly records in relation to ETD Services, including but not limited to—
       
      a.the suitability assessments carried out in respect of ETD Clients, including on an ongoing basis; 
      b.
      liquidation and close-out data of client positions, including but not limited to the—
       
      i.total number and attributable total value of liquidations; 
      ii.total number and attributable total value of liquidations per each type of client classification;
      iii.
      percentage of total liquidations attributable to each type of classification of client expressed both as—
       
      1.a percentage of liquidations across all types of client classification; and
      2.a percentage of the number of clients within that classification of client; 
       
      iv.total number and attributable value of liquidations per ETD; and
      v.total number and attributable value of liquidations per Underlying Asset; 
       
      c.ongoing ETD Client profit and loss data;
      d.distribution of leverage limits held across the client base including per classifications of clients;
      e.financial data including, but not limited to, the volume of ETDs provided and/or outstanding at the time of reporting;
      f.VASPs contributions to the Insurance Fund (if applicable);
      g.the identity of applicable market makers and counterparties, associated selection criteria and historical trade data; 
      h.incident-based reporting relating to events such as flash crashes, instances where loss mutualisation mechanisms are triggered, market maker distress or bankruptcy events; and 
      i.any other information and data items specified by VARA from time to time. 
       
      2.All records required to be kept by VASPs under this Rule ‎V.L must be sufficient to enable VARA to monitor the VASP's compliance with the provisions set forth in this Part ‎V of this Exchange Services Rulebook.
      3.Reporting. In addition to all other applicable requirements in respect of regulatory reporting in the Regulations, Rulebooks or its Licence, VASPs providing ETD Services shall provide copies of such records and information to VARA on request. VARA will notify the VASPs of the manner in which the records and information should be disclosed to VARA. 
      4.
      Notifications. In addition to all other applicable requirements in respect of notifications to VARA in the Regulations, Rulebooks or its Licence, VASPs providing ETD Services shall notify VARA immediately in the event of any of the following—
       
      a.any circumstances required by VARA as a condition of the VASP's authorisation to provide ETD Services; 
      b.any one or more liquidations, which individually or together, may or are likely to have systemic impact or threaten the integrity and/or stability of the Virtual Asset market in the Emirate;
      c.the VASP using amounts in the Insurance Fund to make good any outstanding positions in respect of any client, ETD or ETD Services; or
      d.the VASP mutualising losses among non-defaulting ETD Clients.