| 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.
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| 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.
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| 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. |
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