Skip to main content
Entire section Custom print Text Only Rich Text Print

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.