WORKSHOP ON proposed CMA regulations Licensing &

Purpose of Licensing Regulation Defines the types of “securities business” that require a license
Sets out exemptions from licensing requirement
Establishes categories of license
Sets out licensing requirements and approval process
Defines the functions that must be performed by “registered persons”
Sets out the registration requirements and approval process

Only licensed AIs can market securities business
Applies to foreign firms
Securities advertisement - Verbal, electronic, broadcast or written communication made for purposes of securities business. Licensing & Registration 3<br>

Securities Business “Securities business” means carrying on commercial activity in Lebanon in any of 5 types of securities business activity: Licensing & Registration 4<br>

securities business 2 Must obtain approval for a license that covers each type of activity performed.
Specific requirements apply to CIS managers and CIS custodians.
See CIS Regulation. Licensing & Registration 5<br>

Key Principles Must be “fit and proper” person to carry on the type of securities business
Sufficient expertise, experience and resources for that business
Commit to conducting business with honesty and integrity
Establish adequate systems, policies and procedures covering corporate governance, finance, risk management, compliance, operations and controls
Directors, officers & employees must have the qualifications, experience and integrity needed
Ensure appropriate management of any conflicts of interest between the AI and its clients
Similar principles apply to registered persons. Licensing & Registration 6<br>

licensing requirements Must be a bank, financial institution or financial intermediary, or a subsidiary of a foreign financial firm licensed in a recognized jurisdiction
Applicant demonstrates it meets the key principles
Fit & proper criteria include suitability of controllers, persons with close links and registered persons.
CMA applies principles based on each type of securities business you apply for (5 types), and based on the scale and nature of the business.
File all the required documents, operations manuals and information.
Complies with requirements in CMA Business Conduct Regulation. Licensing & Registration 7<br>

process and approval – new INSTITUTION Apply to CMA Control Unit in prescribed form.
Incomplete applications will be returned.
CMA may require additional information.
CMA Board may approve applications in whole or in part; also may impose conditions or limitations on approvals.
AIs must apply for approval of any changes in license.
CMA must approve ceasing securities business or cancellation of license. Licensing & Registration 8<br>

process and approval – EXISTING Institutions Streamlined filing and review process will apply to existing institutions.
Exempt from filing certain documents and information
Limited CMA review process
Key purposes of licensing are:
Issuance of licenses in the 5 categories of securities business
Registration with CMA as “Approved Institution”
Ensure compliance with new CMA regulations.
Application process will be in stages over a period of time
Focus on filing of revised manuals and procedures based on new BCR and other regulations. Licensing & Registration 9<br>

licensing application Documents and information to be filed by a new institution include:
Securities business profile
Corporate structure and organization chart
Business plan
Details of controllers and close links
Financial statements
Material contracts
Terms of business and client agreements
Operations manual
Systems and controls documents Licensing & Registration 10<br>

SYSTEMS AND CONTROLS Documents and manuals to be filed by all applicants include:
Financial controls policies and procedures
Risk management policies and systems
Anti-money laundering and anti-terrorism financing program and procedures
Compliance manual
Compliance monitoring program
Code of conduct for directors, officers and employees
See Annex 1
Manuals, policies and procedures must comply with new Business Conduct Regulation (BCR).
Subsidiary may use a parent’s manuals if they comply with BCR and CMA approves. Licensing & Registration 11<br>

maintaining a license Must continue to be fit & proper
Must continue to comply with all Regulations and requirements
Follow requirements for notification to CMA
see Annex 3
Annex 3 covers material changes and events, including any changes in business
Changes in controllers or persons with close links must be approved in advance by CMA. Licensing & Registration 12<br>

REGISTERED PERSONS CMA will replace BDL circular 103 with new system covering 10 key functions – next slide.
CMA will maintain register of registered persons.
Must be approved and on register to perform a function.
Qualification examinations are being streamlined.
Current RPs who met requirements of 103 will be “grandfathered”.
Must be added to CMA register.
Must be fit & proper – see article 2406. Licensing & Registration 13<br>

registrable functions + proposed exams Licensing & Registration 14<br>

process and approval File application form with all required documents and information.
See Annex 4
Applications must be endorsed by the AI (including review of fitness & properness).
Incomplete applications will be returned.
CMA may require additional information.
CMA may approve applications in whole or in part; also may impose conditions on approvals.
Must notify CMA if a person ceases to perform a registrable function. Licensing & Registration 15<br>