(l) for the certification by or on behalf of the Authorised Clearing House of the sum finally payable or, as the case may be, of the fact that no sum is payable, separately for each account of the defaulter; and
(m) the Authorised Clearing House's segregation and portability arrangements, including the method for determining the value at which client positions will be transferred; and
(n) provisions ensuring that losses that arise as a result of the default of a Member of the Authorised Clearing House or threaten the Authorised Clearing House's solvency are allocated with a view to ensuring that the Authorised Clearing House can continue to provide the services and carry on the activities specified in its recognition order.
4.6.3. Notification to other parties affected
An Authorised Clearing House must have adequate arrangements for ensuring that parties to unsettled Market Contracts with a defaulter are notified as soon as reasonably practicable of the default and of any decision taken under the rules in relation to contracts to which they are a party.
4.6.4. Cooperation with other authorities
An Authorised Clearing House must cooperate, by the sharing of information and otherwise, with the AFSA and any other authority or body having responsibility for any matter arising out of or connected with the default of a Member of the Authorised Clearing House or the default of another Authorised Clearing House or an Authorised Investment Exchange.
(a) The rules of an Authorised Clearing House must provide that in the event of a default, margin provided by the defaulter for his own account is not to be applied to meet a shortfall on a client account other than a client account of the defaulter.
(b) This rule is without prejudice to the requirements of any rules relating to clients’ money made by the AFSA.
(c) For the purposes of this rule, «client account of the defaulter» means an account held by the Authorised Clearing House in the name of the defaulter in which transactions effected by the defaulter have been recorded.
(1) An Authorised Clearing House acting as a Central Counterparty must have systems and procedures to enable segregation and portability of positions of the customers of its Members and other participants on its facilities, and any collateral provided to it with respect to those positions.
(2) For the purposes of (1), an Authorised Clearing House’s systems and controls must, at a minimum, provide for the following:
(a) the segregation and portability arrangements that effectively protect the positions and related collateral of the customers of the Members or other participants on its facilities from the default or insolvency of the relevant Member or other participants;
(b) if the Authorised Clearing House offers additional protection of the customer positions and related collateral against the concurrent default of both the relevant Member or other participants or other customers, the adoption of necessary measures to ensure that the additional protection offered is effective; and
(c) the use of account structures that enable the Authorised Clearing House to readily identify positions of the customers of the relevant Member or other participant, and to segregate their related collateral.
(3) An Authorised Clearing House acting as a Central Counterparty must make available to its Members and other participants using its facilities, its rules, policies and procedures relating to the segregation and portability of the positions and related collateral of the customers of its Members and other participants using its facilities.
Guidance
The provisions of this chapter are additional to:
(a) the provisions of Chapter 6 of GEN (Supervision) to which an Authorised Market Institution is also subject as an Authorised Person; and
(b) the powers in respect of Authorised Market Institutions conferred upon the AFSA in the Framework Regulations.
5.2. Information and notifications
5.2.1. Information gathering on the AFSA’s own initiative
(a) The AFSA or (as the case may be) its officers may, by notice in writing, require an Authorised Market Institution or any Person who is connected to the Authorised Market Institution to provide or produce specified information or information of a specified description, at a specified place and before the end of a reasonable period, in such form and with such verifications or authentications as it may reasonably require.
(b) A Person is connected with an Authorised Market Institution if he is or has at any relevant time been:
i. a member of the Authorised Market Institution’s group;
ii. a Controller of the Authorised Market Institution;
iii. a member of the Governing Body of the Authorised Market Institution; or
iv. any other member of a partnership of which the Authorised Market Institution is a member.
5.2.2. Ongoing notification obligations
An Authorised Market Institution must deal with AFSA in an open and co-operative manner and keep the AFSA promptly informed of significant events or activities, wherever they are carried on, relating to the Authorised Market Institution, of which the AFSA would reasonably expect to be notified, including but not limited to, any matters that might impair the Authorised Market Institution’s ability to discharge its regulatory functions.
5.2.3. Notification of significant breaches by the Authorised Market Institution or its Employees
An Authorised Market Institution must advise the AFSA immediately if it becomes aware, or has reasonable grounds to believe, that a significant breach by the Authorised Market Institution or any of its Employees of a Rule or any other requirement imposed by the AFSA may have occurred or may be about to occur.
5.2.4. Notification of significant breaches of the Business Rules
An Authorised Market Institution must advise the AFSA immediately if it becomes aware, or has reasonable grounds to believe, that a significant breach by any Person of its Business Rules may have occurred or may be about to occur.
5.2.5. Notification of changes in constitution and governance
An Authorised Market Institution must give notice to the AFSA in the following circumstances, setting out written particulars of the matters concerned and any relevant dates:
(a) Where an Authorised Market Institution is to circulate any notice or other document proposing any amendment to its memorandum or articles of association or other document relating to its constitution, to:
i. its shareholders or any group or class of them;
ii. Persons granted access to its facilities or any group or class of them; or
iii. any other group or class of Persons which has the power to make that amendment or whole consent or approval is required before it may be made.
(b) Where an Authorised Market Institution makes an amendment to its memorandum or articles of association, or other document relating to its constitution.
(c) Where any significant change is made to an agreement which relates to the constitution or to the corporate governance framework or the remuneration structure or strategy of the Authorised Market Institution.
5.2.6. Notification of complaints
Where an Authorised Market Institution has investigated a complaint arising in connection with the performance of, or failure to perform, any of its regulatory functions, and the conclusion is that the Authorised Market Institution should:
(a) make a compensatory payment to any Person; or
(b) remedy the matter which was the subject of that complaint,
the Authorised Market Institution must immediately notify the AFSA of that event and give the AFSA a copy of the report and particulars of the recommendation as soon as that report or those recommendations are available to it.
5.2.7. Notification of admission to or removal from trading
Where an Authorised Investment Exchange proposes to suspend or remove from trading or admit to trading, by means of its facilities, a class of Security or Unit in a Listed Fund which it has not previously traded, but is licensed to do so, it must give the AFSA notice of that event, at the same time as the proposal is communicated to Persons granted access to its facilities or shareholders, with the following information:
(a) a description of the Investment to which the proposal relates; and
(b) the name of any clearing or settlement facility in respect of that Investment.
5.2.8. Notification of removal from or admission to clearing
Where an Authorised Clearing House proposes to cease clearing or settling, or to commence clearing or settling, by means of its facilities, a class of Security or Unit in a Listed Fund which it has not previously cleared or settled, but is licensed to do so, it must give the AFSA notice of that event, at the same time as the proposal is communicated to Persons granted access to its facilities or shareholders, with the following information:
(a) a description of the Investment to which the proposal relates; and
(b) the name of any trading facility in respect of that Investment.
5.3. Financial and other information
5.3.1. Annual financial statements
An Authorised Market Institution must give the AFSA:
(a) a copy of its audited annual financial statements; and
(b) a copy of any audited consolidated annual financial statements of any group of which the Authorised Market Institution is a member;
no later than when the first of the following events occurs:
(c) four months after the end of the financial year to which the document relates;
(d) the time when the documents are sent to Persons granted access to the facilities or shareholders of the Authorised Market Institution; or
(e) the time when the document is sent to a holding company of the Authorised Market Institution.
5.3.2. Audit committee reports
Where an audit committee of an Authorised Market Institution has received a report in relation to any period or any matter relating to any regulatory functions of that Authorised Market Institution, the Authorised Market Institution must immediately give the AFSA a copy of that report.
5.3.3. Quarterly management accounts
An Authorised Market Institution must give the AFSA a copy of its quarterly management accounts within one month of the end of the period to which they relate.
5.3.4. Forward-looking estimates
An Authorised Market Institution must give the AFSA:
(a) a statement of its anticipated income, expenditure and cash flow for each financial year; and
(b) an estimated balance sheet showing its position as it is anticipated at the end of each financial year;
at least 15 days before the beginning of that financial year.
An Authorised Market Institution must give the AFSA a summary of:
(a) any proposal for changes to the fees or charges levied on users of its facilities, or any group or class of them, at the same time as the proposal is communicated to the relevant users; and
(b) any such change, no later than the date when it is published and notified to relevant parties.
6. RULES APPLICABLE TO AN AUTHORISED DIGITAL ASSET TRADING FACILITY
6.1. Main requirements relating to trading on the facility
(1) An Authorised Digital Asset Trading Facility must, at the time a Licence is granted and at all times thereafter, have:
(a) transparent and non-discriminatory rules and procedures to ensure fair and orderly trading of Digital Assets on its facility;
(b) objective criteria governing access to its facility;
(c) objective and transparent criteria for determining the Investments that can be traded on its facility; and
(d) adequate technology resources.
(2) An Authorised Digital Asset Trading Facility must maintain effective arrangements to verify that its members comply with requirements set out in COB, AML.
(3) An Authorised Digital Asset Trading Facility must not introduce a liquidity incentive scheme other scheme for encouraging bids on a trading venue or to increase the volume of business transacted unless it has obtained the prior approval of the AFSA.
(4) For the purposes of (1), an Authorised Digital Asset Trading Facility must make available to the public, without any charges, data relating to the quality of execution of transactions on the Authorised Digital Asset Trading Facility on at least an annual basis. Reports must include details about price, costs, speed and likelihood of execution for individual Digital Assets.
6.2. Requirement to prepare Rules
(1) An Authorised Digital Asset Trading Facility’s Rules must:
(a) be based on objective criteria;
(b) be non-discriminatory;
(c) be clear and fair;
(d) be made publicly available free of charge;
(e) contain provisions for the resolution of Members’ and other participants’ disputes;
(f) contain provisions for penalties or sanctions which may be imposed by the Authorised Digital Asset Trading Facility for a breach of the Rules; and
(g) contain provisions for an appeal process from the decisions of the Authorised Digital Asset Trading Facility.
(2) An Authorised Digital Asset Trading Facility must seek prior approval of its Rules (Business Rules, Admission to Trading Rules, Membership Rules) and of amendments to its Rules by:
(a) making its Rules available for market consultation for no less than 30 days; and
(b) obtaining approval of the AFSA.
(3) Where an Authorised Digital Asset Trading Facility has made any amendments to its Rules, it must have adequate procedures for notifying users and the AFSA of such amendments with a notice period of at least 30 days prior to making any amendments to its Rules available for market consultation.
(4) An Authorised Digital Asset Trading Facility must have procedures in place to ensure that its Rules are monitored and enforced.
6.3. Admission of Digital Assets to trading
6.3.1. Admission to Trading Rules
(1) An Authorised Digital Asset Trading Facility must make clear and transparent rules concerning the admission of Digital Assets to trading on its facilities.
(2) The rules of the Authorised Digital Asset Trading Facility must ensure that:
(a) Digital Assets admitted to trading on an Authorised Digital Asset Trading Facility’s facilities are capable of being traded in a fair, orderly and efficient manner; and
(b) Digital Assets admitted to trading on an Authorised Digital Asset Trading Facility’s facilities are freely negotiable.
6.3.2. Application for admission of Digital Assets to Trading
(1) Applications for the admission of a Digital Asset to trading can be made to an Authorised Digital Asset Trading Facility by the issuer of the Digital Asset, by a third party on behalf of and with the consent of the issuer of the Digital Asset, or by a Member of an Authorised Digital Asset Trading Facility.
(2) A Digital Asset can also be admitted to trading on the Authorised Digital Asset Trading Facility’s own initiative.
(3) An Authorised Digital Asset Trading Facility must, before admitting any Digital Asset to trading:
(a) be satisfied that the applicable requirements, including those in its Admission to Trading Rules, have been or will be fully complied with in respect of such Digital Asset and
(b) obtain approval of the AFSA in respect of such Digital Asset.
(4) For the purposes of (1), an Authorised Digital Asset Trading Facility must notify an applicant in writing of its decision in relation to the application for admission of the Digital Asset to trading. In the case that such decision is to deny the application, the written notice should indicate (і) whether the application has been considered by the AFSA, and if so, (ii) the AFSA’s determination in respect thereof.
(5) For purposes of 3(b), an application to AFSA by Authorised Digital Asset Trading Facility shall include:
(a) a copy of the admission application; and
(b) any other information requested by the AFSA.
6.3.3. Decision-making procedures for the AFSA in relation to applications for approval of the admission of Digital Assets to trading
(1) Where an Authorised Person Operating a Digital Asset Trading Facility applies for approval of the admission of a Digital Asset to trading, the AFSA may:
(a) approve the application;
(b) deny the application; or
(c) approve the application subject to conditions or restrictions.
(2) The AFSA may exercise its powers under (1)(b) where the AFSA reasonably considers that:
(a) granting the Digital Assets admission to trading of Digital Assets would be detrimental to the interests of Persons dealing in the relevant Digital Assets using the facilities of an Authorised Person Operating a Digital Asset Trading Facility or otherwise; or
(b) any requirements imposed by the AFSA or in the Rules of an Authorised Digital Asset Trading Facility as are applicable have not been or will not be complied with; or
(c) the Issuer of the Digital Assets has failed or will fail to comply with any obligations applying to it including those relating to having its Digital Assets admitted to trading or traded in another jurisdiction.
(3) Where the AFSA denies an application for approval of admission of a Digital Asset to trading pursuant to (2), such Digital Assets must not be admitted by an Authorised Person Operating a Digital Asset Trading Facility to its facility.
(4) Where the AFSA approves an application for approval of admission of a Digital Asset to trading subject to conditions or restrictions, the Authorised Person Operating a Digital Asset Trading Facility is responsible for implanting such conditions and restrictions in admitting the Digital Asset to trading, and such conditions or restrictions may not be varied or removed without the approval of the AFSA.
6.3.4. Undertaking to comply with the acting law of the AIFC
An Authorised Digital Asset Trading Facility may not admit Digital Asset to trading unless the person who seeks to have Digital Assets admitted to trading:
(a) gives an enforceable undertaking to the AFSA to submit unconditionally to the jurisdiction of the AIFC in relation to any matters which arise out of or which relate to its use of the facilities of the Authorised Market Institution;
(b) agrees in writing to submit unconditionally to the jurisdiction of the AIFC Courts in relation to any disputes, or other proceedings in the AIFC, which arise out of or relate to its use of the facilities of the Authorised Market Institution; and
(c) agrees in writing to subject itself to the acting law of the AIFC in relation to its use of the facilities of the Authorised Market Institution.
The Authorised Digital Asset Trading Facility must maintain arrangements regularly to review whether the Digital Assets admitted to trading on its facilities comply with the Admission to Trading Rules.
6.4. Suspending or removing Digital Assets from trading
(1) The rules of an Authorised Digital Asset Trading Facility must provide that the Authorised Digital Asset Trading Facility have the power to suspend or remove from trading on its facilities any Digital Assets with immediate effect or from such date and time as may be specified where it is satisfied that there are circumstances that warrant such action or it is in the interests of the AIFC.
(2) The AFSA may direct an Authorised Person Operating a Digital Asset Trading Facility to suspend or remove Digital Assets from trading with immediate effect or from such date and time as may be specified if it is satisfied there are circumstances that warrant such action or it is in the interests of the AIFC.
(3) The AFSA may withdraw a direction made under (2) at any time.
(4) Digital Assets that are suspended from trading of Digital Assets remain admitted to trading for the purposes of this Chapter.
(5) The AFSA may prescribe any additional requirements or procedures relating to the removal or suspension of Digital Assets from or restoration of Digital Assets to trading.
6.4.2. Limitation on power to suspend or remove Digital Assets from trading
The rules of an Authorised Digital Asset Trading Facility must contain provisions for orderly suspension and removal from trading on its facilities any Digital Asset which no longer complies with its rules taking into account the interests of investors and the orderly functioning of the financial markets of the AIFC.
6.4.3. Publication of decision
(1) Where the Authorised Digital Asset Trading Facility suspends or removes any Digital Asset from trading on its facilities, it must notify the AFSA in advance and make that decision public by issuing a public notice on its website.
(2) Where the Authorised Digital Asset Trading Facility lifts a suspension or re-admits any Digital Asset to trading on its facilities, it must notify the AFSA in advance and make that decision public by issuing a public notice on its website.
(3) Where an Authorised Digital Asset Trading Facility has made any decisions on admission, suspension, or removal of Digital Assets from trading on its facilities, it must have adequate procedures for notifying users of such decisions.
6.5.1. Trading transparency obligation
An Authorised Digital Asset Trading Facility must make available to the public:
(a) the current bid and offer prices of Digital Assets traded on its systems on a continuous basis during normal trading hours;
(b) the price, volume and time of the transactions executed in respect of Digital Assets traded on its facilities in as close to real-time as technically possible; and
(c) provide price, volume, time and counterparty details to the AFSA within 24 hours of the close of each trading day via a secure electronic feed.
6.5.2. Public notice of suspended or terminated Membership
The Authorised Digital Asset Trading Facility must promptly issue a public notice on its website in respect of any Member that has a Licence to carry on Market Activities or Regulated Activities whose Membership is suspended or terminated.
6.5.3. Cooperation with office-holder
The Authorised Digital Asset Trading Facility must cooperate, by the sharing of information and otherwise, with the AFSA, any relevant office-holder and any other authority or body having responsibility for any matter arising out of, or connected with, the default of a Member of the Digital Asset Trading Facility.
6.6. Additional requirements on technology resources
(1) An Authorised Digital Asset Trading Facility shall implement a written cyber security policy setting forth its policies and procedures for the protection of its electronic systems and members and counterparty data stored on those systems, which shall be reviewed and approved by the Authorised Digital Asset Trading Facility’s governing body at least annually.
(2) The cyber security policy must, as a minimum, address the following areas:
(a) information security;
(b) data governance and classification;
(c) access controls;
(d) business continuity and disaster recovery planning and resources;
(e) capacity and performance planning;
(f) systems operations and availability concerns;
(g) systems and network security;
(h) systems and application development and quality assurance;
(і) physical security and environmental controls;
(j) customer data privacy;
(k) vendor and third-party service provider management; and
(l) incident response.
(3) An Authorised Digital Asset Trading Facility must advise the AFSA immediately if it becomes aware, or has reasonable grounds to believe, that a significant breach by any Person of its cyber security policy may have occurred or may be about to occur.
An Authorised Digital Asset Trading Facility must, as a minimum, have in place systems and controls with respect to the procedures describing the creation, management and control of digital wallets and private keys.
An Authorised Digital Asset Trading Facility must be able to:
(a) reject orders that exceed its pre-determined volume and price thresholds, or that are clearly erroneous;
(b) temporarily halt or constrain trading on its facilities if necessary or desirable to maintain an orderly market; and
(c) cancel, vary, or correct any order resulting from an erroneous order entry and/or the malfunctioning of the system of a Member.
6.6.4. Settlement and Clearing facilitation services
(1) An Authorised Digital Asset Trading Facility must ensure that satisfactory arrangements are made for securing the timely discharge (whether by performance, compromise or otherwise), clearing and settlement of the rights and liabilities of the parties to transactions effected on the Authorised Digital Asset Trading Facility (being rights and liabilities in relation to those transactions).
(2) An Authorised Digital Asset Trading Facility acting as a Digital Asset Depository must:
(a) have appropriate rules, procedures, and controls, including robust accounting practices, to safeguard the rights of Digital Assets issuers and holders, prevent the unauthorised creation or deletion of Digital Assets, and conduct periodic and at least daily reconciliation of each Digital Asset balance it maintains for issuers and holders;
(b) prohibit overdrafts and debit balances in Digital Assets accounts;
(c) maintain Digital Assets in an immobilised or dematerialised form for their transfer by book entry;
(d) protect assets against custody risk through appropriate rules and procedures consistent with its legal framework;
(e) ensure segregation between the Digital Asset Depository’s own assets and the Digital Assets of its participants and segregation among the Digital Assets of participants; and
(f) identify, measure, monitor, and manage its risks from other custody related activities that it may perform.
6.7. Clients of an Authorised Digital Asset Trading Facility and Investment limits
(1) Members of an Authorised Digital Asset Trading Facility and their clients will be Clients of an Authorised Digital Asset Trading Facility.
(2) An Authorised Digital Asset Trading Facility must maintain effective systems and controls to ensure that a Retail Client using its service does not invest, in respect of all Digital Assets in aggregate calculated over a period of one month, an amount which exceeds the greater of:
(a) USD 1,000; or
(b) the lesser of (і) 10 percent of the annual income; or (ii) 5 percent of the net worth of such Retail Client (excluding the value of the primary residence), up to a maximum aggregate amount of USD100,000.
7. RULES APPLICABLE TO AN AUTHORISED CROWDFUNDING PLATFORM
7.1.1 The terminology used in this Chapter 7 varies according to the type of Authorised Crowdfunding Platform:
(a) «Borrower», «Debenture», «lender», «loan» and «Permitted Loan» for Loan Crowdfunding Platform; and
(b) «Issuer», «Investor», «Investment» and «Permitted Investment» for Investment Crowdfunding Platform.
7.1.2 AMI 7.2 and 7.3 apply to all Authorised Crowdfunding Platforms (unless specified otherwise).
7.2.1 An Authorised Crowdfunding Platform may apply to the AFSA to carry on one or more of the following Regulated and Market Activities:
(a) Dealing in Investments as Agent;
(b) Arranging Custody;
(c) Arranging Deals in Investments;
(d) Operating a Representative Office;
(e) Providing Credit;
(f) Arranging a Credit Facility;
(g) Providing Money Services; and
(h) Operating a Digital Asset Trading Facility.
7.2.2 Permitted Investments and Permitted Loans
(1) An Investment Crowdfunding Platform may facilitate a Person investing in the following kinds of Investments («Permitted Investments») through the Investment Crowdfunding Platform:
(a) Shares; and
(b) Units.
(2) A Loan Crowdfunding Platform may facilitate a Person investing in the following kinds of loans («Permitted Loans») through the Loan Crowdfunding Platform:
(a) loans;
(b) Debentures; and
(c) other financial accommodation.
7.2.3 An Investment Crowdfunding Platform must not facilitate a Person investing in the following kinds of Investments through the Investment Crowdfunding Platform:
(a) Warrants;
(b) Certificates;
(c) Structured Products;
(d) Derivatives;
(e) Digital Assets; or
(f) rights or interests in a Security, Structured Product, Derivative or a Digital Asset.
7.3. Requirements for Authorised Crowdfunding Platforms
7.3.1 Clients of an Authorised Crowdfunding Platform
(1) Both Borrowers and lenders (in the case of a Loan Crowdfunding Platform) and Issuers and Investors (in the case of an Investment Crowdfunding Platform) will be Clients of an Authorised Crowdfunding Platform.
(2) An Authorised Crowdfunding Platform must classify Clients as being in one of the following categories:
(a) a Retail Lender or Retail Investor; or
(b) an Accredited Lender or Accredited Investor.
(3) An Authorised Crowdfunding Platform must notify a new Client of its classification in accordance with AMI 7.3.1 in respect of the services provided by it to that Client.
(4) An Authorised Crowdfunding Platform must classify as a Retail Lender or Retail Investor any Client that is not an Accredited Lender or Accredited Investor.
(5) For the purposes of AMI 7, «Accredited Lender or Accredited Investor» means:
(a) in respect of a Loan Crowdfunding Platform, any natural person who lends or intends to lend for a total consideration of at least USD100,000 (or an equivalent amount in another currency) per Borrower across one or more Permitted Loans in any 12-month period; or
(b) in respect of an Investment Crowdfunding Platform, any natural person who acquires or intends to acquire Permitted Investments for a total consideration of at least USD 100,000 (or an equivalent amount in another currency) per Issuer across one or more offers in any 12-month period; or
(c) an Authorised Person; or
(d) a Body Corporate.
7.3.2 Crowdfunding risk disclosure
(1) An Authorised Crowdfunding Platform must disclose prominently on its website the main risks to lenders or Investors using a Crowdfunding Platform, including (as applicable) that:
(a) Borrowers or Issuers using the Authorised Crowdfunding Platform may include new businesses and, as many new businesses fail, a loan to such a Borrower or an Investment with such an Issuer may involve high risks, including the loss of all or part of the lender or Investor's money, or delays in payment or the realization of gains;
(b) Borrowers or Issuers on the Crowdfunding Platform may apply funds borrowed to higher risk activities or investments (for example, to a prospective investments in a property development) and, consequently, a loan to such a Borrower or a Permitted Investment with such an Issuer may involve high risks;
(c) failure to diversify a portfolio of Permitted Loans or Permitted Investments may lead to greater losses in the event of the default of a relevant Borrower or Issuer;
(d) the lender may not be able to transfer their Permitted Loans or the Investor may not be able to sell their Permitted Investment when they wish to, or at all; and
(e) if for any reason the Authorised Crowdfunding Platform ceases to carry on its business, the lender or Investor may lose their money, incur costs or experience delays in being paid.
(2) The disclosure referred to in (1) must be presented in a way that is fair, clear and not misleading.
7.3.3 Information about default or failure rates
(1) An Authorised Crowdfunding Platform must disclose prominently on its website (as applicable):
(a) for a Loan Crowdfunding Platform, the actual and expected default rates for Permitted Loans entered into on the Authorised Crowdfunding Platform; and
(b) for an Investment Crowdfunding Platform, the actual and expected failure rate of Permitted Investments who use the Authorised Crowdfunding Platform.
(2) The information referred to in (1) must:
(a) for actual default or failure rates, cover the period since the Authorised Crowdfunding Platform began providing the service;
(b) for expected default or failure rates, set out a summary of the assumptions used in determining those expected rates; and
(c) be presented in a way that is fair, clear and not misleading.
(3) Where an Authorised Crowdfunding Platform is within its first 12 months of operation, it does not need to disclose actual default or failure rates if no such data is yet available. Where no such data is available during this period, an Authorised Crowdfunding Platform shall disclose that no historic data is available and all default or failure rates disclosed are expected default or failure rates only.
7.3.4 Information about the service and lender or Investor education tools
(1) An Authorised Crowdfunding Platform must disclose prominently on its website in a way that is fair, clear and not misleading key information about how its service operates (as applicable), including:
(a) details of how the Authorised Crowdfunding Platform functions;
(b) details of how and by whom an Authorised Crowdfunding Platform is remunerated for the service it provides, including fees and charges it imposes;
(c) any financial interest of an Authorised Crowdfunding Platform or a Related Person that may create a conflict of interest;
(d) the eligibility criteria for Borrowers or Issuers that use the service;
(e) the minimum and maximum amounts, if any, of Permitted Loans or Permitted Investments that may be sought by a Borrower or an Issuer using the service;
(f) what, if any, security or collateral is usually sought from Borrowers or Issuers, when might rights to enforce such security or apply such collateral be exercised and any limitations in connection therewith;
(g) the eligibility criteria for lenders or Investors that use the service;
(h) any limits on the amounts a lender may lend or an Investor may invest using the service, including limits for individual Permitted Loans or Permitted Investments and limits that apply over any 12-month period;
(і) when a lender or Investor may withdraw a commitment to provide funding, and the procedure for exercising such a right;
(j) what will happen if Permitted Loans sought by a Borrower or funds sought by an Issuer either fail to meet, or exceed, the target level;
(k) steps an Authorised Crowdfunding Platform will take if there is a material change in a Borrower's or Issuer's circumstances and the rights of the lender and Borrower or Issuer and Investor in that situation;
(l) how an Authorised Crowdfunding Platform will deal with overdue payments or a default by a Borrower;
(m) which jurisdiction's laws will govern the loan agreement between the lender and Borrower or the Investment between Investor and Issuer;
(n) arrangements and safeguards for Client Assets held or controlled by an Authorised Crowdfunding Platform, including details of any legal arrangements (such as nominee companies) that may be used to hold Client Assets;
(o) any facility an Authorised Crowdfunding Platform provides to facilitate the transfer of Permitted Loans or sale of Permitted Investments, the conditions for using the facility and any risks relating to the use of that facility;
(p) measures the Authorised Crowdfunding Platform has in place to ensure the Crowdfunding Platform is not used for money-laundering or other unlawful activities;
(q) measures the Authorised Crowdfunding Platform has in place for the security of information technology systems and data protection; and