MIR 3.3 MIR 3.3 Fair and orderly trading
A Recognised Investment Exchange must ensure that it has transparent and non-discretionary rules and procedures to provide for fair and orderly trading, and to establish objective criteria for the efficient execution of orders.
In determining whether a Recognised Investment Exchange is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the Regulator may have regard to the extent to which the Recognised Investment Exchange's rules and procedures:(a) are consistent with the Rules of Market Conduct;(b) prohibit abusive trading practices or the deliberate reporting or publication of false information about trades;(c) prohibit or prevent:(i) trades in which a party is improperly indemnified against losses;(ii) trades intended to create a false appearance of trading activity ("wash trades");(iii) cross trades executed for improper purposes;(iv) improperly prearranged or pre-negotiated trades;(v) trades intended to assist or conceal any potentially identifiable trading abuse ("accommodation trades"); and(vi) trades which one party does not intend to close out or settle.(d) include appropriate measures to prevent the use of its facilities for abusive or improper purposes;(e) provide appropriate safeguards for investors against fraud or misconduct, recklessness, negligence or incompetence by users of its facilities;(f) provide appropriate information to enable users of its facilities to monitor their use of the facilities;(g) include appropriate arrangements to enable users of its facilities to raise queries about any use of those facilities which they are reported to have made;(h) include appropriate arrangements to enable users of its facilities to comply with any relevant regulatory or legal requirements; and(i) include appropriate arrangements to reduce the risk that those facilities will be used in ways which are incompatible with relevant regulatory or legal requirements,
and in this paragraph "appropriate" should be taken to mean appropriate having regard to the nature and scale of the Recognised Body's facilities, the types of Persons who will use the facilities and the use which they will make of those facilities.
In determining whether a Recognised Investment Exchange is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the Regulator may have regard to whether the Recognised Investment Exchange's arrangements and practices:(a) enable Members and clients for whom they act to obtain the best price available at the time for their size and type of trade;(b) include procedures which enable the Recognised Investment Exchange to influence trading conditions or suspend trading promptly when necessary to maintain an orderly market; and(c) if they include arrangements to support or encourage liquidity:(i) are transparent;(ii) are not likely to encourage any Person to enter into transactions other than for proper trading purposes (which may include hedging, investment, speculation, price determination, arbitrage and filling orders from any client for whom he acts);(iii) are consistent with a reliable, undistorted price-formation process; and(iv) alleviate dealing or other identified costs associated with trading on the Recognised Investment Exchange's markets and do not subsidise a market position of a user of its facilities.
The rules of a Recognised Investment Exchange must provide that the Recognised Investment Exchange must not exercise its power to suspend or remove from trading on a market operated by it any Financial Instrument which no longer complies with its rules, where such step would be likely to cause significant damage to the interests of investors or the orderly functioning of the Abu Dhabi Global Market Financial System.