COBS 8.4 COBS 8.4 Rules Applicable to MTF and OTF Operators and rules on Liquidity providers
An MTF Operator or OTF Operator must not introduce a liquidity incentive scheme unless(a) participation of such a scheme is limited to members or any other Persons where:(i) the MTF Operator or OTF Operator has undertaken due diligence to ensure that the Person is of sufficient good repute and has adequate competencies and organisational arrangements; and(ii) the Person has agreed in writing to comply with the MTF Operator or OTF Operator's operating rules so far as those rules are applicable to that Person's activities; and(b) the MTF Operator or OTF Operator has obtained the prior approval of the Regulator.
For the purposes of this section, a "liquidity incentive scheme" means an arrangement designed to provide liquidity to the market in relation to Investments traded on the MTF or OTF.
Where an MTF Operator or OTF Operator proposes to introduce or amend a liquidity incentive scheme, it must lodge with the Regulator, at least ten days before the date by which it expects to obtain the Regulator approval, a statement setting out:(a) the details of the relevant scheme, including benefits to the MTF or OTF and members arising from that scheme; and(b) the date on which the scheme is intended to become operative.
The Regulator must within ten days of receiving the notification referred to in 8.4.3, approve a proposed liquidity incentive scheme unless it has reasonable grounds to believe that the introduction of the scheme would be detrimental to the MTF or OTF or to markets in general. Where the Regulator does not approve the proposed liquidity incentive scheme, it must notify the MTF Operator or OTF Operator of its objections to the introduction of the proposed liquidity incentive scheme, and its reasons for that decision.
An MTF Operator or OTF Operator must sufficiently prior to launch, to enable any interested parties to participate in it, announce the introduction of the liquidity incentive scheme, specify the date on which the scheme becomes operative and the contracts to which it relates.
COBS 8.4.6 [Deleted]
Amended on (3 February, 2020).