ADVOKS GLOBAL · KENYA
The Capital Markets (Derivatives Markets) Regulations
6. Rules of the exchange
Edition: 2025-02-14 · In force
6. Rules of the exchange
(1)An applicant seeking approval to operate a derivatives exchange shall establish and adopt derivatives exchange rules.(2)The rules adopted under subregulation (1) shall contain provisions on—(a)the clear demarcation of roles and responsibilities of the board, chief executive officer and the statutory committees of the board;(b)the powers of the chief executive officer including in emergency situations;(c)the granting of trading rights and non-transferable memberships of the derivatives exchange;(d)general obligations of the derivatives brokers who are its derivatives members;(e)specifications of the minimum parameters to be disclosed in respect of derivatives contracts to be listed with prior approval of the Authority;(f)the clearing and settlement of all trades in derivatives contracts by the clearing house of the derivatives exchange where the clearing house is wholly owned by the exchange or is its subsidiary;(g)the performance of novation, netting and guarantee settlement of trades;(h)complete segregation of business accounts of brokers from that of their clients and between different clients;(i)trading including validation of orders on the derivatives exchange;(j)the suspension of trading of any derivatives contract for the protection of investors or for the conduct of orderly and fair trading;(k)investigation into the trading practices and financial transactions of derivatives brokers and their clients;(l)the clearing house and designated clearing banks of the derivatives exchange;(m)the margining regime, daily marking to market of all open positions and variation margin call to derivatives brokers and their clients;(n)the methodology for determining the daily and final settlement prices;(o)deliveries through the clearing house and obligations of the brokers;(p)the closing out of derivatives contracts in case of non-compliance with the rules of the derivatives exchange;(q)the mandatory maintenance of a settlement guarantee fund including provisions for pay in, pay out and topping up;(r)the mandatory maintenance of an investor protection fund including provisions for pay in, pay out and topping up;(s)the declaration of an event of default and disposal of defaulter's assets under lien or pledge;(t)the arbitration of disputes and provision for appeal to the Authority by derivatives brokers and investors; and(u)any other provisions specified by the Authority.