Circular No. (51) of 2009

Capital Markets Authority Page 70 Circular No. (51) of 2009 Date: 26/3/2009 Subject: Intra Day Trading Reference: Circular No. 24 of 2008 regarding Intra Day Trading. The Capital Markets Authority hereby issues this circular to regulate Intra Day Trading. Intra Day Trading is defined as the purchase and sale of securities within the same trading day. The Authority permits this activity under specific conditions to ensure market integrity and investor protection.

Broker Declaration for Intra Day Trading Date: .../.../...... Broker Name: .............................................................................................. License No.: ..............................................................................................

• Conditions:
• Requirements:

Capital Markets Authority Page 71 [Continuation of Conditions]

1. The broker must obtain prior approval from the Authority.
2. The broker must maintain a dedicated trading platform for intra-day transactions.
3. The broker must verify client eligibility and capital adequacy.
4. The broker must implement real-time risk monitoring systems.
5. The broker must enforce margin requirements and liquidation protocols.
6. The broker must provide comprehensive risk disclosures to clients.
7. The broker must maintain accurate records and submit regular reports.

Capital Markets Authority Page 72 [Continuation of Conditions] 8. The broker must ensure system stability and disaster recovery plans. 9. The broker must conduct regular staff training on intra-day trading risks. 10. The broker must maintain a minimum capital requirement of 10,000 KD for intra-day trading operations.

Capital Markets Authority Page 73 [Continuation of Conditions] 11. The broker must ensure clients sign a specific agreement acknowledging intra-day trading risks. 12. The broker must monitor trading patterns for abusive practices.

Capital Markets Authority Page 74 Section 1: Definition of Intra Day Trading

1. Reference is made to Circular No. 24 of 2008.
2. Intra Day Trading refers to the purchase and sale of the same security on the same trading day.
3. The Authority permits this activity subject to the conditions outlined herein.

Capital Markets Authority Page 75 Section 2: Conditions for Intra Day Trading

1. The broker must have a dedicated trading system approved by the Authority.
2. The broker must ensure clients maintain sufficient margin to cover positions.
3. The broker must monitor positions in real-time and issue margin calls when necessary.
4. The broker must enforce automatic liquidation if margins fall below required levels.
5. The broker must implement risk management systems to prevent excessive leverage.
6. The broker must maintain detailed records of all intra-day transactions.
7. The broker must ensure adequate operational capacity and staff expertise.

Capital Markets Authority Page 76 Section 3: Risk Disclosures

1. Margin Trading Risk: Trading on margin amplifies both gains and losses. Investors may lose more than their initial investment. The Authority requires brokers to clearly disclose leverage risks.
2. Short Selling Risk: Short selling involves borrowing securities to sell, with the obligation to buy them back later. Losses can be unlimited if prices rise. Brokers must ensure clients understand these risks.
3. Market Risk: Prices may fluctuate rapidly due to market conditions. Circuit breakers may halt trading at 10% or 20% thresholds. Liquidity risks may prevent timely execution.
4. Communication Risk: System failures, network delays, or technical glitches may disrupt order execution. Brokers must have backup systems and clear communication protocols.

Capital Markets Authority Page 77 5. Security Risk: Unauthorized access, hacking, or system breaches may compromise client data or funds. Brokers must implement robust cybersecurity measures. 6. Currency Risk: Trading in foreign currencies exposes investors to exchange rate fluctuations. Brokers must disclose currency conversion risks and associated costs.

Capital Markets Authority Page 78 [Signature Blocks] Broker Signature: .............................................................................................. Client Signature: .............................................................................................. Date: .../.../......