Decision Number 16 on Financial Instruments and Products

Decision Number 16 Financial Instruments and Products The Chairman of the Capital Markets Authority/Governor of the Central Bank of Lebanon, Pursuant to Law 161 of August 17, 2011 on Capital Markets, whereby the CMA is entrusted with all the powers pertaining to financial instruments, and products and the operations related hereto, Pursuant to Law No. 308 dated 3/4/2001 on bank share issuing and trading, bank bond issuing and bank ownership of real estate, Pursuant to the decision of the Capital Markets Authority’s Board taken in its meeting held on 20 December 2013. And pursuant to the decision of the Capital Markets Authority’s Board taken in its meeting held on 27 October 2014. Declares the following, Article 1: The provisions of this decision shall apply to financial intermediation institutions, financial institutions, investment authorities, banks exercising operations related to financial instruments in Lebanon, and also on insurance companies where the insurance contracts they offer to the public include financial instruments. Article 2: First: The institutions mentioned in Article 1 above should apply for a license to be obtained from the Capital Markets Authority before issuing or promoting: 1- Any instruments or financial products (shares offered to the public, programs, securities, financial instruments, contracts, derivatives, certificates or structured financial products…), including those which revenues or repayment of capital are related to:

• Shares, bonds or deposit certificates including the financial flows resulting therefrom or at the level of the prices of the said shares, bonds or certificates.

• Debts, corporate bond, certificates or government bonds or debentures including the financial flows resulting therefrom or at the level of the prices of the said bonds or certificates.

• Currency and precious metals exchange rate.

• Interest rates.

• Commodities prices.

• Indices or financial derivatives.

• The achievement of conditions or events of any kinds (credit events, companies’ profits, economic indices, levels of prices …)

• Issuer’s rights of any kind. 2- Any kind or form of instruments or products resulting from securitization operations. Second: The above mentioned provisions do not affect the Central Bank of Lebanon’s powers under Law No 308 dated 2/4/2001 regarding the issuance of bank’s shares and debentures by the banks. Article 3: The concerned institutions must prove full transparency in their relations with customers in respect of the operations mentioned in Article 1 above through the following: 1- Defining clearly and explicitly:

• The financial instruments and products mentioned in Article 1 above and all its revenues related to (indices, derivatives, shares, notes, debts, etc…)

• The revenues and the methods of calculation

• All the risks to which the client might be exposed

• Any further information which can provide maximum accuracy and clarity in dealing, and that might be required by the Capital Markets Authority 2- Preparing a prospectus or agreement with the client, any of which containing, at least, the information mentioned in clause (1) above, provided that the said prospectus or agreement is not distributed or put at the disposal of the concerned parties before informing the Capital Markets Authority thereof and obtaining its approval on the license to issue or promote financial instruments and products pursuant to the provisions of clause (2) of Article 2 above. Article 4: The institutions concerned by this decision shall provide the Capital Markets Authority with a monthly report (three copies) regarding the status and the volume of the operations on the above mentioned financial instruments and products, in accordance with the template No.1 attached to this decision. Article 5: This decision is published in the Official Gazette and enters into force as of 2/1/2015. Beirut, 27 November 2014 Chairman of the CMA/Governor of the Central Bank Riad Toufic Salameh (Signature)

Annex 1 Monthly Statement about the Evolution of the Status of a Financial Instrument/ Program and Volume of Subscription As on: Institution name: Registration Number in the Central Bank of Lebanon / Capital Markets Authority: Currency Instrument Name/ Certificate Program Financial instrument or indices or program or debts related thereto Subscription Volume of reimbursements Volume of amounts guaranteed by the institution Subscription volume in initial marketing Subscription balance at the end of the month Current number of subscribers At the request of the customer At the request of the institution Note: This template should be sent on a CD.