Regulatory Bylaw No. 35 of 2025 for Financial Brokerage Companies Seeking Licensing from the Iraqi Capital Markets Authority for Trading in Foreign Securities and Commodities Markets

Iraqi Capital Markets Authority

Based on the provisions of Sections (5) and (12) of Legislative Decree No. (74) of 2004, We have issued the following:

Regulatory Bylaw No. (35) of 2025 for the Operation of Financial Brokerage Companies Seeking a License from the Authority to Trade in Foreign Securities and Commodities Markets

Article (1):

The following terms have the meanings indicated below:

• First:

  • The Authority: The Iraqi Capital Markets Authority.
  • Second: Financial Market: Any financial market specialized in the exchange of securities.
  • Third: Financial Brokerage Company: The licensed legal entity that conducts the following activities (Financial Broker, Principal Broker, Introducer Broker, Investment Management, Financial Advisory Services) regarding stocks, bonds, commodities, and/or any other activity determined by the Iraqi Capital Markets Authority in foreign securities and commodities markets.

• Fourth: Investment Manager: The licensed person who manages securities portfolios on behalf of others.

• Fifth: Financial Advisor: The licensed person who performs the duties of providing advice and consultation to others in the field of investment in securities and commodities.

• Sixth: Investment Custodian: The licensed person who monitors and supervises the management of client investments to ensure compliance with the client's investment principles and objectives.

• Seventh: Investment Management: The qualified professional management of various securities to meet specific investment objectives for the benefit of investors, provided that it includes at least one person licensed by the Authority.

• Eighth: Introducer Broker: The broker licensed by the Authority to provide client introduction services to a foreign licensed broker dealing in foreign securities and commodities markets.

• Ninth: Authorized Person: The person affiliated with the financial brokerage company, whether an employee, manager, or in any other capacity, who is licensed for positions requiring licensing by the Authority.

• Tenth: Foreign Securities and Commodities Markets: Any market outside the borders of the Republic of Iraq that is regulated and licensed for trading in securities and commodities of all kinds, including speculation on prices.

• Eleventh: Trading in Foreign Securities and Commodities Markets: Buying, selling, brokering, or managing securities and commodities of all kinds.

• Twelfth: Foreign Broker: The external broker with whom the financial brokerage company licensed by the Authority to trade in foreign securities and commodities markets deals, provided that it holds an official license from the competent authorities in its country.

• Thirteenth: Bank Account (Omnibus Account): The account opened in licensed banks located in Iraq through which transactions are conducted with foreign exchanges (foreign securities and commodities markets) for buying and selling operations, opened in the name of the financial brokerage company licensed by the Authority for the benefit of its clients with the foreign broker.

• Fourteenth: Financial Broker: The foreign legal entity that buys and sells securities and commodities on behalf of clients of the licensed Iraqi brokerage company.

• Fifteenth: Principal Broker: The person who buys and sells securities and commodities for their own account directly.

• Sixteenth: Prohibited Acts: Any act, practice, plan, approach, or means prohibited by effective laws, regulations, instructions, or decisions.

• Seventeenth: Misrepresentation and Deception: Any untrue statement concerning a material fact, any other information, or any omission or concealment of material information necessary for the provided data to be correct and accurate. Material information is determined by the Authority, or any act, practice, plan, approach, or means intended to entice, lie to, deceive, or conceal facts, and anything indicating the word fraud.

• Eighteenth: Material Information: Any strategic decisions, major developments, or important events that affect the performance, activity, ownership, and continuity of the company, and thus have a direct or indirect effect on the value and movement of securities and commodities.

• Nineteenth: Authorization: The request submitted by the investor to the licensed financial brokerage company, requesting and authorizing it to execute a specific transaction to buy or sell securities or commodities.

• Twentieth: Custodian: The licensed legal entity authorized by the Authority to perform custodian activities for securities, as stipulated in the Custodian Bylaw issued by the Authority.

• Twenty-first: Commodities: Agricultural products and natural resources extracted from the earth, rivers, and seas after preparation and processing for commercial use, and any other product that the Authority designates as a commodity.

Article (2):

It is prohibited for any person to practice one or more of the following activities in foreign securities and commodities markets unless they obtain a license from the Authority to practice those activities, provided that the individuals are authorized by the Authority:

• Financial Broker
• Principal Broker
• Introducer Broker
• Investment Management
• Investment Custodian
• Financial Advisory Services

Article (3):

The following conditions are required to grant a license to practice one or more of the activities listed in Article (2) of this Bylaw: A. The minimum capital requirement for the license application for each activity sought in Iraqi Dinars must be as follows:

• Financial Broker: Only one billion Dinars (1,000,000,000)
• Principal Broker: Only two hundred and fifty million Dinars (250,000,000)
• Introducer Broker: Only three hundred million Dinars (300,000,000)
• Investment Management: Only one billion Dinars (1,000,000,000)
• Investment Custodian: Only one hundred million Dinars (100,000,000)
• Financial Advisory Services: Only seventy-five million Dinars (75,000,000)

B. The minimum capital requirement for the license application to practice one or more of the activities listed in paragraph (a) of this Article must not be less than the sum of the minimum limits required for each activity sought.

C. The ratio of net equity to capital for the license application must not be less than 75% at any time. In case of a decrease, guarantees acceptable to the Authority must be provided until the decrease is rectified in accordance with the law within (15) fifteen working days, after which the company's operations will be suspended to allow for the equity difference to be addressed, and the Authority must suspend the company until the guarantee is provided.

D. The management of the license applicant must possess the necessary experience, competence, and knowledge to practice their activities and must be of good repute. They must provide proof thereof, and the Authority has the right to verify this through appropriate means.

E. The Managing Director and/or major shareholders who hold a stake of 25% or more of the company's capital must not have been convicted of a crime involving moral turpitude or any money-related crimes.

Article (4):

The license applicant wishing to trade in foreign securities and commodities markets must submit a written license application to the Authority accompanied by the following documents: A. The Articles of Association and Internal Regulations.

Article (5):

B. The organizational structure of the financial brokerage company. C. The necessary written work procedures to be applied regarding the service of trading in foreign securities and commodities markets. D. The appointment of a compliance officer and a compliance manual outlining the internal control procedures to be implemented to ensure effective supervision of their trading and their clients' trading in foreign securities and commodities markets, and the duties of the compliance officer as determined by the Authority. E. The appointment of a Risk Management Director and the determination of work procedures that enable them to identify current or potential risks they may face and the mechanisms for addressing and monitoring them, with these procedures to be reviewed by them continuously. F. Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) work procedures, including a customer acceptance and identification policy, the due diligence and enhanced due diligence procedures followed by the licensed financial brokerage company, procedures for identifying the beneficial owner, and compliance with AML/CFT Law No. (39) of 2015 and the bylaws and regulations issued thereunder. G. A commitment that the source of funds provided for licensing purposes is legitimate, that these funds are private funds, and to provide the net assets of shareholders from sources audited by an authorized auditor, and that they are the beneficial owner of the licensed financial brokerage company. H. A commitment to the accuracy of the data and information provided by them to the Authority and included in the license application. I. Any other documents requested by the Authority.

Article (6):

The Authority shall issue its decision to grant or reject the license within 30 working days from the date of submission of a complete application meeting the conditions and requirements, after scrutinizing the sources of funds and ensuring their integrity.

Article (7):

The licensed financial brokerage company is not permitted to begin practicing one or more of the services listed in Article (2) of these Instructions until it obtains the Authority's written approval to commence trading in foreign securities and commodities markets and fulfills the following: A. Payment of fees determined by the Authority. B. Provision of an unconditional financial guarantee for the order of the Authority, according to the format approved by the Authority, with the value of the guarantee reviewed annually for each licensed financial brokerage company, provided that the minimum guarantee value is not less than:

• Financial Broker: Only five hundred million Dinars (500,000,000)
• Introducer Broker: Only one hundred and fifty million Dinars (150,000,000)
• Investment Management: Only five hundred million Dinars (500,000,000)
• Investment Custodian: Only seventy-five million Dinars (75,000,000)
• Financial Advisory Services: Only fifty million Dinars (50,000,000)

C. Providing the Authority with the following:

1. The (Agreement Form) related to the transaction between the licensed financial brokerage company and the client in foreign securities and commodities markets for approval, certified by official authorities, and confirming that the foreign exchange is licensed in the country where it conducts its activities.
2. Any agreement signed with any other party to fulfill the requirements of trading in foreign securities and commodities markets and specifying the entities with which trading will occur.
3. Names of employees in the financial brokerage company, along with their resumes supported by necessary documents. D. Designating one or two persons as representatives of the authorized persons to practice one or more activities of financial brokerage companies in foreign securities and commodities markets, with their data to be scrutinized by the Authority before commencing work. E. Providing a plan for the (Electronic Programs) used by the financial brokerage company, internet connection procedures, specifications of those networks, the designated trading platform, and an alternative plan in case of an emergency party.

Article (7):

F. A commitment from the Managing Director, Director, and Legal Advisor of the licensed financial brokerage company that all agreements and forms comply with the provisions of laws and meet the Authority's requirements.

Article (8):

The licensed financial brokerage company is prohibited from the following:

• First: Executing a purchase transaction in foreign securities and commodities markets for a client unless sufficient cash balance is previously confirmed in the client's account for execution. It is also prohibited for the company to prevent its clients from funding transactions with their own funds or the funds of their brokerage in foreign securities and commodities markets.
• Second: Executing any buy or sell transaction in foreign securities and commodities markets unless based on client authorization through a recorded telephone buy/sell process, email, or online trading. The company bears the burden of proof at any time that it has an authorization between the client's name, type of transaction, type of operation (sell or buy), quantity, price, date and time of authorization, and its validity period (5 years), and must retain the original copy of the authorization for a period of not less than 5 years.
• Third: Dealing with any foreign financial brokerage company not licensed by the competent authorities in its country.
• Fourth: Paying or crediting any amount to the account of any of its clients to settle any transaction unless it has been sold on behalf of the client.
• Fifth: Opening accounts for minors and opening joint accounts involving more than one beneficiary for trading and individuals, and writing a commitment to that effect.
• Sixth: Dealing in Contracts for Difference (CFDs), digital and encrypted operations, Forex, or any other currencies not approved in the Republic of Iraq.
• Seventh: The licensed financial brokerage company is prohibited from providing stock lending services to clients, from clients to other clients, or from the brokerage company, as borrowed stocks are often used for short selling purposes.
• Eighth: Mixing its advisory services with its clients' investments.
• Ninth: Operating with leverage that enables the investor to obtain doubled amounts used for trading in buying securities and commodities, which do not represent real amounts but are for trading purposes only.

Article (9):

• Eleventh: Misconduct with client or shareholder funds, including misappropriation or misuse.
• Twelfth: Practicing deception, misrepresentation, and prohibited acts.
• Thirteenth: Negatively affecting competition by manipulating commission rates or service fees charged to any client or limiting the services provided.
• Fourteenth: Whether acting individually or in collusion with others.
• Fifteenth: Broadcasting, promoting, or giving misleading or untrue information, data, or statements that may affect the price of any security or the reputation of any entity, or publishing or promoting any untrue data or information about foreign exchanges or the transactions conducted.
• Sixteenth: The licensed financial brokerage company is prohibited from opening trading accounts with the foreign broker using omnibus account merging, where merging client accounts into a single omnibus account with the foreign broker is not allowed. Aggregating and executing trades under the name of the financial brokerage company or any other name, rather than individual client names, is prohibited.

Article (10):

The licensed financial brokerage company is required to provide the Authority with the following before commencing trading in foreign securities and commodities markets:

• First: Details of the foreign broker's bank account at the clearing bank through which financial remittances for clients will be received and sent.
• Second: Guarantees provided by foreign regulatory authorities for the recovery of financial deposits and securities ownership in the event the foreign broker and/or ceases its activities.
• Third: An explanation of the mechanism for recovering and collecting funds held with the foreign broker in the event of a client's death.
• Fourth: A list of obstacles, fines, audit reports, and reports issued by regulatory authorities, if any, against the foreign broker intended to be dealt with.
• Fifth: A full explanation and clarification of the foreign tax consequences that will be imposed on the Iraqi client as a result of trading in foreign markets.

Article (11):

• Sixth: A list of names and details of companies to be approved for electronic customer identity verification and ensuring the customer is not on local or global watchlists before opening the account.
• Seventh: Names of (foreign securities and commodities markets) and foreign brokerage companies intended for trading, and documents proving the licensing of those markets and companies by the competent authorities under which they operate, and providing evidence supporting the licensed financial brokerage company's contract with the relevant companies before promotion.
• Eighth: A copy of the agreement signed with the foreign broker, or any agreement signed with any other party to fulfill trading requirements, signed and certified.
• Ninth: Providing the Authority with any data or information it may request regarding its trades.
• Tenth: And the trades of its clients in foreign exchanges.
• Eleventh: Separating their accounts for their transactions in foreign securities and commodities markets.
• Twelfth: Any other requirements or documents requested by the Authority in this regard.

Article (12):

The licensed financial brokerage company is required to have a relationship with the client and the licensed brokerage company under a written agreement compliant with the provisions of laws, particularly the Securities Law and the systems, instructions, bylaws, and decisions issued thereunder.

• First: Preparing and organizing the contract with the client to ensure the agreement includes as a minimum:
  • A. Clarification of risks related to trading in foreign securities and commodities markets.
  • B. Explicit reference to the order entry mechanism, whether by the client directly, by the licensed brokerage company, or by both.
  • C. Mechanism for recording purchases in foreign securities and commodities markets.
  • D. Mechanism for financial settlements between the client and the licensed financial brokerage company.
• C. The commissions to be charged by the licensed financial brokerage company and all costs related to trading in foreign securities and commodities markets.
• H. Iraqi law and Iraqi courts shall be adopted to resolve any dispute that may arise between the licensed financial brokerage company and its clients, and to determine dispute resolution methods and agreement termination methods.
• K. These agreements shall be written in the account opening contract with the licensed financial brokerage company.
• Eighth: Attaching the necessary regulatory brochure prepared by the Authority with each agreement signed by the client and informing the client of it. The client must also sign it and consider it an integral part of the agreement.
• Ninth: Notifying the client in writing or via the agreed-upon means of executed operations on their account on the same day of execution. The client has the right to object to any operation by informing the licensed financial brokerage company via the same means of any error or objection to the executed operations and their calculation according to the terms stated in the agreement.
• Tenth: Sending a detailed statement every month to each client for any activity on accounts with financial movements or transactions, including their balance in trading foreign securities and commodities markets and details of their trading movements, or according to the terms stated in the agreement. A detailed statement every 3 months for private accounts, along with providing a copy of documents related to their account with the licensed financial brokerage company upon request.

Article (13):

The following conditions are required for the financial brokerage company to use the bank account: A. Not to reverse the effect of working funds in its internal records after the actual execution of orders in foreign securities and commodities markets. B. Preparing necessary records to show all auxiliary data related to movements on its clients' accounts through the omnibus account. C. Separating its investments in foreign securities and commodities markets and its cash balances from its clients' investments and balances related to transactions with it through the omnibus account, and showing them separately in all its financial statements. D. Not using client balances to obtain financial investments. E. Not making any transfers from the client's account to the company's account except within the limits of commissions resulting from trading operations.

Article (14):

The licensed financial brokerage companies must separate their accounts and their clients' accounts as follows:

• First: Opening a current account in the name of the licensed financial brokerage company to deposit the company's own funds, revenues, and funds resulting from practicing brokerage activities to cover its expenses, distribute dividends, and other company-specific accounts, except for trust accounts.
• Second: Opening another current account in the client's name and using it for executing their trading operations for the following purposes:
  • A. Depositing the amount received from the client to finance purchase operations for securities and commodities on their behalf.
  • B. Transferring due amounts to the company's private account resulting from its execution of buy and sell operations on behalf of its clients.
  • C. The accounts will be monitored by the Authority to ensure compliance with operations executed by the licensed financial brokerage company.
• Third: The licensed financial brokerage company is prohibited from disposing of funds deposited in client accounts for purchasing purposes without selling on behalf of the clients.

Article (15):

The licensed financial brokerage company, before the Authority's approval of the Custodian's collection after practicing its activities, must contract with the purchase of securities and commodities as stipulated in the Regulatory Bylaw for the licensed Custodian issued by the Authority.

Article (16):

The licensed financial brokerage company wishing to promote its services in any manner must place warning phrases regarding the risks of trading in foreign securities and commodities markets clearly on all its advertisements, as well as on its official website and social media pages.

Article (17):

The Authority may impose a financial penalty it deems appropriate for violation of this Bylaw, not exceeding (50) fifty million Dinars. In case of assault, the violating act will be referred to the competent courts as a crime.

Article (18):

The licensed financial brokerage company is required to acquire a specific system for evaluating and combating money laundering and financing terrorism and to keep records for a period of (5) years from the date of termination of the relationship with the client.

Article (19):

Financial brokerage companies will not be registered in the Companies Registration Office after obtaining the Authority's approval.

Article (20):

The licensed financial brokerage companies are subject to supervision by the competent security agencies through conducting security audits on their owners, with the names of those companies to be published on the Authority's website.

Article (21):

Any other conditions and requirements approved by the Capital Markets Authority according to public interest requirements will be added.

Article (22):

This Bylaw does not apply to digital, foreign, or encrypted operations.

9/9/2025 Faisal Al-Haimas President of the Capital Markets Authority

Regulatory Bylaws of the Capital Markets Authority