Notice No. 84 on Increasing the Minimum Capital for Financial Institutions Engaged in Securities Activities and Amending the Licensing and Registration Regulation Series 2000

Notice No. 84 on Increasing the Minimum Capital Required by Financial Institutions for Securities Activities and Amending the Licensing and Registration Regulation Series 2000

Pursuant to Law No. 161 dated 17/8/2017 on Financial Markets, and to the Capital Market Authority Board Decision No. 22/2/17 dated 22/2/2022, which increases the required capital for licensed institutions conducting securities activities by 20% (twenty percent) over the currently applicable capital.

The Licensing and Registration Regulation in Financial Markets Series 2000, published on January 19, 2017, and its amendments, hereby stipulates the following:
We inform you

First: Paragraph (1) of Article 2103 of the Licensing and Registration Regulation in Financial Markets Series 2000 is amended to read as follows:
(1) Securities activities mean the conduct of any of the following activities:

• Trading or dealing in a financial instrument from the institution’s account or clients’ accounts. Required Capital: 720 million Lebanese Lira.

• Selling, buying, or receiving an order to sell or buy a financial instrument.

• Acting as an authorized distributor for a foreign collective investment fund.

• Market maker or liquidity provider. Required Capital: 1.8 billion Lebanese Lira.

• Managing underwriting of financial instruments, distributing financial instruments, or guaranteeing the underwriting of financial instruments. This license does not include providing third-party custody services if it requires obtaining a licensing for performing arrangement services. Furthermore, this license does not include providing custody services that require obtaining a custody license.

• Advisory Services: Providing appropriate advice to another person regarding the benefits and risks of their investment or trading in any type of financial instrument. Required Capital: 180 million Lira.

• Providing advice regarding the exercise of any trading right linked to a financial instrument.

• Performing underwriting issuance operations for financial instruments, and public or private placement operations.

• Providing financial advice, including advising on: investments and trading in financial instruments, capital market matters, and merger and acquisition operations. This does not include receiving orders from clients that require obtaining a license for trading services.

• Arrangement Services: Arranging operations related to securities activities. Required Capital: 360 million Lira.

• Identifying persons for financial instrument operations.

• Working on arranging operations in a financial instrument.

• Including arranging capital market agreements, merger and acquisition agreements, underwriting issuance operations for financial instruments, and public or private placement operations.
  Third: Institutions providing custody services must comply with the provisions of Series 3000, specifically Articles 3515 and 3517 thereof.
  Note: Arrangement services do not include trading (execution of trading operations).

• Management Services: Managing a financial instrument or portfolio of financial instruments on behalf of another person in a discretionary manner. Required Capital: 3.6 billion Lebanese Lira.

• Includes managing collective investment bodies (additional conditions apply pursuant to the regulation specific to collective investment bodies).

• Custody Services: Holding assets, including financial instruments, on behalf of another person. Required Capital: 7.2 billion Lebanese Lira.

• Providing custody services to clients, managing rights, benefits, and procedures related to a financial instrument.

Second: Licensed financial institutions with the Authority must increase their capital by 20% (twenty percent) over the currently applicable minimum, within a maximum deadline of December 31, 2022. In this regard, licensed institutions must apply to the Authority for approval of their capital increase in accordance with standard procedures.

Third: This notice takes effect immediately upon its publication in the Official Gazette.
Beirut, July 28, 2022

Chairman of the Capital Market Authority / Governor of the Central Bank of Lebanon Riad T. Salamah

Includes acting as a custody provider for a collective investment fund. (Additional conditions apply pursuant to the regulation specific to collective investment bodies).