Regulatory Alerts2023-02-15
Instructions and Regulations for Licensing Five Securities Brokerage Companies
The Iraqi Securities Commission issued updated 2022 instructions establishing strict licensing criteria for exactly five securities brokerage companies to operate in the Iraqi Securities Market. The regulations mandate that applicants be Iraqi entities meeting minimum capital requirements, possessing qualified management, and demonstrating technical competence with a 90% pass rate in market exams. Furthermore, the rules prohibit dual brokerage ownership, restrict operations to the local market, and require regulatory approval for mergers, liquidation, or any changes to the authorized list of five firms.
Regulations for Licensing Five Securities Brokerage Companies
The following conditions must be met for a securities brokerage company to be granted a license:
A. The applicant must be an Iraqi company established under the prevailing Companies Law or an Iraqi bank intending to conduct certain brokerage activities through a subsidiary.
B. The company's activities must be limited to conducting securities brokerage business in the Iraqi Securities Market.
C. The paid-up capital of the licensed company must not be less than the minimum specified by the Securities Commission for securities brokerage companies.
D. The management of the brokerage company must possess the necessary experience and competence. The company must appoint one authorized manager approved by the Iraqi Securities Market and two assistants, who must pass the prescribed examination upon licensing by the Market.
E. A guarantee letter must be submitted, the value of which is determined in accordance with the regulations of the Securities Commission.
F. No founder, director, or member of the board of directors of the company shall have previously been convicted of a felony or misdemeanor involving deprivation of work in a similar field, or a crime compromising honor, or any of the crimes stipulated in the Companies Law or Commercial Law, or declared bankrupt.
G. The company is committed to providing a qualified staff to work using the electronic trading method applied in the Iraqi Securities Market, after its authorized personnel pass the Market's technical tests with a success rate of not less than 90%, within a period not exceeding one month from the date the company is licensed.
H. Licensed securities brokerage companies must comply with prevailing Iraqi laws and adhere to the systems, rules, and regulations issued by the Iraqi Securities Commission, as well as the instructions and decisions of the Board of Governors of the Iraqi Securities Market.
I. No securities brokerage company may decide to liquidate its business without the approval of the Commission, and only after verifying that the company has fulfilled all its obligations.
J. Licensed securities brokerage companies in the Iraqi Securities Market are prohibited from acquiring, merging with, or managing another securities brokerage company without obtaining the approval of the Securities Commission.
K. Licensed securities brokerage companies in the Iraqi Securities Market are prohibited from conducting brokerage activities in any other securities market.
L. The membership fee for the company is one hundred and fifty million dinars. Competition among applicants who meet all conditions shall be based on (financial and technical solvency) for the selection of the five applicants.
M. It is not permissible for two brokerage companies to be owned by the same owners or one of them.
N. The company shall bear the costs of connection, installation, and electronic operation according to the technical guidelines specified by the Iraqi Securities Market for the purpose of electronic trading.