Regulatory Alerts2022-08-29
On Amending the Licensing and Registration Regulation Series 2000
The Capital Markets Authority, in coordination with the Governor of Bank of Lebanon, issued Notice No. 86 mandating licensed financial institutions to register all persons performing organized functions under Part E of the Licensing and Registration Regulation Series 2000. The notice amends Annex 5 to define eleven key executive and operational roles, specifies their required qualification exams across financial instruments, derivatives, and business conduct, and establishes a two-year compliance window during which appointees are classified as "Supervised Persons." Failure to complete registration within this period or meet examination requirements subjects both the appointees and non-compliant institutions to suspension and enforcement actions by the Authority.
Notice No. 86 Addressed to Licensed Institutions with the Capital Markets Authority Regarding the Registration of Persons Performing Organized Functions under Law No. 161 dated 2011/8/17 concerning Capital Markets, and under CMA Board Decision No. 22/5/23 dated 2022/5/24 and CMA Board Decision No. 22/7/26 dated 2022/8/16, as follows:
We inform you that the Capital Markets Authority (hereinafter "the Authority") requires licensed institutions to fully comply with Part E of the Licensing and Registration Regulation Series 2000 regarding the mandatory registration of persons performing organized functions, meeting the registration requirements (especially those specified in Annex 5 attached to said Regulation), under penalty of suspending the appointed person from performing these functions until fulfilling the required registration conditions.
Secondly, in this context, licensed institutions that previously appointed persons performing organized functions before the date of issuance of this notice must promptly apply for their registration with the Authority, under penalty of the Authority taking a decision to suspend these persons from performing these functions until fulfilling registration requirements. Furthermore, the CMA Board may take appropriate measures against non-compliant institutions under Article 2501 of the Licensing and Registration Regulation Series 2000.
Thirdly, Annex 5 attached to the Licensing and Registration Regulation Series 2000 is amended to read as follows: Annex No. 5 Functions of Registered Persons and Required Qualification Exams
The Authority has specified the following functions, which are deemed to require registration under Article 2402 for registered persons performing the following functions: -1. Chief Executive Officer, Administrative Director, or General Manager – The person primarily responsible for managing the business of the licensed institution. -2. Executive Officer – A person primarily responsible for one or more parts of the licensed institution's business or its administrative activities. -3. Executive Board Member – A person who is a member of the executive management within the licensed institution. -4. Financial Officer – The person primarily responsible for financial management and controls within the licensed institution, and for compliance with regulations concerning prudential measures. -5. Compliance Officer – The person responsible for compliance affairs within the licensed institution. -6. Anti-Money Laundering Reporting Officer – The person responsible for implementing the policies and procedures adopted by the licensed institution to combat money laundering. -7. Risk Management Officer – The person responsible for designing and implementing the policies and procedures adopted by the licensed institution for risk management. -8. Internal Audit Unit Officer – The person responsible for monitoring the adequacy and effectiveness of supervisory systems and controls within the licensed institution, evaluating internal control mechanisms and risk management policies/procedures, and reviewing financial data and records of the licensed institution. -9. Senior Manager – A person fully or partially responsible for managing, supervising, or monitoring one or more parts of the licensed institution's business. -10. Customer Service Representative (Account Officer) – Any person whose functions involve dealing with clients of the licensed institution regarding financial instrument-related business, including sales representatives, investment advisors, fund managers, and portfolio managers. -11. Trader – Any person trading financial instruments on behalf of clients or the licensed institution's own account.
To qualify for registration, the applicant must have passed the following exams: Function | Qualification Exams -1. Chief Executive Officer, Administrative Director, or General Manager | Financial Instruments Exam; Business Rules and Conduct Exam -2. Executive Officer (including Heads of Departments/Divisions) | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -3. Executive Board Member | Financial Instruments Exam; Business Rules and Conduct Exam -4. Financial Officer | Financial Instruments Exam; Business Rules and Conduct Exam -5. Compliance Officer | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -6. Anti-Money Laundering Reporting Officer | Financial Instruments Exam; Business Rules and Conduct Exam -7. Risk Management Officer | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -8. Internal Audit Unit Officer | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -9. Senior Manager (including Heads of Business Lines/Product Areas) | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -10. Customer Service Representative (Account Officer) | Account Representative; Sales Representative/Agent; Investment Manager; Investment Fund Manager; Portfolio Manager (Discretionary); Portfolio Manager (Non-Discretionary); Investment Advisor; Asset Manager; Financial Investments Director/Officer at a bank or company; Research Analyst/Manager; Financial Instruments Products Analyst/Manager. | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam -11. Trader | Financial Instruments Exam; Derivatives Exam; Business Rules and Conduct Exam
An appointed person performing organized functions is granted a maximum period of two years from the date of commencing these functions to obtain the Authority's registration approval after fulfilling the required qualifications and conditions. During this period, such person is considered a "Supervised Person" according to the following definition: Supervised Person: Any person performing functions under a registered supervising person and in the process of obtaining the Authority's approval. Licensed institutions must notify the Authority upon appointing any "Supervised Person", stating the name of the supervising registered person with the Authority. If the aforementioned two-year period expires without initiating registration, the Authority may take a decision to suspend the "Supervised Person" from performing their functions until fulfilling registration requirements.
Fourthly, this notice takes effect upon publication in the Official Gazette. Beirut, 29 August 2022
Chairman of the Capital Markets Authority / Governor of Bank of Lebanon: Riad Toufic Salameh