On Amending the Licensing and Registration Regulation Series 2000, Related to Change of Capital Requirements for Approved Institutions

Notice No. 93
Regarding the Increase of the Minimum Capital Required by Financial Institutions for Engaging in Activities Related to Financial Instruments and Amending the Licensing and Registration Regulation in Financial Markets Series 2000 Pursuant to Law No. 161 dated 2011/8/17 on Financial Markets, And Pursuant to Capital Markets Authority Board Decision No. 23/2/15 dated 2023/2/28 increasing the capital required from licensed institutions for engaging in activities related to financial instruments' business to become 10 times the approved capital before issuing Notice No. 84 dated 2022/7/28, as well as granting licensed institutions a maximum period of 6 months from its issuance date to comply with its provisions. We hereby inform you of the following:

First: Paragraph (1) of Article 2103 of the Licensing and Registration Regulation in Financial Markets Series 2000 is amended to read as follows:
(1) The activities related to financial instruments' business mean engaging in any of the following activities:
Trading/Dealing: Trading or dealing in a financial instrument from the institution's account or clients' accounts.
Required Capital: 6,000,000,000 L.L. (Six Billion Lebanese Lira).

• Buying, selling, or receiving orders to buy or sell a financial instrument.
• Acting as an authorized distribution agent for a foreign collective investment entity.
• Market maker or liquidity provider.
  Required Capital: 15,000,000,000 L.L. (Fifteen Billion Lebanese Lira).
• Managing underwritings in financial instruments, or distributing financial instruments, or guaranteeing underwriting of financial instruments.
  This license does not include providing custody services to clients, as that requires obtaining a license for arranging 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 dealing in any type of financial instruments. Required Capital: 1,500,000,000 L.L. (One Billion Five Hundred Million Lebanese Lira).

• Providing advice regarding the exercise of any dealing right related to a financial instrument.
• Carrying out underwriting offering operations in financial instruments, and public or private placement offering operations.
• Providing financial advice, including advice on: investments and dealing in financial instruments, matters related to corporate finance, and merger and acquisition operations.
  This does not include receiving orders from clients, which requires obtaining a license for dealing services.

Arranging Services: Arranging operations related to financial instruments' business.
Required Capital: 3,000,000,000 L.L. (Three Billion Lebanese Lira).

• Introducing persons to financial instruments' operations.
• Working on arranging transactions in financial instruments.
• This includes arranging corporate finance agreements, merger and acquisition agreements, underwriting offering operations in financial instruments, and public or private placement offering operations.
• Providing custody services, subject to the provisions of Series 3000, specifically Articles 3515 and 3517 thereof.
  Note: Arranging services do not include dealing (executing trading operations).

Management Services: Managing a financial instrument or portfolio of financial instruments for the benefit of another person on a discretionary basis. Required Capital: 30,000,000,000 L.L. (Thirty Billion Lebanese Lira).

• Includes managing collective investment entities (additional conditions apply under the regulation specific to collective investment entities).

Custody Services: Safeguarding assets, including financial instruments, for the benefit of another person.
Required Capital: 60,000,000,000 L.L. (Sixty Billion Lebanese Lira).

• Providing custody services to clients, managing rights, benefits, and procedures related to a financial instrument.
  Includes acting as a custodian for a collective investment entity. (Additional conditions apply under the regulation specific to collective investment entities).

Second: Licensed financial institutions with the Authority must increase their capital to align with the minimum limit mentioned above within a maximum period of 6 months from the date of issuance of this Notice. In this context, licensed institutions must apply to the Authority to obtain its approval for their capital increase in accordance with the established procedures for this purpose.

Third: This Notice takes effect immediately upon its publication in the Official Gazette.
Beirut, on April 5, 2023
Capital Markets Authority Chairman / Governor of the Central Bank (Bank of Lebanon) Riad Toufic Salemeh