The Capital Markets (Commodity Markets) Regulations

These Regulations may be cited as the Capital Markets (Commodity Markets) Regulations.

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Jurisdiction: Kenya
Instrument: Notice
Citation: Legal Notice 41 of 2020
Version: Undated source snapshot
Language: en

Source attribution: Source: Kenya Law

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About this statute

These Regulations may be cited as the Capital Markets (Commodity Markets) Regulations. Provides definitions of terms used in these Regulations (Interpretation). A commodity exchange must have a board that is responsible for overall leadership, governance and strategic direction; the board must include a chairperson, the chief executive, and executive and non-executive directors with at least one third independent; non-executive and independent directors must have relevant knowledge and represent investors and the public. The Authority must approve proposed directors and key personnel who meet the fit and proper requirements; independent directors must serve three-year fixed terms and may be re-appointed for one further term at the commodity exchange's option. A commodity exchange must set the qualifications, appointment process and terms for its chief executive officer; it may change the CEO with prior written notice to the Authority; the Authority may recommend termination if the CEO is not fit and proper.

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Provisions of The Capital Markets (Commodity Markets) Regulations

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Part I

PRELIMINARY

1
PRELIMINARY - 1. Citation

AI-assisted research summary: These Regulations may be cited as the Capital Markets (Commodity Markets) Regulations.

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Commodity Markets) Regulations.
2
PRELIMINARY - 2. Interpretation

AI-assisted research summary: Provides definitions of terms used in these Regulations (Interpretation).

Section 2. Interpretation Section In these Regulations, unless the context otherwise requires— "Act" means the Capital Markets Act (Cap. 485A); "Authority" means the Capital Markets Authority established under section 5 of the Act; "board" means the board of directors of a commodity exchange or a commodity broker; "bucketing" means directly or indirectly taking the opposite side of a client's order into a commodity broker's own account or into an account in which a commodity broker has an interest, without open and competitive execution of the order on the trading platform of a commodity exchange; "clearing house" means an entity, approved by the Authority, recognized as a clearing institution on behalf of a commodity exchange, providing the services of clearing and settlement of transactions and guaranteeing settlement on behalf of the commodity exchange; "client" means a person on whose account a commodity broker carries on trading in any spot commodity contract, but does not include directors, key personnel, representatives and related companies of the commodity broker; "commodity" has the meaning assigned to it under section 2 of the Act; "commodity broker" means a company cleared by the exchange and licenced by the Authority to carry on the business of purchase or sale of commodities contracts as an agent for investors or on its own account; "commodity exchange" means an exchange licenced by the Authority to undertake spot commodity trading, and includes any clearing or settlement or transfer services connected with the transaction; "commodity market" has the meaning assigned to it under section 2 of the Act; "Fund" means the Investor Compensation Fund established under section 18 of the Act; "key personnel" has the meaning assigned to it under section 2 of the Act; "market participant" includes commodity brokers, clearing house of a commodity exchange or a client of a commodity broker; "member" means any person, with the approval of the Authority, has been admitted to membership of a commodity exchange and includes a commodity broker and settlement bank of a commodity exchange; "settlement bank" means a bank as defined under section 2 of the Banking Act (Cap. 488), approved by the Authority to facilitate the maintenance of a segregated account and settlement of transactions executed on a commodity exchange; "settlement price" means the daily settlement price at the close of trading; "spot commodity contract" means delivery verses payment contract traded on a commodity exchange for settlement within five working days from the date of the transaction at the exchange; "trading system" includes any system or platform provided by a commodity exchange, which makes available to the members of the commodity exchange, and disseminates information regarding trades effected, volumes and such other notifications as may be placed thereon by a commodity exchange; "warehouse receipt" has the meaning assigned to it under the Warehouse Receipt System Act (Cap. 350); "warehouse receipt system" has the meaning assigned to it under the Warehouse Receipt System (Cap. 350); and "warehouse operator" has the meaning assigned to it under the Warehouse Receipt System (Cap. 350).

Part II

LICENSING OF COMMODITY EXCHANGES

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LICENSING OF COMMODITY EXCHANGES - 10. Board of the commodities exchange

AI-assisted research summary: A commodity exchange must have a board that is responsible for overall leadership, governance and strategic direction; the board must include a chairperson, the chief executive, and executive and non-executive directors with at least one third independent; non-executive and independent directors must have relevant knowledge and represent investors and the public.

Section 10. Board of the commodities exchange Section 10(1) A commodity exchange shall have a board responsible for the overall leadership, governance and strategic direction of the commodities exchange. Section 10(2)(a) chairperson; Section 10(2)(b) chief executive of the commodity exchange; and Section 10(2)(c) executive and non-executive directors with at least one third of the members of the board being independent directors. Section 10(3) The non-executive and independent directors shall be persons who have knowledge and experience in commodity exchanges, and corporate governance and shall represent the interests of investors and the public interest.
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LICENSING OF COMMODITY EXCHANGES - 11. Conditions for appointment of directors and key personnel

AI-assisted research summary: The Authority must approve proposed directors and key personnel who meet the fit and proper requirements; independent directors must serve three-year fixed terms and may be re-appointed for one further term at the commodity exchange's option.

Section 11. Conditions for appointment of directors and key personnel Section 11(1) The Authority shall approve the names of the proposed directors and key personnel where such directors and key personnel have met the fit and proper requirements as prescribed under section 24A of the Act. Section 11(2) An independent director shall serve for a fixed term of three years and shall be eligible for re-appointment, at the option of a commodity exchange, for one further term.
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LICENSING OF COMMODITY EXCHANGES - 12. Appointment of a chief executive officer

AI-assisted research summary: A commodity exchange must set the qualifications, appointment process and terms for its chief executive officer; it may change the CEO with prior written notice to the Authority; the Authority may recommend termination if the CEO is not fit and proper.

Section 12. Appointment of a chief executive officer Section 12(1) A commodity exchange shall determine the qualification, manner of appointment, terms and conditions of appointment and other procedural formalities associated with the appointment of the chief executive officer. Section 12(2)(a) a significant shareholder or an associate of a shareholder of any commodity exchange; or Section 12(2)(b) a significant shareholder or an associate of a market participant. Section 12(3) The tenure under any contract of appointment of the chief executive officer of a commodity exchange shall not be less than three years and not exceeding five years and may be renewable once. Section 12(4) A commodity exchange may change its chief executive officer upon prior written notice to the Authority. Section 12(5) The Authority may recommend to the board of the commodity exchange the termination of the appointment of a chief executive officer of a commodity exchange if the Authority considers the chief executive officer has not met the fit and proper requirements as set out in section 24A of the Act.
13
LICENSING OF COMMODITY EXCHANGES - 13. Committees of the board and audit committee

AI-assisted research summary: The section lists five standing board committees and requires the committees of the board to have written terms of reference; it also allows the Board to establish other committees for relevant functions.

Section 13. Committees of the board and audit committee Section 13(1)(a) audit; Section 13(1)(b) nomination; Section 13(1)(c) risk management; Section 13(1)(d) finance; and Section 13(1)(e) information technology. Section 13(2) Notwithstanding paragraph (1), the Board may establish other committees to deal with any other relevant functions of the commodities exchange. Section 13(3) The committees of the board shall have written terms of reference which set out their authority and duties.
14
LICENSING OF COMMODITY EXCHANGES - 14. Audit committee and internal audit function

AI-assisted research summary: Requires an audit committee composed partly of independent directors (at least one third), with an independent Chair, at least one member qualified in audit or accounting; the board must set up an internal audit function that reports to the audit committee; the internal audit function must assure the board about internal controls and processes.

Section 14. Audit committee and internal audit function Section 14(1)(a) at least one third of its members who shall be independent directors; Section 14(1)(b) the Chairperson of the audit committee is an independent director; Section 14(1)(c) at least one of the members of the audit committee holds professional qualification in audit or accounting. Section 14(2) The board shall establish an internal audit function which reports directly to the audit committee. Section 14(3) The internal audit function shall be responsible for providing assurance to the board on the adequacy of the commodity exchange's internal controls and processes.
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LICENSING OF COMMODITY EXCHANGES - 15. Advisory committee

AI-assisted research summary: The board of a commodity exchange must establish an advisory committee to advise on non-regulatory and operational matters; the committee must comprise technically expert persons; the Chairperson and CEO must attend every committee meeting; the committee must meet at least four times a year and no more than three months may pass between meetings.

Section 15. Advisory committee Section 15(1) The board of a commodity exchange shall establish an advisory committee mandated to advise the board on non-regulatory and operational matters including product innovation and design, technology, charges and levies. Section 15(2) The advisory committee shall comprise persons with technical expertise on commodity markets matters or capital markets. Section 15(3) The Chairperson of the board and the chief executive officer shall attend every meeting of the advisory committee. Section 15(4) The advisory committee shall meet at least four times a year, but a period of three months shall not lapse between the date of one meeting and the next meeting. Section 15(5) The recommendations of the advisory committee shall be tabled at the meeting of the board of the commodity exchange for consideration and by the board.
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LICENSING OF COMMODITY EXCHANGES - 16. Risk management committee

AI-assisted research summary: A commodity exchange must establish a risk management committee made up of directors and independent external experts; the committee must report to the board, formulate and monitor a board‑approved risk management policy, keep the Authority and board informed of implementation and deviations, perform board-assigned responsibilities, be responsible for implementing the policy, and report to the committee and the chief executive officer.

Section 16. Risk management committee Section 16(1) A commodity exchange shall establish a risk management committee comprising directors and independent external experts. Section 16(2)(a) report to the board; Section 16(2)(b) formulate a detailed risk management policy which shall be approved by the board; Section 16(2)(c) monitor the implementation of the risk management policy; Section 16(2)(d) keep the Authority and the board informed on the implementation of policy and any deviation; and Section 16(2)(e) perform any other responsibilities as may be assigned by the board. Section 16(3)(a) be responsible for implementation of the risk management policy; and Section 16(3)(b) report to the risk management committee and to the chief executive officer of the commodity exchange.
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LICENSING OF COMMODITY EXCHANGES - 17. Appointment of a compliance officer

AI-assisted research summary: The board of a commodity exchange must appoint a compliance officer in accordance with regulation 30 of the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations.

Section 17. Appointment of a compliance officer Section The board of a commodity exchange shall appoint a compliance officer in accordance with regulation 30 of the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations.
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LICENSING OF COMMODITY EXCHANGES - 18. Disclosure and corporate governance norms

AI-assisted research summary: Commodity exchanges must follow disclosure, corporate governance and conduct-of-business requirements for market intermediaries issued by the Authority, including subsequent amendments.

Section 18. Disclosure and corporate governance norms Section A commodity exchange shall comply with the disclosure requirements and corporate governance norms and conduct of business requirements applicable to market intermediaries, issued by the Authority and as amended from time to time.
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LICENSING OF COMMODITY EXCHANGES - 19. Net worth requirements

AI-assisted research summary: Commodity exchanges must maintain adequate liquid net worth, establish systems to monitor it, and submit quarterly audited liquid net worth certificates to the Authority; minimum amounts include half the next 12 months' estimated gross operating costs or other amounts prescribed by the Authority.

Section 19. Net worth requirements Section 19(1) A commodity exchange shall maintain, at all times, liquid net worth amounts of a type acceptable to the Authority, which shall be adequate in relation to the nature, size and complexity of the business of that commodity exchange to ensure that there are no significant risks that liabilities may not be met as they fall due. Section 19(2)(a) an amount equal to one half of the estimated gross operating costs of the commodity exchange for the next twelve-month period; or Section 19(2)(b) such other liquid net worth amount as may be prescribed by the Authority. Section 19(3) A commodities exchange shall establish systems and controls to enable the commodity exchange to determine and monitor the sufficiency of its liquid net worth. Section 19(4) A commodity exchange shall, on a quarterly basis within thirty days after the end of every quarter, submit to the Authority an audited liquid net worth certificate from an auditor.
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LICENSING OF COMMODITY EXCHANGES - 20. Penalties levied by a commodity exchange

AI-assisted research summary: Fines imposed by the commodity exchange on its members shall be credited to the Fund.

Section 20. Penalties levied by a commodity exchange Section Any fines imposed by the commodity exchange on its members shall be credited to the Fund.
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LICENSING OF COMMODITY EXCHANGES - 21. Self-regulatory organization

AI-assisted research summary: A self-regulatory organization must establish procedures and systems to self-regulate commodity market members, adopt a code of conduct, maintain trading surveillance and compliance capacity, and provide a dispute-resolution procedure.

Section 21. Self-regulatory organization Section 21(1)(a) a procedure and appropriate system of exercising self-regulation over its commodity market members; Section 21(1)(b) a code of conduct for its commodity market members; Section 21(1)(c) adequate trading surveillance and compliance capacity; and Section 21(1)(d) a procedure for dispute resolution. Section 21(2)(a) the rules of the commodity exchange, and any amendments thereto, approved by the Authority; and Section 21(2)(b) laws, regulations and guidelines relating to spot commodity contracts issued by the Authority.
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LICENSING OF COMMODITY EXCHANGES - 22. Categories of membership

AI-assisted research summary: Section 22. Categories of membership Section commodity brokers;

Section 22. Categories of membership Section commodity brokers;
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LICENSING OF COMMODITY EXCHANGES - 3. Licensing of commodity exchanges

AI-assisted research summary: Persons must not operate or hold themselves out as commodity exchanges unless they have obtained a commodity exchange license from the Authority; securities or derivatives exchanges that intend to operate a commodities exchange must set up a separate legal entity to do so.

Section 3. Licensing of commodity exchanges Section 3(1) A person shall not carry on business as a commodity exchange or hold himself out as providing or maintaining a commodities exchange unless such a person has obtained a commodity exchange license from the Authority. Section 3(2) A securities exchange or derivatives exchange intending to operate a commodities exchange shall set up a separate legal entity to conduct such business of a commodity exchange.
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LICENSING OF COMMODITY EXCHANGES - 4. Application for licence

AI-assisted research summary: A person who intends to establish a commodity exchange must apply to the Authority for a licence using Form A set out in the First Schedule.

Section 4. Application for licence Section 4(1) A person who intends to establish a commodity exchange shall apply to the Authority for licensing in Form A set out in the First Schedule. Section 4(2)(a) copies of memorandum and articles of association; Section 4(2)(b) rules governing the operations of the commodities exchange; Section 4(2)(c) details of trading, clearing and settlement systems proposed to be adopted by the applicant; Section 4(2)(d) the application fees set out in the Second Schedule; Section 4(2)(e) satisfactory bank references; Section 4(2)(f) a business feasibility plan evaluated by an entity with a proven track record and expertise in commodity markets or commodity market development, establishment or management; and Section 4(2)(g) any additional documents as the Authority may require.
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LICENSING OF COMMODITY EXCHANGES - 5. Considerations in granting a licence

AI-assisted research summary: Requires that the subject "be a company limited by shares".

Section 5. Considerations in granting a licence Section be a company limited by shares;
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LICENSING OF COMMODITY EXCHANGES - 6. Rules of the commodity exchange

AI-assisted research summary: An applicant seeking to operate a commodity exchange must develop rules, which must be approved by the board and the Authority prior to the application.

Section 6. Rules of the commodity exchange Section 6(1) An applicant seeking to operate a commodity exchange shall develop rules to be approved by the board and the Authority prior to the application. Section 6(2)(a) the clear demarcation of roles and responsibilities of the board, chief executive officer and the committees of the board; Section 6(2)(b) the code of conduct and ethics for directors and key personnel; Section 6(2)(c) the powers of the chief executive officer including in emergency situations; Section 6(2)(d) the granting of membership to the commodity exchange including the procedures for admission as a member of a commodity exchange and requirements for membership inclusive of fees; Section 6(2)(e) powers to levy fees and impose penalties for breach of its rules; Section 6(2)(f) the granting of trading rights and non-transferable memberships of the commodity exchange; Section 6(2)(g) requirements and management of margin deposit by commodity brokers so as to provide reasonable assurance that all obligations arising out of the commodity contracts trading will be met; Section 6(2)(h) general obligations of the trading participants who are members of the commodity exchange, including requirements on minimum net worth, maintenance of accounting records and compliance to the Laws of Kenya and the rules of the commodity exchange; Section 6(2)(i) the termination of membership to a commodity exchange; Section 6(2)(j) specifications on the minimum parameters to be disclosed in respect of spot commodity contracts to be listed, with prior approval from the Authority; Section 6(2)(k) procedures for fixing of position limits and trading limits; Section 6(2)(l) the clearing and settlement of all trades in spot commodity contracts by the appointed clearing house, whether the clearing house is a department of the commodities exchange or its subsidiary or is independent; Section 6(2)(m) the performance of novation, netting and guarantee settlement of trades; Section 6(2)(n) complete segregation of business accounts of trading participants from that of their clients and between different clients; Section 6(2)(o) trading including validation of order on the commodity exchange; Section 6(2)(p) the suspension of trading of any spot commodity contract for the protection of investors or for the conduct of orderly and fair trading; Section 6(2)(q) investigation into trading practices and financial transactions of commodity brokers and their clients; Section 6(2)(r) the clearing house and designated settlement banks of the commodity exchange; Section 6(2)(s) commodity categories including provisions on commodity category due diligence and demand and supply assessments; Section 6(2)(t) the operation of warehousing facilities on commodities; Section 6(2)(u) the declaration, management and delivery of various commodities traded on a commodity exchange; Section 6(2)(v) detailed provisions on direct market access by clients of the commodity exchange; Section 6(2)(w) detailed provisions on give-up and take-up transactions, position transfers, assignments, transaction separations, open or close transaction designations and adjustments, and average pricing including transaction mergers and de-mergers; Section 6(2)(x) the methodology for determining the daily and final settlement prices with provisions for adjustments in contract prices to compensate for allowable adjustments in quality and quantity; Section 6(2)(y) the closing out of spot commodity contracts in case of non-compliance with the rules of the commodity exchange; Section 6(2)(z) the declaration of an event of default and disposal of a defaulter's assets under lien or pledge; Section 6(2)(z)(aa) the declaration of an event of default and disposal of a defaulter's assets under lien or pledge; Section 6(2)(z)(bb) the exclusion from membership to a commodity market of persons who are not fit and proper as provided for under the Act; Section 6(2)(z)(cc) the expulsion, suspension or disciplining of members of a commodity market for conduct inconsistent with just and equitable principles in the transaction of business, or for a contravention of the business rules of the proposed commodity market; Section 6(2)(z)(dd) the trading days and business hours of the commodity exchange; Section 6(2)(z)(ee) the resolution of disputes and provision for appeal to the Authority by trading participants and investors; Section 6(2)(z)(ff) generally, for the carrying on the business of the proposed commodity market with due regard to the interests and protection of the public; and Section 6(2)(z)(gg) any other provisions specified by the Authority or the commodities exchange.
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LICENSING OF COMMODITY EXCHANGES - 7. Grant of licence

AI-assisted research summary: The Authority must grant a licence to an applicant who meets licensing requirements and pays the licensing fees; licences remain valid unless suspended or revoked by the Authority; a commodity exchange must pay an application fee and an annual regulatory fee as set out in the Second Schedule or as imposed by the Authority.

Section 7. Grant of licence Section 7(1) The Authority shall, if satisfied that the applicant has met all the requirements for licensing as a commodities exchange and upon payment of the licensing fees set out in the Second Schedule, grant the applicant a licence to operate as a commodity exchange. Section 7(2) A licence granted shall remain valid unless suspended or revoked by the Authority as specified in regulation 8. Section 7(3) A commodity exchange shall pay an application fee and an annual regulatory fee as set out in the Second Schedule or as may be imposed by the Authority from time to time.
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LICENSING OF COMMODITY EXCHANGES - 8. Suspension, restriction or revocation of a licence

AI-assisted research summary: The Authority may suspend, restrict or revoke a commodity exchange licence.

Section 8. Suspension, restriction or revocation of a licence Section The Authority may suspend, restrict or revoke a commodity exchange licence in accordance with section 26 and 26A of the Act.
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LICENSING OF COMMODITY EXCHANGES - 9. Obligations of a commodity exchange

AI-assisted research summary: This section lists duties of a commodity exchange, including maintaining an orderly market, providing market information, managing risks, complying with the Regulations, operating facilities under approved rules, regulating members, recordkeeping, preserving confidentiality (subject to specified disclosures), publishing rules and fees, managing conflicts of interest, using licensed warehouses, and providing clearing and settlement.

Section 9. Obligations of a commodity exchange Section 9(1)(a) an orderly, fair and transparent market in spot commodity contracts traded at the exchange is maintained at all times; Section 9(1)(b) adequate market information is readily available to all participants, investors, media and other relevant stakeholders in a commodity market; Section 9(1)(c) risks associated with the operations of the market and the commodity exchange are managed prudently; and Section 9(1)(d) the exchange complies with these Regulations. Section 9(2) A commodity exchange shall operate its facilities in accordance with its rules as approved by the Authority. Section 9(3)(a) regulate the operations, standards of practice and business conduct of its members, their employees, representatives and associates, in accordance with the exchange's rules; Section 9(3)(b) keep such records as are necessary for the proper recording of each transaction in the commodity exchange; Section 9(3)(c) preserve confidentiality of all information in its possession concerning its members and their clients, except such information as may be disclosed by the commodity exchange when required to do so, in writing, by its clearing house, the Authority, an order of a Court of law in Kenya and the provisions of any Law of Kenya; Section 9(3)(d) publish its rules, fees and charges; Section 9(3)(e) identify and manage conflicts of interest; Section 9(3)(f) ensure that only licenced warehouses and warehouse operators are used in connection with trading in a commodity market; and Section 9(3)(g) provide a robust mechanism for clearing and settlement. Section 9(4)(a) a member is unable to comply with any rule of the exchange or any rules relating to financial resources; or Section 9(4)(b) a financial irregularity or other matter which, in the opinion of the exchange, may indicate that the financial standing or integrity of a member is in question, or that a member may not be able to meet its legal obligations.

Part III

COMMODITY CLEARING HOUSE AND COMMODITY BROKERS

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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 23. Establishment of a clearing house

AI-assisted research summary: Section 23 requires that an applicant be a company or other approved body corporate, satisfy the commodity exchange about technical, financial and human resources, and be approved by the Authority; the applicant must ensure orderly, fair and expeditious clearing arrangements; a clearing house must be exclusively engaged in clearing except for ancillary matters expressly permitted by the Authority; and where the Authority proposes to impose a condition it must give reasons and an opportunity to be heard.

Section 23. Establishment of a clearing house Section 23(1)(a) be a company or such other body corporate as approved by the Authority; Section 23(1)(b) satisfy the commodity exchange as to its technical, financial and human resources, including fit and proper requirements set out in the Act; and Section 23(1)(c) be approved by the Authority as a clearing house. Section 23(2)(a) the applicant will ensure that that there are orderly, fair and expeditious clearing arrangements for transactions in spot commodity contracts; Section 23(2)(b) the rules of the commodity exchange make satisfactory provision relating to guaranteeing to its members of the performance of spot commodity contracts made in a commodity market; Section 23(2)(c) the interests of the public will be served by granting the application; and Section 23(2)(d) all conditions imposed by the Authority on the applicant clearing house have been met. Section 23(3) A clearing house shall be exclusively engaged in its clearing business except only in respect of such other matters as are ancillary or incidental thereto as may be expressly permitted by the Authority. Section 23(4) Where the Authority proposes to impose a condition under this regulation, the Authority shall give reasons for its decision and shall give the applicant an opportunity to be heard before a final decision is made.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 24. Duties of a clearing house

AI-assisted research summary: A clearing house must manage risks and operate fair, orderly and expeditious clearing and settlement for spot commodity contracts, act in the public interest (with the public interest prevailing in conflicts), follow commodity exchange clearing rules, ensure brokers' compliance, preserve confidentiality subject to specified disclosures, handle investor complaints, and maintain premises, personnel, systems, security and technical support.

Section 24. Duties of a clearing house Section 24(1)(a) there is orderly, fair and expeditious clearing and settlement arrangements for any transactions in spot commodity contracts through its facilities; and Section 24(1)(b) the risks associated with its business and operations are managed prudently. Section 24(2)(a) act in the interest of the public; and Section 24(2)(b) ensure that where the interest of the public conflicts with its interest, the interest of the public prevails. Section 24(3)(a) operate its facilities in accordance with the established commodity exchange rules relating to clearing and settlement; Section 24(3)(b) formulate and implement appropriate procedures to ensure that commodity brokers comply with commodity exchange rules; Section 24(3)(c) preserve confidentiality on all information in its possession concerning its commodity brokers and their clients, subject to disclosure of such information when required in writing to do so by the Authority, a commodity exchange or if it is ordered by court to do so; and Section 24(3)(d) have efficient procedures and arrangements to address investor complaints. Section 24(4)(a) that any of its agents are unable to comply with any rule of the clearing house or a commodity exchange; and Section 24(4)(b) the financial standing or integrity of a commodity broker or warehouse operator is in question; or Section 24(4)(b)(i) the financial standing or integrity of a commodity broker or warehouse operator is in question; or Section 24(4)(b)(ii) a commodity broker or warehouse operator may not be able to meet its legal obligations. Section 24(5)(a) adequate and properly equipped premises; Section 24(5)(b) competent personnel; Section 24(5)(c) automated systems with adequate capacity and facilities to meet contingencies or emergencies, Section 24(5)(d) security arrangements; and Section 24(5)(e) technical support for the conduct of its business.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 25. Licensing of commodity brokers

AI-assisted research summary: Is licenced as a commodity broker by the Authority.

Section 25. Licensing of commodity brokers Section is licenced as a commodity broker by the Authority; and
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 26. Application for a licence

AI-assisted research summary: Persons intending to be commodity brokers must apply to the Authority for a licence in Form B and submit required fees, supporting documents, and a letter from a commodity exchange.

Section 26. Application for a licence Section 26(1) A person who intends to carry on the business of a commodity broker shall apply to the Authority for a licence to operate as such in Form B as set out in the First Schedule. Section 26(2)(a) the fees as set out in the Second Schedule; Section 26(2)(b) the relevant documents in support of the information and declarations; and Section 26(2)(c) a letter from a commodity exchange stating that the application meets all the relevant requirements of that commodity exchange and that the commodity exchange will admit the applicant if licensed by the Authority.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 27. Consideration for grant of license

AI-assisted research summary: If an applicant is a market intermediary of another licensed exchange, the applicant must provide an undertaking to allocate a set percentage of its net capital balance to support its activities at the commodity exchange.

Section 27. Consideration for grant of license Section 27(1)(a) be a company limited by shares; Section 27(1)(b) have a chief executive officer who is a fit and proper person as described under section 24A of the Act and who has experience of not less than five years in the business of buying, selling or dealing in commodities, spot commodity contracts, derivatives contracts or other securities; Section 27(1)(c) have the necessary infrastructure including office space, equipment and trained staff to effectively discharge its activities; Section 27(1)(d) have as its directors and key personnel, persons who are fit and proper as described under section 24A of the Act; and Section 27(1)(e) have a minimum net capital and minimum net worth as determined by a commodity exchange and approved by the Authority from time to time. Section 27(2) Where an applicant is a market intermediary of another licensed exchange under the Act, the applicant shall provide an undertaking that it shall allocate a set percentage of the net capital balance to support its activities at the commodity exchange. Section 27(3)(a) not be less than the minimum required net capital balance at a commodity exchange; Section 27(3)(b) be kept segregated; and Section 27(3)(c) be maintained at all times.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 28. Furnishing of information and clarifications

AI-assisted research summary: The Authority can require applicants for a commodity broker licence to provide further information; applicants or key personnel must appear if the Authority requires personal representations.

Section 28. Furnishing of information and clarifications Section 28(1) The Authority may, in considering an application made for a commodity broker licence, require an applicant to furnish such further information regarding any previous dealings in securities, derivatives, commodities and any other related matter as the Authority may consider necessary. Section 28(2) An applicant or its key personnel shall, if required by the Authority, appear before the Authority to make personal representations.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 29. Grant of license

AI-assisted research summary: The Authority must grant licences within 30 days for complete applications, notify the exchange and applicant within 7 days of its decision, must not refuse without hearing the applicant, must notify refusals in writing within 14 days after hearing with grounds, and an aggrieved applicant may appeal to the Capital Markets Tribunal within 15 days of receipt.

Section 29. Grant of license Section 29(1) The Authority, shall, within thirty days from the date of receipt of an application that meets all the requirements, grant a licence to the applicant. Section 29(2) The Authority shall within seven days of its decision, inform a commodity exchange and the applicant of the grant of a licence. Section 29(3) A licence granted shall remain valid unless it is suspended or revoked. Section 29(4) The Authority shall not refuse to grant a licence without first giving the applicant an opportunity of being heard. Section 29(5) Where the Authority, after hearing the applicant, refuses to grant the applicant a licence, the Authority shall, in writing, communicate the decision to the applicant and the commodity exchange within fourteen days of the hearing, stating the grounds for refusal. Section 29(6) An applicant aggrieved by the decision of the Authority to refuse the grant of a licence may appeal against such refusal to the Capital Markets Tribunal within fifteen days of receipt of the decision of the Authority.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 30. Annual regulatory fee

AI-assisted research summary: Commodity brokers must pay an annual regulatory fee as set out in the Second Schedule.

Section 30. Annual regulatory fee Section A commodity broker shall pay an annual regulatory fee as set out in the Second Schedule.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 31. Suspension, restriction or revocation

AI-assisted research summary: The Authority may suspend, restrict, or revoke a commodity exchange licence in accordance with sections 26 and 26A of the Act.

Section 31. Suspension, restriction or revocation Section The Authority may suspend, restrict or revoke a commodity exchange license in accordance with section 26 and 26A of the Act.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 32. Commodity broker to clear its liabilities

AI-assisted research summary: If a commodity broker's licence is suspended or revoked, the commodity broker must clear all outstanding obligations up to the date it was operating.

Section 32. Commodity broker to clear its liabilities Section In the event of a suspension or revocation of a commodity broker's licence, a commodity broker shall be responsible for clearing all of its outstanding obligations up to the date on which that commodity broker had been operating.
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COMMODITY CLEARING HOUSE AND COMMODITY BROKERS - 33. Continuing obligations

AI-assisted research summary: Certified copies of the documents listed in subsection (1) must be submitted to the Authority quarterly within thirty days of the end of the quarter.

Section 33. Continuing obligations Section 33(1)(a) the net capital balance; Section 33(1)(b) net worth statements; and Section 33(1)(c) a report of the auditor. Section 33(2) The certified copies of the documents provided in paragraph (1) above shall be submitted to the Authority quarterly within thirty days of the end of the quarter in a form the manner provided by the Authority.

Part IV

TRADING AND CONDUCT OF BUSINESS

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TRADING AND CONDUCT OF BUSINESS - 34. Trading system and platform

AI-assisted research summary: Trading systems of a commodity exchange must be integrated with clearing/settlement and registries, provide online screen-based direct market access, and have an effective risk management framework.

Section 34. Trading system and platform Section 34(1)(a) the trading system of the commodity exchange; Section 34(1)(b) an electronic platform provided by a commodity exchange; or Section 34(1)(c) such other facility a commodity exchange provides, subject to the approval of the Authority. Section 34(2)(a) be integrated with a clearing and settlement system; Section 34(2)(b) have an online screen-based trading system for providing direct market access up to the client level via the internet; Section 34(2)(c) be integrated with the electronic central registry of the warehouse operators prescribed under the Warehouse Receipt System Act; and Section 34(2)(d) have an effective risk management framework.
35
TRADING AND CONDUCT OF BUSINESS - 35. Transactions on a commodity exchange

AI-assisted research summary: Transactions to be conducted in a commodity exchange shall include dealings in spot commodity contracts.

Section 35. Transactions on a commodity exchange Section Transactions to be conducted in a commodity exchange shall include dealings in spot commodity contracts.
36
TRADING AND CONDUCT OF BUSINESS - 36. Approval of spot commodity contract specifications

AI-assisted research summary: A commodity exchange must submit spot commodity contract specifications to the Authority for approval before they are eligible for listing on a commodity exchange.

Section 36. Approval of spot commodity contract specifications Section 36(1) The commodity exchange shall submit spot commodity contract specification to the Authority for approval prior to becoming eligible for listing on a commodity exchange. Section 36(2)(a) direct the relevant commodity exchange to correct the deficiency; Section 36(2)(b) direct the relevant commodity exchange to comply with the condition or requirement given by the Authority within the specified time; Section 36(2)(c) amend the specification of any spot commodity contract; or Section 36(2)(d) revoke the spot commodity contract. Section 36(3) The Authority may require an application for approval of a spot commodity contract to be accompanied by an expert opinion regarding any of the information contained in the contract. Section 36(4) An application for approval of a spot commodity contract specification shall not be rejected and an approval of a spot commodity contract shall not be revoked unless the relevant commodity exchange has been given an opportunity to be heard by the Authority.
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TRADING AND CONDUCT OF BUSINESS - 37. Fixing of position and trading limits in contracts

AI-assisted research summary: A commodity exchange may set limits on trading and positions with the Authority's approval and by written notice; the exchange must include positions and trading by persons it controls when deciding if limits have been exceeded.

Section 37. Fixing of position and trading limits in contracts Section 37(1) In order to diminish, eliminate or prevent excessive speculation in any commodity under a spot commodity contract, a commodity exchange, with the approval of the Authority, may, by notice in writing, establish and fix such limits as it considers necessary on the amount of trading which may be done or positions which may be held by any person, generally or specifically, under a spot commodity contract on or subject to rules of a commodity exchange. Section 37(2) A commodity exchange shall, in deciding on whether a person has exceeded the limits fixed under paragraph (1) consider the positions held and trading done by any persons, directly or indirectly, controlled by such a person shall be included with the positions held and trading done by that person. Section 37(3) The limits on positions and trading, described under this regulation shall apply to positions held by, and trading done by, two or more persons acting pursuant to an express or implied agreement or understanding, as if the positions were held by, or the trading done by, a single person.
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TRADING AND CONDUCT OF BUSINESS - 38. Clearing and settlement through the clearing house

AI-assisted research summary: The clearing house of a commodity exchange must clear and settle all approved contracts transacted on the exchange, and must close them out when required under exchange rules or as directed by the Authority.

Section 38. Clearing and settlement through the clearing house Section All approved contracts transacted on a commodity exchange shall be cleared and settled by the clearing house of a commodity exchange, and whenever required, closed out in accordance with the rules of a commodity exchange or as directed by the Authority.
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TRADING AND CONDUCT OF BUSINESS - 39. Application of Warehouse Receipt System Act

AI-assisted research summary: Section 39(2) allows the Authority or a commodity exchange (with the Authority's approval) to impose additional requirements on warehouses or warehouse operators to protect market integrity, efficiency, or investor interests.

Section 39. Application of Warehouse Receipt System Act Section 39(1) The Warehouse Receipt System Act shall apply to the warehouse receipt of a commodity that is the subject of a spot commodity contract. Section 39(2) The Authority or the commodity exchange subject to the Approval of the Authority may impose additional requirements on warehouses or warehouse operators where necessary to maintain market integrity and efficiency or in the protection of investor interests.
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TRADING AND CONDUCT OF BUSINESS - 40. Standards of conduct

AI-assisted research summary: The two named Capital Markets Regulations apply to commodity brokers, subject to any necessary modifications set out by the Authority.

Section 40. Standards of conduct Section The Capital Markets (Conduct of Business) (Market Intermediaries) Regulations (L.N. 144/2011) and the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations (L.N. 145/2011) shall apply to commodity brokers with necessary modifications as may be set out by the Authority.
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TRADING AND CONDUCT OF BUSINESS - 41. Commodity broker not to use funds

AI-assisted research summary: A commodity broker must not knowingly use customer money, securities, property, proceeds or funds to margin, guarantee or secure trades or contracts, or to secure or extend credit for anyone other than the client for whom the funds are held.

Section 41. Commodity broker not to use funds Section A commodity broker shall not knowingly use money, securities, property, proceeds or funds received from, advanced to or held for any customer to margin, guarantee or secure the trades or contracts or to secure or extend the credit of any client other than the client for whom such money, securities, property, proceeds or funds are held.
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TRADING AND CONDUCT OF BUSINESS - 42. Statement of purchase and sale

AI-assisted research summary: Requires a statement of purchase and sale specifying dates of the initial transaction and the liquidating trade.

Section 42. Statement of purchase and sale Section dates of the initial transaction and liquidating trade;
43
Provision

Section 43. Statement terms and conditions to be furnished to prospective client Section 43(1)(a) explain the nature of, and risks inherent in trading in contracts and obligations assumed by the client upon entering a contract; Section 43(1)(b) advise the client to request and study the terms and conditions of the contract; Section 43(1)(c) set out the terms and conditions of any relevant contracts; Section 43(1)(d) furnish details concerning commissions and other charges levied by the commodity broker and the commodity exchange. Section 43(2) Every commodity broker shall upon request by a prospective client avail copies of all current terms and conditions of any spot commodities contract. Section 43(3)(a) the opening cash balance for the month in the client's account; Section 43(3)(b) all deposits, credits, withdrawals and debits to the client's account; Section 43(3)(c) the cash balance in the client's account; Section 43(3)(d) each unexpired and unexercised spot commodity contract; Section 43(3)(e) the agreed price of each unexpired or unexercised spot commodity contract; Section 43(3)(f) each open spot commodity contract; and Section 43(3)(g) the price at which each open spot commodity contract was entered into.
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TRADING AND CONDUCT OF BUSINESS - 44. Risk disclosure statements

AI-assisted research summary: A commodity broker must not open a client's spot commodity contract account unless it provides the client with a written risk disclosure (in the form provided by a commodity exchange) and receives a signed and dated acknowledgement that the client received and understood it.

Section 44. Risk disclosure statements Section A commodity broker shall not open a spot commodity contract account for a client unless the commodity broker furnishes the client with a separate written risk disclosure document which shall be in the form provided by a commodity exchange and receives from the client an acknowledgement signed and dated by the client that the client has received and understood the nature and contents of the risk disclosure document.
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TRADING AND CONDUCT OF BUSINESS - 45. Segregation of clients' funds

AI-assisted research summary: Commodity brokers must keep client funds strictly separate from their own, create and use client group accounts with the exchange's settlement/clearing bank, must not accept or pay cash for transactions, and must keep transaction records with relevant banks.

Section 45. Segregation of clients' funds Section 45(1) A commodity broker shall maintain strict segregation between its own funds and each individual client's funds without any Statement, terms and conditions to be furnished to prospective client. Section 45(2) A commodity broker shall establish a client group account with the designated settlement bank of the commodity exchange of which that commodity broker is a member. Section 45(3)(a) the client group account maintained at the designated clearing house of a commodity exchange; Section 45(3)(b) the client group account at the clearing house of a commodity exchange; and Section 45(3)(c) individual clients' account maintained at the clearing house of a commodity exchange. Section 45(4) A commodity broker shall not accept cash from or pay cash to a client for a transaction under these Regulations. Section 45(5) A commodity broker shall maintain a record of transactions with the relevant banks including client's deposits and withdrawals from the client group account maintained with the commodity exchange designated clearing house.

Part V

COMMODITY SETTLEMENT GUARANTEE FUND

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COMMODITY SETTLEMENT GUARANTEE FUND - 46. Establishment of the Fund

AI-assisted research summary: The commodity exchange must establish and the commodities exchange must maintain a Settlement Guarantee Fund to guarantee members' clearing and settlement obligations.

Section 46. Establishment of the Fund Section 46(1) For the purposes of section 12(1(i) and (j) of the Act, the commodity exchange shall establish a Fund to be known as the Settlement Guarantee Fund for the purpose of providing guarantee to a member of a commodity exchange who fails to meet their clearing and settlement obligations to a commodity exchange arising out of transactions on a commodity exchange. Section 46(2) The settlement guarantee fund shall be maintained by the commodities exchange. Section 46(3)(a) amount of deposit or contribution to be made by each member of the commodity exchange to the settlement guarantee fund; Section 46(3)(b) terms, manner and mode of deposit or contribution; Section 46(3)(c) conditions of repayment of deposit or withdrawal of contributions from the settlement guarantee fund; Section 46(3)(d) charges for drawing from the settlement guarantee fund; Section 46(3)(e) penalties applicable; and Section 46(3)(f) disciplinary actions.
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COMMODITY SETTLEMENT GUARANTEE FUND - 47. Composition of the Fund

AI-assisted research summary: Section 47 sets out the composition of the settlement guarantee fund and rules about investing and settlement guarantees; it requires a commodity exchange to recommend additional member contributions and requires a clearing house to guarantee settlement where it acted as legal counterparty.

Section 47. Composition of the Fund Section 47(1)(a) contributions from a commodity exchange and its clearing house; Section 47(1)(b) contributions from settlement banks of a commodity exchange as may be determined by the board of a commodity exchange, with the approval of the Authority, from time to time; Section 47(1)(c) such sums of money as accrued from interest and profits from investing the assets of the settlement guarantee fund; Section 47(1)(d) such money recovered by or on behalf of a commodity exchange from entities whose failure to meet their obligations to investors results in payments from the settlement guarantee fund; and Section 47(1)(e) such sums of money as are received for purposes of the settlement guarantee fund from any other source approved by the commodity exchange. Section 47(2) Money accumulated in the settlement guarantee fund may be invested by the commodities exchange in such manner as set out in the rules of the Settlement Guarantee Fund. Section 47(3) A commodity exchange shall recommend the amount of additional contributions or deposit to be made by each of its members. Section 47(4) A clearing house shall, in respect of settlement of transactions, guarantee financial settlement of such transactions to the extent it has acted as a legal counter party.
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COMMODITY SETTLEMENT GUARANTEE FUND - 48. Form of contribution or deposit to the Fund

AI-assisted research summary: The commodity exchange may allow a member to contribute or provide a deposit to the Fund, in cash or other forms and under terms set by the exchange.

Section 48. Form of contribution or deposit to the Fund Section The commodity exchange may, permit a member of a commodity exchange to contribute to or provide the deposit to be maintained with the Fund, in the form of cash or in such other form or method and subject to such terms and conditions, as may be specified by the commodity exchange.
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COMMODITY SETTLEMENT GUARANTEE FUND - 49. Management of the Fund

AI-assisted research summary: Section defraying the expenses of creation and maintenance of the settlement guarantee fund;

Section 49. Management of the Fund Section defraying the expenses of creation and maintenance of the settlement guarantee fund;
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COMMODITY SETTLEMENT GUARANTEE FUND - 50. Scheme of arrangements on default

AI-assisted research summary: Defines amounts paid by the defaulting member as a pre-trade deposit but excludes a client's pre-trade deposit and other money deposited with or retained by a clearing house to meet clearing and settlement obligations.

Section 50. Scheme of arrangements on default Section any amount that may have been paid by the defaulting member in the form of a pre-trade deposit, but does not include a client's pre-trade deposit, or any other money deposited with or retained by a clearing house for the purpose of meeting the clearing and settlement obligations;
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COMMODITY SETTLEMENT GUARANTEE FUND - 51. Additional contributions or deposits

AI-assisted research summary: Members must make up any shortfall in their settlement guarantee fund contributions within a time the commodity exchange specifies; the exchange may charge interest and take administrative action if a member fails to pay.

Section 51. Additional contributions or deposits Section 51(1) Where a pro-rata charge has been made against a member's actual contribution or deposit, and as a consequence, the member's remaining contribution or deposit towards the settlement guarantee fund falls below his required contribution or deposit, the member shall contribute or deposit towards the shortfall in the settlement guarantee fund within such time as the commodity exchange may specify. Section 51(2) Where any member who is required to contribute or deposit to the Fund fails to do so, the commodities exchange may charge such rate of interest on the shortfall, as it may determine, in addition to any administrative action, including imposing fines and penalties against the member.

Part VI

RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS

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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 52. Production of records

AI-assisted research summary: Section 52 requires an entity ('it') to produce books, accounts and records, to collect and furnish returns, and to provide information the Authority may require; the Authority may, on production, take copies or extracts of produced records.

Section 52. Production of records Section 52(1)(a) produce any books, accounts and records kept by it in connection with, or for the purposes of, its business, or in respect of any trading in spot commodity contracts; Section 52(1)(b) collect and furnish any returns; and Section 52(1)(c) provide any information relating to its business, or any trading in spot commodity contracts, or any other specified information, as the Authority may require. Section 52(2) The Authority, may, on production of any books, accounts or records under paragraph (1) take copies of or extracts from them.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 53. Records of transactions on a commodity market or clearing house

AI-assisted research summary: Commodity exchanges, commodity brokers and clearing houses must keep records necessary to properly record each transaction.

Section 53. Records of transactions on a commodity market or clearing house Section 53(1) A commodity exchange, commodity broker and a clearing house shall keep such records as are necessary for the proper recording of each transaction on the exchange, commodity broker or clearing house. Section 53(2) The records kept under paragraph (1) shall be availed to any client of any member of such an exchange, broker or clearing house, upon production of a written confirmation of any transaction with such member, particulars of the approximate time at which the transaction took place and verification or otherwise of the matters set forth in the confirmation. Section 53(3) The Authority may, at any time, require a commodity exchange, commodity broker or a clearing house of a commodity exchange to deliver to it reports of transactions on the commodity exchange, commodity broker or clearing house of a commodity exchange.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 54. Information to be provided by market participants

AI-assisted research summary: The Authority can require market participants to provide account information by written notice when it believes such information is relevant to market disorders; recipients must supply the information within a time specified by the Authority. If a person fails to supply required information, the Authority may inform an exchange or clearing house, which must then prohibit certain trades specified in the notice unless they offset that person's open contracts.

Section 54. Information to be provided by market participants Section 54(1) Upon a determination by the Authority that information concerning accounts may be relevant to determine whether manipulation, corner, squeeze or other market disorders exist in any commodity exchange, the Authority may, by notice in writing, require such information as it thinks necessary from any person, including a member of a clearing house or a commodity broker or any client in the commodity market, and the person concerned shall provide the required information within such time as may be specified by the Authority. Section 54(2) Where the Authority has reason to believe that any person has failed to give the information required in the notice under paragraph (1), it may without prejudice to any other penalty that may be imposed, inform a commodity exchange or a clearing house which shall, in the event, prohibit the execution of, or acceptance for orders of, trades on the exchange or a clearing house in the months or expiration dates specified in the notice unless such trades offset open contracts of that person.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 55. Accounts and audit

AI-assisted research summary: Entities (commodity exchanges, clearing houses and brokers) must keep accounts, have annual audited financial statements, appoint auditors, submit accounts for audit, and send audited reports to the Authority within specified deadlines; auditors may examine persons and prepare reports.

Section 55. Accounts and audit Section 55(1) A commodity exchange, clearing house and commodity broker shall keep proper books of accounts and records of income and expenditure, assets and liabilities and all other transactions of the commodity exchange. Section 55(2) A commodity exchange, clearing house and commodity brokers shall, within four months after the end of each financial year, prepare a statement of accounts of the commodity exchange, clearing house and commodity brokers for the financial year, including a statement of comprehensive income and a statement of financial position. Section 55(3) A commodity exchange and commodity broker shall appoint a qualified auditor or auditors, to audit the books of accounts or to investigate any affairs of a commodity exchange or broker. Section 55(4) A commodity exchange, clearing house and commodity brokers shall submit the statement of accounts prepared under paragraph (2) to their auditors for audit. Section 55(5) The auditors shall prepare a report on the accounts and submit the report to the commodity exchange, clearing house and commodity brokers. Section 55(6) A commodity exchange, clearing house and commodity brokers shall, within thirty days from the date of receipt of the auditor's report referred to under paragraph (5), send a copy of the report and a copy of the statement of accounts to the Authority. Section 55(7)(a) the opinion of the auditor, whether the statement of comprehensive income for the financial year to which the report relates gives a true and fair view of the surplus or deficit of a commodity exchange, clearing house or commodity broker; Section 55(7)(b) a statement whether, in the opinion of the auditor, the statement of financial position for the financial year gives a true and fair view of a commodity exchange, clearing house or commodity broker and their financial affairs at the end of that financial year; and Section 55(7)(c) any other information that the auditor may consider important. Section 55(8)(a) allow the auditor reasonable access to the premises occupied by a commodity broker or by any other person acting on behalf of a commodity broker; Section 55(8)(b) extend reasonable facilities to the auditor; Section 55(8)(c) provide any information required by an auditor; and Section 55(8)(d) produce for inspection any documents, books, vouchers and other records or copies of any documents, books, vouchers and other records, that the audit firm may consider necessary for the performance of its duties. Section 55(9) An auditor shall, during an audit or investigation, be entitled to examine or record statements of any member, director, partner, proprietor, associate or employee of a commodity exchange, commodity broker or clearing house, under audit or investigation. Section 55(10) A member, director, partner, proprietor, associate or employee of a commodity exchange, broker or clearing house under audit or investigation shall give the auditor all assistance in connection with the audit or investigation.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 56. Authority may appoint an auditor

AI-assisted research summary: The Authority may appoint an auditor, in writing and at the expense of the commodity exchange/clearing house/commodity broker, to examine, audit and report on their books, accounts and records when satisfied it is in the public interest.

Section 56. Authority may appoint an auditor Section The Authority may, where satisfied that it is in the public interest to do so, appoint an auditor, in writing, at the expense of a commodity exchange, clearing house or commodity broker, to examine, audit, and report, either generally or in relation to any matter, on the books, accounts and records of a commodity exchange, clearing house or commodity broker.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 57. Annual report

AI-assisted research summary: Commodity exchanges, clearing houses and commodity brokers must submit an annual report to the Authority within four months after the end of their financial year.

Section 57. Annual report Section 57(1) A commodity exchange, clearing house or commodity broker shall, within four months after the end of their respective financial year, submit to the Authority an annual report. Section 57(2)(a) a description of the activities undertaken in that financial year; Section 57(2)(b) the resources, including financial, technological and human resources, that were available and used, to ensure compliance with obligations and, in particular, for a commodity exchange, the obligation to ensure that the commodity market operates in a fair, efficient and transparent manner; Section 57(2)(c) an analysis of the extent to which activities undertaken, and resources used have resulted in full compliance with all obligations under these Regulations and the rules of the commodity exchange; Section 57(2)(d) the audit report as required under these Regulations; and Section 57(2)(e) any other information and statements as the Authority may specify, in writing.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 58. The right of the Authority to inspect

AI-assisted research summary: The Authority has the right to inspect books of accounts and other records to establish they are being maintained in the manner required.

Section 58. The right of the Authority to inspect Section establish that the books of accounts and other records are being maintained in the manner required;
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 59. Procedure for inspection

AI-assisted research summary: The Authority must give reasonable notice before inspections under regulation 58; the Authority may direct inspections without notice in writing if satisfied it's in the market or investors' interest; inspecting officers have the power to undertake inspections as directed; a commodity broker is bound to discharge its statutory obligation.

Section 59. Procedure for inspection Section 59(1) The Authority shall, before undertaking an inspection under regulation 58, give the relevant commodity exchange, commodity broker or clearing house a reasonable notice on the intention to undertake an inspection. Section 59(2) The Authority may direct, in writing, that an inspection of a commodity exchange, commodity broker or clearing house be carried out without notice to the commodity exchange, commodity broker or clearing house, if the Authority is satisfied that it is in the interest of the commodity market or investors in the commodity market that no such notice should be given. Section 59(3) The inspecting officers appointed for the purpose of an inspection, shall have the power to undertake the inspection as directed by the Authority and that commodity broker is bound to discharge its statutory obligation.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 60. Obligations of a commodity broker in respect of inspections

AI-assisted research summary: Inspecting officers may require persons connected to a commodity exchange, broker or clearing house to produce books, accounts and information; they are entitled to examine or record statements during inspection; directors, officers or employees must give all assistance for inspections.

Section 60. Obligations of a commodity broker in respect of inspections Section 60(1) An inspecting officer may require a shareholder, director, officer or an employee of a commodity exchange, commodity broker or clearing house under inspection to produce such books, accounts and other documents in his custody or control and furnish the inspecting officer with the statements and information relating to the transactions in a commodity exchange within such time as the inspecting officer may require. Section 60(2)(a) allow the inspecting officer reasonable access to its premises; Section 60(2)(b) extend reasonable facilities to the inspecting officer to examine any books, records, documents and computer data in its possession; Section 60(2)(c) provide copies of documents or other materials which, in the opinion of the inspecting officer, are relevant. Section 60(3) An inspecting officer shall, during inspection, be entitled to examine or record statements of any shareholder, director, partner, proprietor or employee of a commodity exchange, commodity broker or clearing house under inspection. Section 60(4) A director, an officer or an employee of the commodity exchange. Commodity broker or clearing house under investigation shall give to the inspecting officer all assistance in connection with the inspection as it may reasonably be expected to give.
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RECORD KEEPING ACCOUNTS, AUDITS AND INSPECTIONS - 61. Action on inspection report

AI-assisted research summary: The Authority may, after considering an inspection report, take such action as provided for under the Act.

Section 61. Action on inspection report Section The Authority may, after considering an inspection report, take such action as provided for under the Act.

Part VII

OFFENCES

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OFFENCES - 62. Market offences

AI-assisted research summary: Prohibits purchasing or selling spot commodity contracts to create a false appearance of active trading or to create misleading information about market condition or price.

Section 62. Market offences Section directly or indirectly purchases or sells spot commodity contracts to cause a false appearance of active trading or cause the creation of misleading information regarding the condition of the market or price of any spot commodity contract;
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OFFENCES - 63. Bucketing

AI-assisted research summary: It is an offence for a person to knowingly execute or claim to have executed an order to buy or sell a spot commodity contract on a commodity exchange without actually making a bona fide purchase or sale according to exchange rules and practices.

Section 63. Bucketing Section A person who knowingly executes, or hold himself out as having executed, an order for the purchase or sale of a spot commodity contract on a commodity exchange without having effected a bona fide purchase or sale of the spot commodity contract in accordance with the rules and practices of a commodity exchange commits an offence.
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OFFENCES - 64. Manipulation of price and cornering

AI-assisted research summary: Addresses manipulation or attempted manipulation of the price of a spot commodity contract that may be dealt in on a commodity exchange.

Section 64. Manipulation of price and cornering Section manipulates, or attempts to manipulate, the price, of a spot commodity contract that may be dealt in on a commodity exchange;
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OFFENCES - 65. Employment of fraudulent or deceptive devices, etc.

AI-assisted research summary: Employs any device, scheme or artifice to defraud another person.

Section 65. Employment of fraudulent or deceptive devices, etc. Section employs any device, scheme or artifice to defraud that other person;
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OFFENCES - 66. Fraudulently inducing trading

AI-assisted research summary: Making a statement that is false, misleading or deceptive about a material fact, knowing or having reasonable grounds to believe it is false, is described in the provision.

Section 66. Fraudulently inducing trading Section any statement which is, at the time and considering the circumstances in which it is made, false, misleading or deceptive with respect to any material fact and which he knows, or has reasonable grounds for believing, is false, misleading or deceptive; or
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OFFENCES - 67. Insider trading

AI-assisted research summary: It is an offence for certain commodity-exchange insiders to disclose non-public price-sensitive information to help others trade, and it is also an offence for persons who receive such insider information to use it to trade.

Section 67. Insider trading Section 67(1) A board member, employee, member or agent of a commodity exchange who, by virtue of his employment or position, acquires information which may affect or tend to affect the price of any spot commodity contract for which such information has not been made public, and disseminates such information with intent to assist another person, directly or indirectly to participate in any transaction in a commodity exchange or any other exchange or off-exchange commits an offence. Section 67(2) Any person who acquires information as described under paragraph (1) from a board member, employee, member or agent of a commodity exchange and uses such information to directly or indirectly participate in any transaction in a commodity exchange or any other exchange or off-exchange commits an offence.
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OFFENCES - 68. Penalty

AI-assisted research summary: Penalty: the penalty specified under section 34A of the Act.

Section 68. Penalty Section the penalty specified under section 34A of the Act; and

Part VIII

GENERAL PROVISIONS

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GENERAL PROVISIONS - 69. Investor compensation fund

AI-assisted research summary: The Fund established under section 18 must apply to the commodities market with necessary modifications; a commodity broker must remit fees to the Fund for every spot commodity contract within fifteen days following a transaction.

Section 69. Investor compensation fund Section 69(1) The Fund established under section 18 of the Act, shall apply to the commodities market with the necessary modifications. Section 69(2) A commodity broker shall remit to the Fund fees payable to the Fund for every spot commodity contract within fifteen days following a transaction.
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GENERAL PROVISIONS - 70. Transition

AI-assisted research summary: Entities that were operating a commodity exchange before these Regulations began must comply with the Regulations within twelve months after commencement.

Section 70. Transition Section An entity carrying on the business of a commodity exchange prior the commencement of these Regulations shall comply with these Regulations within twelve months upon commencement of these Regulations.

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