2.5.1. Requirement to prepare Business Rules

(1) Save where the AFSA otherwise directs, an Authorised Market Institution must establish and maintain Business Rules governing relations between itself and the participants in the market, including but not limited to:

(a)    Membership Rules, prepared in accordance with AMI 2.6, governing the admission of Members and any other Persons to whom access to its facilities is provided;

(b)    Direct Electronic Access Rules, prepared in accordance with AMI 2.7, setting out the rules and conditions pursuant to which its Members may provide their clients with Direct Electronic Access to the Authorised Market Institution’s trading systems;

(c)     Default Rules, prepared in accordance with either AMI 3.5 or AMI 4.6, governing action that may be taken in respect of unsettled Market Contracts in the event of a Member being, or appearing to be, unable to meet its obligations;

(d)    Admission to Trading Rules, prepared in accordance with AMI 3.2, or Admission to Clearing Rules, prepared in accordance with AMI 4.1, governing the admission of Securities or Units in a Listed Fund, Commodity Derivatives, or Environmental Instruments to trading, or clearing and settlement, as appropriate to its facilities;

(e)    Listing Rules, prepared in accordance with AMI 3.6, setting out the rules and conditions applicable to a Person who wishes to have Securities or Units in a Listed Fund included in an Official List; and

(f)    any other matters necessary for the proper functioning of the Authorised Market Institution and the facilities operated by it.

(2) An Authorised Market Institution must incorporate into its Business Rules the substance of any additional provisions to be found in the COB Rules, with any modifications which seem to the Institution to be appropriate, for the purpose of regulating the conduct of business of a Person referred to in AMI 2.6.1(1)(c) as a Member of the Institution for the purposes of dealing in Commodity Derivatives or Environmental Instruments.

(3)   An Authorised Market Institution must incorporate into its Business Rules the substance of additional provisions to be found in the COB Rules, for the purpose of regulating the conduct of business of a Person referred to in AMI 2.6.1(1)(d) as a Member of the Institution for the purposes of dealing in Security Tokens.

2.5.2. Content and effect of Business Rules

An Authorised Market Institution’s Business Rules must:

• (a) be based on objective criteria;
• (b) be non-discriminatory;
• (c) be clear and fair;
• (d) set out the Members’ and other participants’ obligations:
• (i) arising from the Authorised Market Institution’s constitution and other administrative arrangements;
• (ii) when undertaking transactions on its facilities; and
• (iii) relating to professional standards that must be imposed on staff and agents of the Members and other participants when undertaking transactions on its facilities;
• (e) be made publicly available free of charge;
• (f) contain provisions for the resolution of Members’ and other participants’ disputes and an appeal process from the decisions of the Authorised Market Institution, whether by an internal but independent body or otherwise; and
• (g) contain disciplinary procedures, including any sanctions that may be imposed by the Authorised Market Institution against its Members and other participants; and
• (h) be enforceable against the Members and other participants.

2.5.3. Review, amendment and consultation

The Authorised Market Institution must ensure that appropriate procedures are adopted for it to keep its Business Rules under annual review and to amend them. The procedures must include procedures for consulting users of the Authorised Market Institution's facilities in appropriate cases.

2.5.4. Amendment of rules

Any amendment to an Authorised Market Institution's Business Rules must, prior to the amendment being effective, be:

• (a) made available for market consultation for no less than 30 days; and
• (b) approved by the AFSA.

2.5.5. Waiver of consultation requirement

The AFSA may waive or modify the requirement for market consultation in AMI 2.5.4(a) where it considers it necessary or desirable to do so, including but not limited to, cases of emergency, force majeure, typographical errors, minor administrative matters, or to comply with applicable laws.

2.5.6. Monitoring and enforcing compliance with Business Rules

The Authorised Market Institution must have effective arrangements for monitoring and enforcing compliance with its Business Rules including procedures for:

• (a) prompt investigation of complaints made to the Authorised Market Institution about the conduct of Persons in the course of using the Authorised Market Institution's facilities; and
• (b) where appropriate, disciplinary action resulting in financial and other types of penalties.

2.5.7. Financial penalties

Where arrangements made pursuant to AMI 2.5.6 include provision for requiring the payment of financial penalties, they must include arrangements for ensuring that any amount so paid is applied only in one or more of the following ways:

• (a) towards meeting expenses incurred by the Authorised Market Institution in the course of the investigation of the breach or course of conduct in respect of which the penalty is paid, or in the course of any appeal against the decision of the Authorised Market Institution in relation to that breach or course of conduct; or
• (b) for the benefit of users of the Authorised Market Institution's facilities.

2.5.8. Appeals

Arrangements made pursuant to AMI 2.5.6 must include provision for fair, independent and impartial resolution of appeals against decisions of the Authorised Market Institution.

The requirements in AMI 2.5 do not apply to an Authorised Crowdfunding Platform.