The Jordan Securities Commission Issues Decision Regulating Obligations of Companies Trading on Foreign Stock Exchanges

February 22, 2024

The Jordan Securities Commission issued a circular to companies licensed to conduct financial services on foreign stock exchanges regarding the regulation of certain company obligations. In accordance with the Commission's Board of Commissioners' decision, companies are required to provide all agreements, their addenda, declarations, publications, and the content of their websites, as well as any circulars or publications issued by them, in Arabic. The circular also stipulates that margin call rates, commission amounts, and any other costs borne by the client must be clearly and explicitly stated in the agreement or any addendum, and that the client must sign the relevant clauses. According to the decision, companies are not permitted to change or impose any commissions or costs on the client without obtaining their prior written consent.

The Council's decision mandates that companies immediately notify clients of any amendments to their agreements or policies via the company's designated contact numbers, email, and any other approved communication channels. Prior written consent from the client is required for any such amendment, and the amendment must be published on the company's website. Furthermore, any amendments to agreements or policies must comply with the provisions of the Securities Law, the Law Regulating Trading in Foreign Exchanges, and all regulations, instructions, and decisions issued thereunder.

The decision also requires companies to retain, at all times, a copy of the agreement signed by both the company and the client, along with any appendices or amendments thereto, and to provide the client with a copy upon receipt and signature of the client. The resolution stipulates that companies must establish an internal mechanism, approved by their board of directors or management committee, encompassing all necessary requirements, safeguards, technical and electronic procedures, tools, and technologies to ensure continuous communication and business continuity. Specifically, this includes providing alternative means of communication in case of a connection interruption resulting from a technical malfunction at the company or its foreign broker, and providing a backup data server in case of any emergency. The company must provide the Securities Authority with the required information within three months of being notified of this resolution. The resolution also mandates that the Authority be notified immediately of any connection interruption affecting client trading operations, no later than the second business day following the interruption. This notification must include the source and cause of the interruption, the method used to inform clients, any actions taken by the company, and supporting documentation for these actions.

The decision requires companies to conduct technical updates outside of trading days, taking into account customer interests. Companies must immediately notify both the customer and the regulatory authority of any pricing errors and rectify customer situations promptly. If the regulatory authority determines that no error occurred, the company must recalculate for each affected customer according to the correct prices. Furthermore, the prices at which customers trade must be real and in real time, without any delay or intervention from the company or any other party. Customers have the right to access these prices without incurring any additional costs.

The obligations stipulated in the decision include the requirement for companies to identify and report any improper trades that lead to the cancellation of a client's trades to the Authority. This must be included in all subsequent agreements, and clients who signed previous agreements must be notified. Furthermore, the company must publish these details on its website within one month of being notified of this decision. Companies are also obligated to report any improper trades to the Authority without delay, and no later than the second business day, providing supporting documentation. They must also provide justification to their clients if they cancel any trades or orders and are obligated to provide clients with all requested data and information related to their accounts.

The decision also mandates compliance with the Authority's circular regarding the regulation of certain aspects of trading on foreign stock exchanges. Specifically, clients seeking leverage exceeding 30 times must sign a declaration prepared by the Authority for this purpose, specifying the required leverage ratio. No modifications to this declaration are permitted without the client's prior written consent. The decision requires companies to provide the Authority with an updated declaration from the company’s legal advisor stating that all agreements and forms issued and any amendments thereto are in accordance with the provisions of the Securities Law and the Law Regulating Dealing in Foreign Stock Exchanges in force and the regulations and instructions issued thereunder, without the Authority bearing any responsibility in this regard.