The Capital Markets Authority, or CMA, is an independent and autonomous regulatory body established by the Capital Markets Law No. 161/2011, ratified by the Lebanese Parliament on August 17, 2011.

The CMA has two main objectives that underline its mission and vision:

(I) Promoting and developing the Lebanese Capital Markets; and
(II) Ensuring the protection of savings invested in Financial Instruments which is particularly manifested by protecting investors from fraudulent activities, through the issuance of regulations that are in line with international best practices, and the proper control and audit of all institutions that deal with financial instruments.

Please refer to Article 5 of Law No. 161/2011

CMA is not part of the Banque Du Liban. However, as stipulated by Law 161/2011, the Chairman of the CMA Board is the Governor of Banque Du Liban.

This however does not affect the independency of the Capital Markets Authority given its independent structure; the CMA is a legal entity of public law, with administrative and financial autonomy.

Please refer to Article 4 of Law No. 161/2011

According to Law 161/2011, the management of the Capital Markets Authority is entrusted to a Board composed of seven members chaired by the Governor of Banque du Liban.

The Board is constituted of three full-time executive board members who are experts in banking, Capital Markets and financial affairs, and three part-time members representing ministries and departments directly involved in the work of the CMA: the Director General of the Ministry of Finance, the Director General of the Ministry of Economy and Trade and the Chairman of the Banking Control Commission.

Please refer to Article 6 of Law No. 161/2011

The CMA licenses and approves financial Institutions (as well as activities related to securities business of Banks) that deal in capital markets related activities. The CMA also regulates and licenses all financial products, securities, (including securities based insurance products) which are marketed and sold to investors in Lebanon.

Please refer to Articles 1 and 11 (3) of Law No. 161/2011

A person who proposes to establish a financial intermediation company must apply for approval by the CMA. An application for approval of the establishment of a financial intermediation company must be made on the application form prescribed by the CMA.

Please refer to Article 2202 of the Licensing and Registration Regulation – Series 2000

The documents needed are listed in the ‘Licensing & Registration’ Regulation for detailed information.

Please refer to Annexes 1 & 2 of the Licensing and Registration Regulation – Series 2000

Checklist For Establishing and Licensing a Financial Intermediation Institution

At the time being, the capital requirement varies between six set amounts: 150 Million, 300 Million, 600 Million, 1.5 Billion, 3 Billion and 6 Billion Lebanese Pounds, depending on the activity to be licensed.

This might be subject to change at any time by the CMA.

Please refer to Article 2103 (1) of the Licensing and Registration Regulation – Series 2000

No. An application for the license must specify each type of license that the applicant is seeking approval for. The different activities are grouped under five categories as follows: advising, dealing, managing, arranging and custody. Each category requires a different capital requirement.

Please refer to Article 2103 (1) of the Licensing and Registration Regulation – Series 2000

Yes. Financial institutions report to the CMA with respect to their activities that fall under CMA’s jurisdiction.

Please refer to Article 2102 (3) of the Licensing and Registration Regulation – Series 2000

Approved person means approved legal entities (not individuals) which are approved by the CMA for license to carry on securities business. It is referred to in CMA regulations as “Approved Institutions”.

A registered person is an individual approved for registration by the CMA to carry out specific registrable functions as defined in article 2402 of the Licensing and Registration Regulation – Series 2000 Regulation within an approved institution.

Yes, the Capital Markets Authority issued the Licensing and Registration Regulation – Series 2000 Regulation that highlights the registered functions and the qualifications and requirements for being able to conduct security business related activities in Lebanon.

Please refer to Part E, Article 2402 in the Licensing and Registration Regulation – Series 2000 Regulation

The CMA required all Approved Institutions to register the functions available at their institutions with the CMA by the end of 2017.

Please refer to the Licensing and Registration Regulation – Series 2000 Regulation

An individual who performs a registrable function within an approved institution must apply to the CMA to become a “registered person”. Such applicant must have passed the qualification examinations prescribed by the CMA or obtained an exemption from the Authority.

Please refer to Part E, Article 2405 in the Licensing and Registration Regulation – Series 2000 Regulation

Yes, persons can be exempted based on their experience, academic degree and certifications.

Please refer to Part E, Article 2409 & 2405 in the Licensing and Registration Regulation – Series 2000 Regulation

Registrations remain valid for three years and can be reactivated. If a previously registered person passes three years outside an approved institution, the candidate should go through the exam process required by the CMA in order to be requalified.

Please refer to Part E, Article 2405 in the Licensing and Registration Regulation – Series 2000 Regulation

All fees due to CMA can be found in the Corporate Section of the website under “Payment & Fees Calculator”, whereby users will select the service associated with their request and note the relevant fee.

At this moment, the CMA will not be charging individuals or Approved Institutions any fees for registered functions.

The Approved Institution is required to set a time-frame for the staff performing registrable functions to pass the remaining exams. Once received, the CMA will consider the time-frame proposed, and shall revert with either an acceptance or a request for modification

According to CMA’s current interpretation, each person responsible of a department is considered a manager.

No, the institution does not need to get the approval of the CMA prior to hiring a person to fulfill a registrable function.

Yes, the institutions are required to inform the CMA of respective employees who left the institution for whatever reason.

Please refer to article 2408 in Licensing and Registration Regulation – Series 2000

The employee is entitled to perform registrable functions only in the event the exams he has passed are the derivatives and securities exams offered by ESA

No, the foreign financial institution must have an official form of representation in Lebanon.

Please refer to Article 6306 (1) of the Offers of Securities Regulation

Yes, any form of verbal, electronic, broadcast or written communication made in the course of business for the purpose of inviting or inducing a person to engage in securities activity is considered by the CMA to be an offer of securities.

An offer of securities may be a public offer of securities or an exempt offer of securities, each of which is subject to conditions and requirements set by the CMA.

Please refer to Articles 6202 and 6302 of the Offers of Securities Regulation

Each time the offer falls under the definition of the “Offer of Securities”

Please refer to Article 6002 of the Offers of Securities Regulation

The CMA shall notify the offeror of its decision on the application within 4 weeks of the date of application.

Please refer to Article 6202 (5) of the Offers of Securities Regulation

Yes, exempt offers directed at professional clients, groups and joint ventures, activities as part of another business, activities in connection with the sale of a company and dealing or arranging for own account are exempt from approval and notification.

Please refer to Article 6302 (5) of the Offers of Securities Regulation and Articles 2107 to 2110 of the Licensing and Registration Regulation – Series 2000

Please refer to the definitions included in the Offers of Securities Regulation

Inside information is non-public information related to a traded security or an issuer thereof and is of a precise and material nature that would affect the price of the concerned security. It is prohibited for any person in possession of inside information to make a trade in a security concerned with said inside information.

Please refer to Article 1 of the Offers of Law N° 160/2011

Investors might receive many calls from people trying to sell financial products, always make sure to vet them and understand who they are, and if they represent an approved institution. First priority is to find out if this is a scam.

Therefore, your first question should be whether the person/institution is registered. Registration helps protect investors because securities regulators will only register firms and individuals if they are properly qualified.
Understand their background. You want someone who is qualified and has the right experience to give you the help you need. Ask him/her if they are registered persons with the CMA? You need to make sure that they are allowed to be offering this service to you!

In addition, find out how much their service will cost you and what services you’ll get for your money. It is important to ask what kinds of products and services are they willing to offer. You should discuss this with the adviser up front.

Finally, ask questions like, what level of service can I expect from you? What experience do you have in this business? And make sure the offer isn’t too good to be true, because if it is – then that’s a red-flag for fraud.

Please visit the “Avoid Fraud” page on our website for a guide to avoid being scammed.

You may either obtain profit or incur a loss as a result of investment decisions handled by an authorized institution. For this reason, you are required to understand the risks that you may encounter with and make a decision in consideration of your financial position and limitations before deciding to perform a transaction.

CMA has issued regulations that require Approved Institutions to offer ‘suitable’ financial products to investors. As such, the CMA aims to protect its investors via ensuring that institutions fully understand the investors’ financial and risk tolerances and hence ensure the suitability of all offered financial products. Failing to do so, would make Approved Institutions liable in front of the competent authorities.

This matter depends on several factors like the agreement entered into with the approved institution/broker and the type of securities in question. For instance, Lebanese banks’ shares are mandatorily held at MIDCLEAR. Other securities could be held at custodians chosen by the approved institution/broker or by the investor itself.

The CMA strongly recommends the investors to discuss this matter with their brokers. Institutions should disclose their list of custodians to their clients.

Please refer to Articles 3511 to 3515 of the Business Conduct Regulation – Series 3000 for more information

The role of your Financial Adviser is to give you helpful, informed advice as you build and carry out your plan. Your Financial Adviser is obligated to act in your best interests at all times and to recommend investments that are suitable for you.

You can expect your Financial Adviser to:
– Make clear and specific recommendations
– Explain the reasons behind each  recommendation
– Point out the strengths and weaknesses
– Outline all the risks involved

Your Financial Adviser must get your permission before they take action like buying or selling investments for you, The only exceptions are if you have given your Financial Adviser “discretionary” authority or you have given someone else trading authority or power of attorney over your account. Your Financial Adviser will send you a written confirmation of any transactions they make for you and will send you regular account statements.

To have a more detailed overview, please visit the “Avoid Fraud” page.

Generally speaking and before you are involved in any investment, there are a minimum number of documents that an investor must expect to receive from the approved institutions.

This includes the written agreement signed between the two parties (securities  account opening agreement), the list of fees and commissions that the approved institution will charge the investor for the rendered services, a periodic statement of account detailing the transactions executed for the account of the investor, and a contract note confirming the execution of each and every transaction.

On another hand, the investor is entitled to receive from the approved institution a complete documentation (prospectus, offering memorandum, fact sheet, term sheet, risk disclosure for more info on remaining documents please refer to the Business Conduct Regulation Series 3000 ) related to the securities offered to him by his broker and prior to the purchase of said securities.

Yes. An approved institution must fully disclose to each client the schedule of  fees and commissions before any services  provided.

Please refer to Article 3308 (3) of the Business Conduct Regulation – Series 3000

The institution provide the clients with an account statement monthly, or every three months if no activity has taken place on the client’s account.

Please refer to Article 3521 of the Business Conduct Regulation – Series 3000

An approved institution must record all telephone calls with a client that includes an order or instructions relating to a transaction. In case of dispute, a client can require the competent authority to compel the institution to make the recording available.

Please refer to Article 3406 of the Business Conduct Regulation – Series 3000

The Communication and Research Department conducts daily, monthly, quarterly & yearly quantitative and qualitative analysis that can be found on the Capital Markets Authority website under “Publications & Reports”.

For more info, kindly contact the Communication and Research Department on research@cma.gov.lb

In order to learn more about the different financial instruments and how to trade them on the capital markets, please visit the “Investor Education” page of the CMA website

A Collective Investment Scheme (CIS), also known as investment fund, is an investment scheme wherein several individuals come together to pool their money for investing in a particular asset or basket of assets and for sharing the returns arising from that investment as per the agreement reached between them prior to pooling in the money.

Please refer to the definitions of the CIS Regulation & Annex 1 and 2 – Series 8000

There are two main types of fund charges: one-off charges and regular/annual charges. All charges have to be disclosed before you invest. An entry charge may be taken from your money before it is invested. An exit charge may be taken before the proceeds of your investment are paid out. Ongoing charges are used to pay for the running of a fund, which includes the following costs: Financial advice, administration, investment management, independent oversight, etc.

Please refer to the definitions of the of the CIS Regulation & Annex 1 and 2-Series 8000

If you have fulfilled all the advice on how to ensure dealing with an approved institution and choosing your financial advisor (see Investor related section) then investing in a CIS has the same logic to any other form of investment. Check if this investment is suitable for you, and if you know enough to make an informed decision. To be able to do so, an investor should be offered a ‘Term Sheet’ and a ‘Prospectus’ that detail and break down the contract of the said investment.

A term sheet is a nonbinding agreement setting forth the basic terms and conditions under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is then drawn up.

A prospectus is a formal legal document that is required by and filed with the Capital Markets Authority that provides details about an investment offering for sale to the public.

Please refer to Article 8509 of the CIS Regulation & Annex 1 and 2-Series 8000

One option is to ask your lawyer. If you are not satisfied with the answer, contact the CMA Legal Affairs Unit to inquire on the issue.

Visit the “Approved Investment Funds” page of the CMA website to have detailed information concerning all issued/marketed funds by Banks, Financial Institutions, and Financial Intermediation Institutions.

When the investor faces a deadlock with a certain institution, he/she confronts the institution on the issue at hand. If both sides do not reach to an agreement, only then can the investor seek the Capital Markets Authority’s help through the “File a Complaint” process.

Please refer to Article 3321 of the Business Conduct Regulation

As specified in the Business Conduct Regulation Series 3000 , the complaint should be directed to the CMA Board.

Please refer to Article 3321 of the Business Conduct Regulation

The CMA does not require that a lawyer submit a complaint on behalf of their clients. Hiring a lawyer to assist with the complaint process is optional.

Please refer to the Annex 9 the Business Conduct Regulation

The Capital Markets Authority examines the complaints, conducts necessary investigation, and takes appropriate decisions when need be, in accordance with applicable laws and regulations; when the review is done, the Capital Markets Authority informs the complainant in writing.

The Capital Markets Authority reserves the right to inform the complainant or any other party about the results of its investigations or the decisions that may be taken in this regard if appropriate

Please refer to Article 3321 of the Business Conduct Regulation