General
1.1 Purpose
These Rules establish the classification, admission, authority, continuing duties, conduct, risk management, issuer introduction, listing sponsorship, market-making responsibilities, supervision and exit arrangements for IDSX Market Participants. IDSX uses a tiered framework based on expertise, capital, regulatory standing, experience and responsibility. The classes are Broker Participant, Introducing Participant and Sponsor Market Maker.
1.2 Tiered authority
The classes provide progressively broader authority. A Broker Participant provides investor access and trading services. An Introducing Participant may additionally identify, assess and formally introduce prospective Issuers to IDSX. A Sponsor Market Maker may additionally sponsor an Issuer's listing and must itself provide ongoing market making for the securities it sponsors.
1.3 General principles
Each Market Participant must act honestly, professionally and prudently; support fair, orderly and transparent markets; comply with Applicable Law and IDSX Rules; maintain people, capital, technology and risk capability appropriate to its class; and stay within its Participant Authority.
Market Participant
2.1 Definition
A Market Participant is an institution formally approved by IDSX and authorised under the IDSX Rules to participate in a IDSX Market.
2.2 Participant status
Without IDSX approval, an institution must not connect as a Participant, claim Participant status, submit orders for clients as a Participant, introduce or sponsor an Issuer under IDSX authority, or provide formal market making as a Sponsor Market Maker.
2.3 Classification
IDSX may classify an applicant having regard to its business model, regulatory standing, expertise, capital, technology, internal controls, risk management and capital-markets experience.
Broker Participant
3.1 Definition
A Broker Participant is a Market Participant approved to access a IDSX Market directly and, to the extent permitted by Applicable Law, provide clients with trading and market-access services.
3.2 Authority
Subject to its IDSX approval, a Broker Participant may connect to the Trading System, submit, amend and cancel orders, receive execution information, access market data, trade as principal or for clients, provide eligible clients with Market Access and perform other approved market services.
3.3 Client responsibility
When providing access, the Broker Participant is responsible for applicable client-level duties, including KYC, KYB, AML/CFT, sanctions screening, Investor Classification, Geographic Restrictions, client authority, risk disclosure, client-order management, complaints and other client protections required by Applicable Law.
3.4 Issuer interaction
A Broker Participant may introduce IDSX publicly, provide published Listing Information and refer a prospective Issuer to IDSX, an Introducing Participant or Sponsor Market Maker. It does not have formal Issuer Introduction Authority.
3.5 Prohibited conduct
A Broker Participant must not formally recommend an Issuer for listing under IDSX authority, submit an Issuer Recommendation or Sponsor Declaration, submit a Listing Application as Sponsor, or claim to have IDSX Sponsor authority.
Introducing Participant
4.1 Definition
An Introducing Participant is a Market Participant approved to formally identify, assess and introduce prospective Issuers to IDSX.
4.2 Base authority
An Introducing Participant ordinarily has the applicable authority of a Broker Participant and additional Issuer Introduction Authority.
4.3 Issuer Introduction Authority
It may identify prospective Issuers, make initial contact, explain the IDSX Listing Framework, conduct preliminary eligibility checks and issuer KYB, review basic ownership, UBOs, directors, senior officers and financial information, understand the business and proposed Financial Product, identify apparent legal, regulatory or commercial risks, and submit an Issuer Introduction to IDSX.
4.4 Preliminary Assessment
Before an introduction, it must reasonably assess lawful incorporation and continued existence, genuine business activity, identifiable ownership and UBOs, material integrity concerns involving directors or senior management, apparent satisfaction of basic listing criteria, product eligibility and apparent material litigation, regulatory or sanctions risk.
4.5 Issuer Introduction
It may submit an Issuer Introduction or Listing Referral. The submission must include at least the Issuer's name and jurisdiction, business description, ownership, management, financial overview, proposed security and listing structure, preliminary risk assessment and the Introducing Participant's basic opinion.
4.6 No listing sponsorship
An introduction means only that the Introducing Participant considers there to be a reasonable basis for further listing review. It is not a Sponsor Declaration, completed Due Diligence, listing approval, IDSX endorsement or guarantee of security value.
4.7 No Sponsor authority
An Introducing Participant must not formally sponsor a listing, sign a Sponsor Declaration, submit a final Listing Application as Sponsor or hold itself out as a IDSX Sponsor Market Maker.
4.8 Referral to Sponsor
An Issuer entering the formal Listing Application Process must appoint an eligible Sponsor Market Maker.
Sponsor Market Maker
5.1 Definition
A Sponsor Market Maker is the highest Participant class, specially approved to sponsor an Issuer's admission to a IDSX Market and required to provide ongoing liquidity itself for the securities it sponsors.
5.2 Core principle
“Sponsor what you understand. Make the market you sponsor.” The Sponsor Market Maker is responsible both for listing due diligence and sponsorship and for continuing market making after listing.
5.3 Authority
It may exercise applicable Broker and Introducing Participant authority; accept an Issuer appointment; conduct Listing Due Diligence; assist with and review the Listing Application and Listing Document; submit the application and Sponsor Declaration; act as the Issuer's main professional interface with the IDSX Listing Department; and formally make a market in its sponsored Financial Products.
Sponsor appointment
6.1 Formal appointment
Before applying for formal listing, an Issuer must appoint a Sponsor Market Maker under the applicable Listing Rules.
6.2 Appointment Agreement
The written appointment must address scope, Due Diligence and listing responsibilities, information access, market-making duties, fees, conflicts, termination and other necessary arrangements.
6.3 IDSX recognition
The appointment must be notified to IDSX. IDSX may reject an appointment that does not comply with its Rules.
Sponsor Due Diligence
7.1 General duty
A Sponsor Market Maker must conduct reasonable and adequate Due Diligence on a proposed Issuer.
7.2 Scope
Having regard to the Issuer's business, scale and risk, review must consider legal existence, corporate and ownership structure, UBOs, Board and management, financial statements, material assets and liabilities, contracts, litigation, regulatory matters, related-party transactions, intellectual property, business model, material risks, the proposed Financial Product, Listing Document and disclosure controls.
7.3 Independent judgment
The Sponsor Market Maker must independently assess whether the Issuer is suitable for a formal Listing Application. Payment of fees must not impair its professional judgment.
Sponsor Declaration
8.1 Requirement
A formal Listing Application must include a Sponsor Declaration.
8.2 Matters addressed
The declaration may confirm reasonable Due Diligence; review of the application, Listing Document, key financial information, material risks and ownership and control; that no material false or misleading information or known undisclosed material matter was identified within the reasonable scope of review; that the Issuer was informed of continuing obligations; and that the Sponsor Market Maker is prepared to meet applicable market-making obligations.
8.3 No investment guarantee
A Sponsor Declaration does not guarantee security value, future Issuer profits, absence of default, a security price or that investors will not suffer loss.
IDSX retains the final listing decision
A Sponsor Market Maker cannot approve a listing. Admission, Listing, Quotation and Trading Approval are independently determined by IDSX under the Listing Rules. Sponsor approval must not be represented as IDSX approval.
Mandatory market making by Sponsor Market Makers
10.1 Mandatory duty
A Sponsor Market Maker must itself act as Designated Market Maker for each Financial Product it formally sponsors and IDSX admits to listing.
10.2 No delegation
It must not ordinarily avoid its obligation by outsourcing its market-making business to another Market Participant.
10.3 Continuing obligation
The obligation begins when the product starts trading and continues until delisting, IDSX approval of the Sponsor's withdrawal, formal replacement by a new Sponsor Market Maker or IDSX termination of the duty under the Rules.
10.4 Standards
It must comply with applicable Sponsor Market Maker Rules, including Two-sided Quotes, Minimum Quote Size, Maximum Bid-Ask Spread, Minimum Quote Presence, Market Making Hours, Quote Refresh, conduct and risk-management requirements.
No price guarantee
Market making supplies reasonable liquidity and is not a duty to maintain a particular price.
11.1 Prohibited promises and conduct
A Sponsor Market Maker must not guarantee a listing or minimum price, price increase or investment return; artificially prevent a price decline; create false volume; or maintain a price through Manipulative Trading.
Sponsor Market Maker capital
12.1 Principal capacity
A Sponsor Market Maker may and should use its own account and appropriate capital to meet its Market Making Obligations.
12.2 Adequate resources
It must maintain capital and liquidity appropriate to the number of Issuers and Designated Securities it sponsors, Market Making Volume, Inventory Risk, volatility and Settlement Risk.
12.3 Capital requirements
IDSX may impose higher Minimum Capital, Liquidity, Net Asset, Risk Capital or other Financial Resource Requirements than for other Participant classes.
Sponsor capability and independence
13. Technology
It must maintain connectivity, real-time market data, automated quoting, position monitoring, risk and price limits, order limits, a Kill Switch, business continuity and disaster recovery capability for continuous market making.
14. Personnel
It must have sufficient experienced personnel in corporate finance, Due Diligence, compliance, capital markets, trading, market making, risk management and technology.
15.1 Professional independence
It must maintain the professional independence necessary to perform Sponsor Duties.
15.2 Potential conflicts
It must identify potential conflicts from Issuer ownership, financing, common control, overlapping directors or management, material commercial relationships, Sponsor Fees, Market Making Inventory or a large holding of the relevant securities.
15.3 Conflict management
Conflicts must be managed by appropriate disclosure, information barriers, independent review, internal approval, trading restrictions or other suitable measures.
Admission requirements by class
16. Broker Participant
An applicant must satisfy IDSX that it is lawfully established and subsisting, has required regulatory standing, suitable management, sufficient financial resources, appropriate trading systems, risk and compliance frameworks, AML/CFT arrangements, a Business Continuity Plan and the ability to comply continuously with the Rules.
17. Introducing Participant
In addition to Broker requirements, it must demonstrate corporate-client capability, corporate-finance knowledge, basic financial analysis, KYB and ownership-review capability, qualified personnel, the ability to identify prospective listing risks and suitable Issuer Introduction Procedures.
18. Sponsor Market Maker
In addition to Introducing Participant requirements, it must demonstrate substantial capital-markets experience, formal Due Diligence, listing and financial review, legal and compliance review, sufficient capital and ongoing liquidity, market-making systems, inventory and real-time risk management, algorithmic quoting where applicable, and the ability to bear Sponsor and market-making risk together.
Participant Application and Approval
19. Application
An application must include information IDSX specifies, which may include corporate and ownership documents, UBOs, directors and management, licences, financial statements and capital, compliance, AML/CFT and risk policies, technology and cybersecurity information, a Business Continuity Plan and other necessary information.
20. Approval
IDSX may approve, approve with conditions, limit the business or product scope, require additional capital, system improvements or personnel, set a probation period, or reject an application.
Participant Upgrade
21.1 Broker to Introducing Participant
IDSX assesses issuer-assessment, corporate-finance and KYB capability, professional staff and compliance record.
21.2 Introducing Participant to Sponsor Market Maker
IDSX particularly assesses Sponsor experience, Due Diligence, capital adequacy, market-making technology and trading capability, liquidity resources, risk management and Issuer supervision.
Participant Downgrade
If a Participant no longer meets its classification, IDSX may require remediation; restrict new business or clients; suspend Issuer Introduction or Sponsor Authority; restrict market making; downgrade a Sponsor Market Maker or Introducing Participant; suspend the Participant; or terminate its status.
Participant authority matrix
| Authority | Broker Participant | Introducing Participant | Sponsor Market Maker |
|---|---|---|---|
| Client Brokerage | Yes | Yes | Yes |
| Direct Market Access to IDSX | If approved | Yes | Yes |
| Proprietary Trading | Yes | Yes | Yes |
| Issuer Introduction and Listing Referral | No | Yes | Yes |
| Sponsor Authority, Listing Application and Sponsor Declaration | No | No | Yes |
| Mandatory market making | No | No | Required for sponsored securities |
Client orders and priority
A Participant submitting a client order must ensure valid authority, accurate records and timestamps, compliance with client restrictions, Applicable Law and Trading Rules. It must not misuse client information by front-running, trading as principal on undisclosed client intent, unfairly prioritising an affiliate or abusing client trading data.
Market conduct and internal controls
A Participant must not engage in or assist Market Manipulation, Wash Trading, Spoofing, Layering, false quotations or executions, false liquidity, Insider Trading or other conduct harming market integrity. Its internal controls must be appropriate to its class and address accounts, orders, trading and risk limits, user permissions, conflicts, conduct, AML/CFT, technology, cybersecurity, records and regulatory reporting.
Risk management
A Participant must maintain a written Risk Management Framework appropriate to its business model, addressing market, credit, liquidity, operational, settlement, cyber, legal, compliance, third-party and concentration risks.
Technology and algorithmic trading
A Participant directly connected to IDSX must maintain adequate system capacity and stable connectivity, access controls, pre-trade risk controls, post-trade monitoring, backups, failover and disaster recovery. A Participant using Algorithmic Trading must test algorithms, set order, price and message limits, prevent abnormal repeated orders, retain version records and provide a Kill Switch.
Cybersecurity and business continuity
A Participant must maintain a proportionate cybersecurity framework covering identity and access, multi-factor authentication, network security, encryption, security monitoring, incident response, vulnerability management, backup and recovery. Its Business Continuity Plan must consider system, network and power failures, cyberattack, data-centre or office unavailability, key staff and third-party failures.
Record keeping
A Participant must retain enough records to demonstrate compliance, including client, order, execution, system, compliance and risk records, Issuer Introductions, Sponsor Due Diligence and Declarations, and market-making records.
Material event notification
A Participant must promptly report a material event that may affect its status, including a change of control or major ownership, CEO change, material regulatory investigation, licence suspension or revocation, material litigation or financial deterioration, insolvency risk, major cyber incident or trading-system failure, or Sponsor Market Making failure.
IDSX supervision and information
IDSX may supervise Participants through trading monitoring, financial, compliance and technology reviews, Issuer Introduction and Sponsor Due Diligence reviews, market-making performance reviews, and on-site or remote inspections. It may request trading, client, financial, Issuer, Sponsor, market-making, risk and technology records and other reasonable information.
Ongoing supervision of Sponsor Market Makers
IDSX may specifically review the quality of sponsored Issuers, Due Diligence and Listing Applications, accuracy of Sponsor Declarations, continuing Issuer compliance, market-making performance, quote presence, spreads, liquidity and conduct.
Sponsor replacement and resignation
38.1 Replacement
An Issuer proposing to replace its Sponsor Market Maker must obtain IDSX recognition of the new Sponsor.
38.2 Continuity
The existing Sponsor ordinarily must not stop market making before the new Sponsor formally assumes responsibility.
38.3 New Sponsor
The new Sponsor must accept a formal appointment, conduct the Due Diligence it considers necessary, accept Sponsor Responsibilities and be ready to assume market-making obligations. A resigning Sponsor must notify the Issuer and IDSX, give reasons, perform necessary interim Sponsor Duties and continue market making until IDSX approves its exit or a new Sponsor takes over.
Sponsor Market Maker failure
If a Sponsor cannot continue market making, lacks capital, has a prolonged system failure, loses regulatory standing, is suspended by IDSX or becomes insolvent, IDSX may place sponsored securities in a special Trading Status, restrict trading, require a replacement Sponsor, suspend trading or take another necessary measure.
Participant withdrawal, suspension and termination
A Participant voluntarily withdrawing must notify IDSX in advance, complete open transactions and settlement, address client and Issuer responsibilities, retain required records and complete IDSX exit procedures. A Sponsor responsible for a Listed Financial Product may not withdraw until replacement, transfer of market-making responsibilities and IDSX approval. IDSX may suspend some or all rights for a serious breach, failure to meet admission criteria, insufficient capital, regulatory concern, material technology or integrity risk, or refusal to provide information. In an emergency it may immediately disable access, restrict new orders, cancel open orders or suspend Issuer Introduction, Sponsor or market-making authority. Participant status may end by voluntary withdrawal, revocation by IDSX, dissolution, insolvency, loss of a key regulatory qualification or another event under the Rules. Termination does not affect pre-existing trading, settlement, client, Issuer, Sponsor, record-keeping, investigation or disciplinary obligations.
Representation and directory
Only an approved Participant may use its approved title: IDSX Broker Participant, IDSX Introducing Participant or IDSX Sponsor Market Maker. A Participant must not claim a higher classification or unapproved Sponsor authority, describe status as a government licence, or imply IDSX guarantees the Participant, client assets or security value. IDSX may maintain a public directory showing name, legal name, jurisdiction, classification, status, approved markets, sponsored Issuers and securities, website and other appropriate information.
Enforcement and waivers
For a breach, IDSX may warn, formally censure, issue a remedial direction, impose restrictions or a fine, downgrade or suspend a Participant, terminate status, refer the matter to a regulator or take another applicable measure. To the extent permitted by Applicable Law, IDSX may grant a waiver, conditional waiver or temporary relief. It should not waive a Sponsor Market Maker's core market-making responsibility except in special or emergency circumstances.
IDSX Participant Framework
52.1 Broker Participant
Client Access, brokerage, KYC/AML, order management and trading.
52.2 Introducing Participant
Broker functions, Issuer identification and preliminary assessment, Issuer Introduction and Listing Referral.
52.3 Sponsor Market Maker
Introducing functions, formal sponsorship, Due Diligence, Listing Application, Sponsor Declaration and continuous market making for sponsored securities.
Core principles
- (1) Higher authority carries higher responsibility.
- (2) Only an approved Introducing Participant or Sponsor Market Maker may formally introduce a business to IDSX.
- (3) Only a Sponsor Market Maker may formally sponsor a listing.
- (4) A Sponsor Market Maker must itself market-make its sponsored securities.
- (5) It must not merely charge listing fees and avoid post-listing liquidity responsibility.
- (6) Market making supplies liquidity and does not guarantee a price.
- (7) IDSX retains the final listing decision.
- (8) IDSX continuously supervises all Participants.
— END OF PART 4 — IDSX RULEBOOK PART 4 — PARTICIPANT RULES