Answer ... (a) Crowdfunding, peer-to-peer lending
Crowdfunding regulations were first issued in 2017 and are covered under Crowdfunding Platform Operators Module (Module CFP) in Volume 5: Type 7 of the CBB Rulebook. The regulations in place are conventional and Sharia-compliant and aim to assist small-medium-sized enterprises and start-ups in getting access to alternative forms of funding when traditional forms are not available.
(b) Online lending and other forms of alternative finance
Online lending falls within the remit of Volume 1 of the CBB Rulebook which outlines regulations for Conventional Banks, and under Operational Management 3.1 which covers Internet Banking.
(c) Payment services (including marketplaces that route payments from customers to suppliers (e.g., Uber and Airbnb)
Decree-Law No. 7/1987 On the Issuance of the Law of Commerce governs any commercial transaction that takes place within the Kingdom of Bahrain, whether P.O.S or electronically. More recently, the CBB has authorised specialised licensees who serve as Payment Service Providers “PSP’s”, under Volume 5 of the CBB Rulebook, to provide services under Electronic Funds Transfer Systems (EFTS), a national electronic system that integrates all financial institutions in Bahrain, with the goal of improving the efficiency of cash transfers and bill payments; allowing banks, customers, corporations, and governmental agencies to participate under this framework through the BENEFIT mobile application.
(d) Forex
Entities that offer foreign exchange trading, as a service or a trading platform, will be regulated under Volume 1 and 2 of the CBB Rulebook, depending on whether the entities are governed by conventional or Islamic Sharia banking practices.
(e) Trading
Trading in Bahrain is governed by three (3) distinct laws:
- Resolution No. (6) of 2001, in respect of provision of remote trading at the Bahrain Stock Exchange.
- Resolution No (4) of 1999, on the rules and procedures of automated trading at the Bahrain Stock Exchange.
- Resolution No. (2) of 1990, in respect of certain conditions relating securities trading.
(f) Investment and asset management
Volume 4 of the CBB Rulebook covers the investment/asset management business sector. The regulations in place aim to uphold the standards set by the International Organisation of Securities Commissions.
(g) Risk management
Module HC “High-Level Controls”, found in Volume 1 of the Rulebook outlines Bahrain’s bank-wide management framework. The well-developed framework imposes upon active banking entities in Bahrain to “establish a sound risk management framework commensurate with the bank’s size, complexity and risk profile”.
(h) Roboadvice
Digital Financial Advice, commonly known as Roboadvice or automated advice, falls within the remit of Volume 2 of the Central Bank of Bahrain’s rulebook and is a regulated financial activity. As a result of the algorithmic-based financial modelling techniques utilised by robo-advice, the CBB has ensured that it is subject to a comprehensive governance and control framework. Moreover, there are further issues surrounding confidentiality and data privacy implications of digital financial advice, which can be mainly attributed to their dependence on the cloud for data analytics. The CBB rules attempt to circumvent such concern through the implementation of safeguards to avoid non-compliance with applicable Law No. 30 of 2018 with respect to Personal Data Protection.
(i) Insurtech
There are currently no regulations in place specifically tailored toward Insurtech, rather Insurtech comes under the remit of Volume 3 of the CBB Rulebook which governs all Insurance related entities in the Kingdom of Bahrain. In comparison to other financial industries, insurance technology implementation has been gradual; mainly attributable to the Bahraini insurance sector's lack of implementation of integrated consumer services seen in more advanced economies, due to its relatively small market.