ACT No. XLIV of 2018 AN ACT to further amend various financial services laws.

I assent.

(L.S.)

MARIE-LOUISE

COLEIRO PRECA

President

21st December, 2018

ACT No. XLIV of 2018

AN ACT to further amend various financial services laws.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

The short title of this Act is the Various Financial Services Short title.

Laws (Amendment No. 2) Act, 2018.

PART I

Amendments to the Financial Markets Act

This Part amends and shall be read and construed as one with Amendments to

the Financial Markets Act, hereinafter in this Part referred to as "the the

Financial

Markets Act.

principal Act".

Immediately after the definition "dematerialized form" in Amendment of

article 2 of the principal Act there shall be added the following new article

2 of the

principal Act.

definition

" "depositary receipts" means those securities which are

negotiable on the capital market and which represent ownership of

the securities of a non-domiciled issuer while being able to be

admitted to trading on a regulated market and traded

independently of the securities of the non-domiciled issuer;".

PART II

Amendments to the Investment Services Act

This Part amends and shall be read and construed as one with

the Investment Services Act, hereinafter in this Part referred to as "the

principal Act".

Immediately after the definition "the CRR" in article 2 of the

principal Act there shall be added the following new definition

" "depositary receipts" means those securities which are

negotiable on the capital market and which represent ownership of

the securities of a non-domiciled issuer while being able to be

admitted to trading on a regulated market and traded

independently of the securities of the non-domiciled issuer;".

Article 15 of the principal Act shall be amended as follows

(a) in sub-article (1) thereof, the words "or scheme as is

referred to in article 13(1)" shall be deleted; and

(b) immediately after sub-article (1) thereof, there shall be

added the following new provisos

"Provided that the competent authority may give

any such directive even where a licence holder, for whatever

reason, ceases to hold a licence granted in terms of this Act

Provided further that any directive given in

terms of this article shall, unless the competent authority

otherwise directs, continue to apply even when a licence

holder, for whatever reason, ceases to hold a licence granted

in terms of this Act.".

Article 15A of the principal Act shall be amended as follows

(a) in paragraph (c) of sub-article (1) thereof, for the

words "or part thereof, as the competent authority may direct;"

there shall be substituted the words "or part thereof, including to

take the necessary action for the licence holder to be dissolved and

wound up, as the competent authority may direct;";

(b)

paragraph (c) of sub-article (2) thereof shall be

amended as follows

(i) for the words "or by any other person, including

the legal and judicial representation of such legal person"

there shall be substituted the words "or by any other person,

including for the purpose of the dissolution and winding up

of the licence holder as well as the legal and judicial

representation of such legal person"; and

(ii) for the words "to the exclusion of any other

person." there shall be substituted the words "to the

exclusion of any other person

Provided that the competent person shall not

take any decision for the purpose of the dissolution and

winding up of the licence holder unless the competent

authority issues a directive to that effect in terms of article

15, and any such directive may contain such instructions,

requirements and conditions as the competent authority may

consider necessary, including with regard to the mode of

winding up.";

(c) immediately after sub-article (2) thereof, there shall be

added the following new sub-article

"(2A) Without prejudice to the powers of the

competent authority in terms of sub-article (1), the

competent authority may also make an application to

the court for the dissolution and winding up by the

court of a licence holder where it appears to the

competent authority that a licence holder should be

dissolved and wound up by the court for the reason set

out in article 214(2)(b)(iii) of the Companies Act, and

where the court accedes to the application the relevant

provisions of the Companies Act in relation to the

dissolution and winding up by the court and any other

applicable provisions of any other law shall apply.";

and

(d) immediately after sub-article (4) thereof, there shall be

added the following new sub-article

"(5) Any measure adopted in terms of sub-article (1)

shall remain in force notwithstanding that a licence holder

ceases to hold a licence for whatever reason, unless the

competent authority otherwise directs.".

PART III

Amendments to the Banking Act

This Part amends and shall be read and construed as one with

the Banking Act, hereinafter in this Part referred to as "the principal

Article 2 of the principal Act shall be amended as follows

(a) in sub-article (1) thereof, after the definition

"representative office" there shall be added the following new

definition

" "Resolution Fund" means the resolution

financing arrangement under the Recovery

and Resolution Regulations;"; and

(b) in sub-article (3) thereof, for the words "the relevant

provisions of the CRD and CRR, and shall be interpreted and

applied accordingly." there shall be substituted the words "the

relevant provisions of the BRRD, the CRD and the CRR, and shall

be interpreted and applied accordingly.".

Immediately after sub-article (1) of article 4B of the principal

Act, there shall be added the following new provisos

"Provided that the competent authority may give any

such directive even where a credit institution ceases to hold a

licence for whatever reason or such licence ceases to have effect

Provided further that any directive given in terms of

this article shall, unless the competent authority otherwise directs,

continue to apply even when a credit institution ceases to hold a

licence for whatever reason or such licence ceases to have effect.".

Article 29 of the principal Act shall be amended as follows

(a)

sub-article (1) shall be amended as follows

(i) for the words "may, without prejudice to the

provisions of article 9(2) -" there shall be substituted the

words, "may, without prejudice to the provisions of article

9(2) and to any other powers conferred on the competent

authority under this Act or any other applicable law –";

(ii) in paragraph (d) thereof, for the words "or part

thereof, as the competent authority may direct;" there shall

be substituted the words "or part thereof, including to take

the necessary action for the credit institution to be dissolved

and wound up, as the competent authority may direct;";

(iii) in paragraph (g) thereof, for the words "to any

competent person appointed under this sub-article." there

shall be substituted the words "to any person appointed

under this sub-article;"; and

(iv) immediately after paragraph (g) thereof, there

shall be added the following

"(h) appoint a person to act as

controller and, or to assume control of a

credit institution for the purposes of the

Controlled Companies (Procedure for

Liquidation) Act;

and having adopted any one or more

of the measures aforesaid, the competent

authority may further adopt any one or

more measures, whether in addition

thereto or in substitution therefor.";

(b) paragraph (c) of sub-article (2) thereof shall be

amended as follows

(i) for the words "any other person, including the

legal and judicial representation of the credit institution"

there shall be substituted the words "any other person,

including for the purpose of the dissolution and winding up

of the credit institution as well as the legal and judicial

representation of the credit institution"; and

(ii) for the words "to the exclusion of any other

person." there shall be substituted the words "to the

exclusion of any other person

Provided that the competent person shall not

take any decision for the purpose of the dissolution and

winding up of the credit institution unless the competent

authority, after consulting with the Central Bank, issues a

directive to that effect in terms of article 4B and any such

directive may contain such instructions, requirements and

conditions as the competent authority may consider

necessary, including with regard to the mode of winding

up."; and

(c)

immediately after sub-article (9) thereof, there shall be

added the following new sub-articles

"(10) Without prejudice to the powers of

the competent authority in terms of sub-article

(1), the competent authority may also make an

application to the court for the dissolution and

winding up by the court of a credit institution

where it appears to the competent authority

that a credit institution should be dissolved

and wound up by the court for the reason set

out in article 214(2)(b)(iii) of the Companies

Act, and where the court accedes to the

application the relevant provisions of the

Companies Act in relation to the dissolution

and winding up by the court and any other

applicable provisions of any other law shall

apply.

(11) Any measure adopted in terms of

sub-article (1) shall remain in force

notwithstanding that a credit institution ceases

to hold a licence for whatever reason or such

licence ceases to have effect, unless the

competent authority otherwise directs.".

Article 29A of the principal Act shall be amended as follows

(a)

sub-article (2) thereof shall be amended as follows

(i) in sub-paragraph (ii) of paragraph (b) thereof,

for the words "under the Depositor Compensation Scheme

Regulations:" there shall be substituted the words "under the

Depositor Compensation Scheme Regulations;";

(ii) immediately after paragraph (b) thereof, there

shall be added the following new paragraph

"(c) the Resolution Fund in

relation to any contribution or

contributions that may be due to it by

the credit institution in accordance with

the provisions of the Recovery and

Resolution Regulations:"; and

(iii) in the proviso thereof, for the words "mentioned

in paragraph (b)(i) and the contribution/s due to the Scheme

mentioned in paragraph (b)(ii) shall rank pari passu." there

shall be substituted the words "mentioned in paragraph

(b)(i), the contribution or contributions due to the Scheme

mentioned in paragraph (b)(ii) and the contribution or

contributions due to the Resolution Fund mentioned in

paragraph (c) shall rank pari passu.";

(b) in sub-article (3) thereof, for the words "provided for

the claims of ordinary unsecured, non-preferred creditors:" there

shall be substituted the words "provided for the claims of ordinary

unsecured creditors:";

(c) immediately after sub-article (3) thereof, there shall be

added the following new sub-article

"(3A) Without prejudice to the provisions of sub-

articles (1), (2) and (3), ordinary unsecured claims shall have

a higher priority ranking than that of unsecured claims

resulting from debt instruments that meet the following

conditions

(a) the original contractual maturity of the debt

instruments is of at least one year;

(b) the debt instruments contain no embedded

derivatives and are not derivatives themselves

Provided that debt instruments with variable

interest derived from a broadly used reference rate and debt

instruments not denominated in the domestic currency of the

issuer, provided that principal, repayment and interest are

denominated in the same currency, shall not be considered to

be debt instruments containing embedded derivatives solely

because of those features;

(c) the relevant contractual documentation and,

where applicable, the prospectus related to the issuance

explicitly refer to the lower ranking under this sub-article.";

(d) in sub-article (4) thereof, for the words "all other

ordinary unsecured, non-preferred creditors" there shall be

substituted the words "all other unsecured creditors"; and

(e) immediately after sub-article (4) thereof there shall be

added the following new sub-article

"(5) For the purposes of this article

(a) "debt instruments" shall mean bonds and other

forms of transferable debt and instruments creating or

acknowledging a debt;

(b)

"derivatives" shall mean those financial

instruments defined in point (44) (c) of Article 4(1) of

Directive 2014/65/EU; and referred to in Annex I, Section C

(4) to (10) thereto.".

PART IV

AMENDMENTS TO THE PREVENTION OF FINANCIAL

MARKETS ABUSE ACT

This Part amends and shall be read and construed as one with

the Prevention of Financial Markets Abuse Act, hereinafter in this Part

referred to as "the principal Act".

Article 2 of the principal Act shall be amended as follows

(a) in the definition "trading venue" for the words

"Article 3(1)(24)" there shall be substituted the words "Article

3(1)(10)"; and

(b) in the definition "wholesale energy product" for the

words "Article 2(4)" there shall be substituted the words "Article

3(1)(22)".

Article 4 of the principal Act shall be amended as follows

(a)

sub-article (3) thereof shall be amended as follows

(i) for the words "This Act shall not apply to:"

there shall be substituted the words "Articles 6, 6A and 8

shall not apply to:"; and

(ii)

paragraph (c) thereof shall be deleted;

(b) immediately after sub-article (3) thereof, there shall

be added the following new sub-article

"(3A) (a) This Act shall not apply to transactions,

orders or behaviour carried out in pursuit of monetary,

exchange rate or public debt management policy in

accordance with Article 6(1) of the Market Abuse

Regulation, transactions, orders or behaviour carried out in

accordance with Article 6(2) thereof, activities in pursuit of

the European Union’s climate policy in accordance with

Article 6(3) thereof, or activities in pursuit of the European

Union’s Common Agricultural Policy or of the European

Union’s Common Fisheries Policy in accordance with

Article 6(4) thereof.

(b) Paragraph (a) shall not apply to persons

working under a contract of employment or otherwise for

the entities referred to in the said paragraph where those

persons carry out transactions or orders, or engage in

behaviour, directly or indirectly, on their own account.";

and

(c) in sub-article (4)(a) thereof, for the words "referred to

in sub-article (2);" there shall be substituted the words "referred to

in sub-article (1);".

Article 6 of the principal Act shall be amended as follows

Amendment of

article 6 of the

principal Act.

(a) the marginal note thereof shall be substituted by the

words "Insider dealing.";

(b) sub-article (1) thereof shall be substituted by the

following new sub-article

"(1) (a) A person shall not engage or attempt to

engage in insider dealing, or recommend that another

person engage in insider dealing, or induce another person

to engage in insider dealing.

(b) Any person who intentionally engages or

attempts to engage in insider dealing, or recommends that

another person engage in insider dealing, or induces

another person to engage in insider dealing, shall be guilty

of a criminal offence.";

(c) in sub-article (6) thereof, for the words ''a

cancellation or amendment: Provided that the use of the

recommendations or inducements amounts to insider dealing

where the person using the recommendation or inducement

knows that it is based upon inside information.'' there shall be

substituted the words ''a cancellation or amendment.'';

(d) immediately after sub-article (6) thereof, as

amended, there shall be inserted the following new sub-article

(6A)

"(6A) The use of the recommendations or

inducements referred to in sub-article (6) amount to insider

dealing where the person using the recommendation or

inducement knows that it is based upon inside

information."; and

(e) in sub-article (8) thereof, for the words "in sub-article

(5)" there shall be substituted the words "in sub-article (7)".

Article 6A of the principal Act shall be amended as follows

(a) sub-article (1) thereof shall be substituted by the

following new sub-article

"(1) (a) A person shall not unlawfully disclose

inside information.

(b) Any person who intentionally and unlawfully

discloses inside information shall be guilty of a criminal

offence."; and

(b) in sub-article (3) thereof, the words "as defined under

sub-article (5)" shall be deleted.

Article 8 of the principal Act shall be amended as follows

(a) sub-article (1) thereof shall be substituted by the

following new sub-article

"(1) (a) A person shall not engage in or attempt to

engage in market manipulation.

(b) Any person who intentionally engages in or

attempts to engage in market manipulation shall be guilty

of a criminal offence."; and

(b) in the proviso to sub-article (4)(a) thereof, for the

words "Provided that the reasons" there shall be substituted the

words "Unless the reasons".

In sub-article (2) of article 13 of the principal Act, for the words

"it shall in terms of its powers under this Part" there shall be substituted

the words "it shall, in terms of its powers under this Act, the Market

Abuse Regulation or any other applicable law".

Sub-article (1) of article 22 of the principal Act shall be

substituted by the following

"(1) Without prejudice to the powers, functions and duties

assigned to the competent authority in terms of this Act, the

Market Abuse Regulation or any other applicable law, where the

competent authority is satisfied that a person’s conduct amounts

to a breach of any of Articles 14 and 15, Article 16(1) and (2),

Article 17(1), (2), (4), (5) and (8), Article 18(1) to (6), Article

19(1), (2), (3), (5), (6), (7) and (11) and Article 20(1) of the

Market Abuse Regulation, the competent authority may by

notice in writing and without recourse to a court hearing, take the

following administrative sanctions and measures

(a) an order requiring the person responsible for

the infringement to cease the conduct and to desist from a

repetition of that conduct;

(b) the disgorgement of the profits gained or losses

avoided due to the infringement, insofar as they can be

determined;

(c) a public warning which indicates the person

responsible for the infringement and the nature of the

infringement;

(d) withdrawal or suspension of the authorisation

of an investment firm;

(e) a temporary ban of a person discharging

managerial responsibilities within an investment firm or

any other natural person, who is held responsible for the

infringement, from exercising management functions in

investment firms;

(f) in the event of repeated infringements of

Article 14 or 15 of the Market Abuse Regulation, a

permanent ban of any person discharging managerial

responsibilities within an investment firm or any other

natural person who is held responsible for the

infringement, from exercising management functions in

investment firms;

(g) a temporary ban of a person discharging

managerial responsibilities within an investment firm or

another natural person who is held responsible for the

infringement, from dealing on own account;

(h) maximum administrative pecuniary sanctions

of at least three (3) times the amount of the profits gained

or losses avoided because of the infringement, insofar as

those can be determined;

(i) in respect of a natural person, an administrative

pecuniary sanction which does not exceed

(i) five million euro (€5,000,000) for

infringements of Articles 14 and 15 of the Market

Abuse Regulation;

(ii) one million euro (€1,000,000) for

infringements of Articles 16 and 17 of the Market

Abuse Regulation; and

(iii) five hundred thousand euro (€500,000)

for infringements of Articles 18, 19 and 20 of the

Market Abuse Regulation.

(j) in respect of legal persons, an administrative

pecuniary sanction which does not exceed

(i) fifteen million euro (€15,000,000) or

15% of the total annual turnover of the legal person

according to the last available accounts approved by

the management body for infringements of Articles

14 and 15 of the Market Abuse Regulation;

(ii) two million five hundred thousand euro

(€2,500,000) or 2% of its total annual turnover

according to the last available accounts approved by

the management body for infringements of Articles

16 and 17 of the Market Abuse Regulation;

(iii) one million euro (€1,000,000) for

infringements of Articles 18, 19 and 20 of the Market

Abuse Regulation.

For the purposes of sub-paragraphs (i) and (ii) of paragraph (j), where

the legal person is a parent undertaking or a subsidiary undertaking

which is required to prepare consolidated financial accounts pursuant to

Directive 2013/34/EU, the relevant total annual turnover shall be the

total annual turnover or the corresponding type of income in accordance

with the relevant accounting directives – Council Directive 86/635/EEC

for banks and Council Directive 91/674/EEC for insurance companies –

according to the last available consolidated accounts approved by the

management body of the ultimate parent undertaking.".

Immediately after article 22 of the principal Act, there shall

be inserted a new article 22A as follows

"22A.When determining the type and level of

administrative sanctions, the competent authority shall take into

account all relevant circumstances, including, where appropriate

(a)

the gravity and duration of the infringement;

(b) the degree of responsibility of the person

responsible for the infringement;

(c) the financial strength of the person responsible

for the infringement, as indicated, for example, by the total

turnover of a legal person or the annual income of a natural

person;

(d) the importance of the profits gained or losses

avoided by the person responsible for the infringement,

insofar as they can be determined;

(e) the level of cooperation of the person

responsible for the infringement with the competent

authority, without prejudice to the need to ensure

disgorgement of profits gained or losses avoided by that

person;

(f) previous infringements

by

the

person

responsible for the infringement; and

(g) measures taken by the person responsible for

the infringement to prevent its repetition.".

Passed by the House of Representatives at Sitting No. 181 of the

12th December, 2018.

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€1.44