ACT No. IX of 2023 AN ACT to amend the Financial Markets Act and to provide for other matters ancillary or consequential thereto, Cap. 345.

I assent.

(L.S.)

GEORGE VELLA

President

14th March, 2023

ACT No. IX of 2023

AN ACT to amend the Financial Markets Act and to provide for

other matters ancillary or consequential thereto, Cap. 345.

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 Financial Markets Short title.

(Amendment) Act, 2023 and this Act shall be read and construed as

one with the Financial Markets Act, hereinafter referred to as "the Cap. 345.

principal Act".

The "ARRANGEMENT OF ACT" of the principal Act shall Amendment of

Article 2 of the principal Act shall be amended as follows

the

be substituted by the following

Arrangement of

Act.

"ARRANGEMENT OF THE ACT

Articles

Part I

Preliminary

1-2A

Part II

Trading Venues

3-10B

Prospectus, Listing and

Part III

11-23

Trading

Central

Securities

24-31A

Depository

Covered Bonds

31B-31I

Regulatory

and

32-41B

Investigatory Powers

Financial Services Tribunal

42-44

Miscellaneous

45-54

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

following

"Interpretation and scope.";

(b)

in sub-article (1) thereof

(i) immediately after the definition "Capital

Markets Rules" there shall be added the following new

definition

" "the CBD" means Directive (EU) 2019/2162

of the European Parliament and of the Council of 27

November 2019 on the issue of covered bonds and

covered bond public supervision and amending

Directives 2009/65/EC and 2014/59/EU, as amended

from time to time, and includes any implementing

measures that have been or may be issued

thereunder;";

(ii) immediately after the definition "certificates"

there shall be added the following new definition

" "collateral assets" means physical assets and

assets in the form of exposures that secure cover

assets;";

(iii) immediately after the definition "competent

authority" there shall be added the following new

definitions

" "cover assets" means assets included in a

cover pool;

"cover pool" means a clearly defined set of

assets securing the payment obligations attached to

covered bonds that are segregated from other assets

held by the credit institution issuing the covered

bonds;

"covered bond" means a debt obligation that is

issued by a credit institution in accordance with the

provisions of this Act, the Financial Markets Act LN. 59 of 2023.

(Covered Bonds) Regulations, regulations 68(7) and

108(1) of the Recovery and Resolution Regulations, S.L. 330.09.

and of any Covered Bonds Rules issued under this

Act or under the Financial Markets Act (Covered

Bonds) Regulations, and that is secured by cover

assets to which covered bond investors have direct

recourse as preferred creditors;

"covered bond programme" means the

structural features of a covered bonds issue that are

determined by the provisions of this Act and any

regulations and Covered Bonds Rules issued

thereunder, and the provisions of the Recovery and S.L. 330.09.

Resolution Regulations transposing the CBD and by

contractual terms and conditions, in accordance with

the approval granted to the credit institution issuing

the covered bonds;

"covered bond public supervision" means the

supervision of covered bond programmes ensuring

compliance with, and the enforcement of, the

requirements applicable to the issue of covered

bonds;

"Covered Bonds Rules" means those Rules

issued by the competent authority under Part IV bis

or under any regulations issued thereunder;";

(iv) immediately after the definition "CRD" there

shall be added the following new definitions

" "credit institution" means a credit institution

as defined in point (1) of Article 4(1) of the CRR;

"CRR" means Regulation (EU) No 575/2013 of

the European Parliament and of the Council of 26

June 2013 on prudential requirements for credit

institutions and amending Regulation (EU) No 648/

2012, as amended from time to time, and includes

any implementing measures that have been or may be

issued thereunder;";

(v) immediately after the definition "Directive

2003/87/EC" there shall be added the following new

definition

" "Directive 2009/65/EC" means Directive

2009/65/EC of the European Parliament and of the

Council of 13 July 2009 on the coordination of laws,

regulations and administrative provisions relating to

undertakings for collective investment in transferable

securities (UCITS), as amended from time to time,

and includes any implementing measures that have

been or may be issued thereunder;";

(vi) in the definition "European regulatory

authority", for the words "Article 48 of the Directive" there

shall be substituted the words "Article 67 of the MIFID"

and for the words "the different provisions of the

Directive;" there shall be substituted the words "the

different provisions of the MIFID;";

(vii) immediately after the definition "Directives"

there shall be added the following new definition

" "EBA" means the European Banking

Authority established by Regulation (EU) No. 1093/

2010 of the European Parliament and of the Council

of 24 November 2010 establishing a European

Supervisory

Authority

(European

Banking

Authority), amending Decision No. 716/2009/EC and

repealing Commission Decision 2009/78/EC, as

amended from time to time;";

(viii) immediately after the definition "European

regulatory authority" there shall be added the following

new definition

" "European resolution authority" shall have the

same meaning as that assigned to it in regulation 2(1)

of the Recovery and Resolution Regulations;";

(ix) immediately after the definition "exchange-

traded fund" there shall be added the following new

definition

" "extendable maturity structure" means a

mechanism which provides for the possibility of

extending the scheduled maturity of covered bonds

for a pre-determined period of time and in the event

that a specific trigger occurs;";

(x) immediately after the definition "organised

trading facility" or "OTF" there shall be added the

following new definition

" "overcollateralisation" means the entirety of

the statutory, contractual or voluntary level of

collateral that exceeds the coverage requirement set

out in regulation 12 of the Financial Markets Act L.N. 59 of 2023.

(Covered Bonds) Regulations;";

(xi) immediately after the definition "overseas

regulatory authority" there shall be added the following

new definition

" "prescribed" means prescribed by regulations

made under this Act;";

(xii) immediately after the definition "related

company" there shall be added the following new

definitions

" "resolution" shall have the same meaning as

that assigned to it in regulation 2(1) of the Recovery S.L. 330.09.

and Resolution Regulations;

"Resolution Committee" means the Resolution

Committee appointed by the Resolution Authority in

terms of article 7B(2) of the Malta Financial Services Cap. 330.

Authority Act;";

(xiii) immediately after the definition "securities"

there shall be added the following new definition

" "segregation" means the actions performed by

a credit institution issuing covered bonds to identify

cover assets and put them legally beyond the reach of

creditors other than covered bond investors and

counterparties of derivative contracts;"; and

(xiv) immediately after the definition "Shareholders’

Rights Directive" there shall be added the following new

definition

" "special administrator" means the person or

entity appointed to administrate a covered bond

programme in the event of the insolvency of a credit

institution issuing covered bonds under that

programme, or when such credit institution has been

determined to be failing or likely to fail pursuant to

regulation 32(1) of the Recovery and Resolution

Regulations or, in exceptional circumstances, where

the competent authority determines that the proper

functioning of that credit institution is seriously at

risk;";

(c) sub-article (2) thereof shall be substituted by the

following

"(2) The objective of this Act is inter alia to

regulate trading venues, central securities depositories,

central counterparties, covered bonds and the issuance

thereof by credit institutions licensed in terms of the

Banking Act, and to provide for the orderly trading in

transferable securities and for matters ancillary or

incidental thereto or connected therewith, and to transpose

and, or implement, in part, the relevant provisions of the

CBD, CRAR, CSDR, EMIR, MIFID, MiFIR, the

Prospectus Regulation, the SSR and the Directives, and

consequently this Act and any regulations adopted

thereunder shall be interpreted and applied accordingly.";

and

(d) immediately after sub-article (2) thereof, as

substituted, there shall be added the following new sub-article

"(3) Part IV bis shall apply to covered bonds issued

by credit institutions licensed in terms of the Banking

Act.".

In sub-article (8) thereof, for the words "the Directive",there

shall be substituted the words "the MIFID".

Immediately after article 31A of the principal Act there shall

be added the following new Part and the following new articles

"PART IV bis

COVERED BONDS

(1) Without prejudice to any other power or

function conferred to it by this Act or any other law, it

shall also be the function of the competent authority to

act as the designated competent authority in Malta for

the purposes of implementing the provisions of the

CBD and to carry out covered bond public supervision.

(2) The competent authority shall monitor the

issue of covered bonds to assess and ensure compliance

with the requirements laid down in this Part and any

regulations and Covered Bonds Rules issued

thereunder.

(3) Without prejudice to the generality of sub-

articles (1) and (2) and to any other power or function

conferred on the competent authority by this Act or any

other law, the powers of the competent authority shall

include the power to

(a) grant or refuse approval for covered

bond programmes pursuant to articles 31D and

31E;

(b) assess

compliance

with

the

requirements laid down in this Part and any

regulations and Covered Bonds Rules issued

thereunder;

(c) regularly review covered bond

programmes in order to assess compliance with

the provisions of this Part and any regulations

and Covered Bonds Rules issued thereunder;

(d) issue Covered Bonds Rules in order

to better implement and carry out the provisions

of this Act and, or of any regulations issued

thereunder and, or in furtherance of its

responsibility under any provisions of the CBD,

which rules shall be binding on credit institutions

and any other persons as may be specified

therein;

(e) investigate possible breaches of the

requirements of this Part or any regulations or

Covered Bonds Rules issued thereunder;

(f) carry

out

on-site

and

off-site

inspections;

(g) impose administrative penalties and

other administrative measures in accordance with

article 39CA; and

(h) adopt and implement supervisory

guidelines relating to the issue of covered bonds.

(4) The competent authority shall inform the

European Commission and the EBA of its functions

and duties pursuant to sub-article (1).

(5) The competent authority shall have the

expertise, resources, operational capacity, powers and

independence necessary to carry out the functions

relating to covered bond public supervision.

(1) The competent authority may, from time

to time, issue and publish Covered Bonds Rules as may

be required for carrying into effect any of the

provisions of this Act or any regulations made

thereunder, and to transpose, implement and give effect

to the provisions and requirements of the CBD.

(2) Without prejudice to the generality of sub-

article (1), Covered Bonds Rules issued by the

competent authority may

(a) lay down additional requirements and

conditions in relation to credit institutions

seeking approval for a covered bond programme,

credit institutions having issued covered bonds,

and any other matters as the competent authority

may consider appropriate;

(b) provide for the returns, statements

and notices to be made or given for any purposes

in regard to which the competent authority

exercises supervisory or regulatory functions,

and the form and contents thereof;

(c) lay down the information that such

persons are to submit to the competent authority;

(d) transpose, implement and give effect

to the provisions and requirements of the CBD;

(e) regulate any matter that is incidental

to or connected with any of the matters

mentioned in this article as the competent

authority may consider appropriate in the

performance of its functions; and

(f) lay down requirements and conditions

for the better implementation and purposes of this

Part and of any regulations issued thereunder.

(3) Covered Bonds Rules issued in terms of this

article shall be binding on credit institutions and on any

other persons as may be specified therein.

(1) Without prejudice to the provisions of

Part III and to article 54, no covered bonds shall be

issued in Malta by a credit institution unless and until a

covered bond programme is approved by the competent

authority.

(2) An application for the approval of a covered

bond programme shall be in such form and

accompanied by such documents and information and

shall conform with such requirements as shall be

specified in Covered Bonds Rules.

(3) The competent authority shall not approve a

covered bond programme unless it is satisfied that –

(a) the credit institution has an adequate

programme of operations setting out the issue of

covered bonds;

(b) the credit institution has adequate

policies, processes and methodologies aimed at

investor protection for the approval, amendment,

renewal and refinancing of loans included in the

cover pool;

(c) the credit institution has management

and staff dedicated to the covered bond

programme which have adequate qualifications

and knowledge regarding the issue of covered

bonds and the administration of the covered bond

programme;

(d) the administrative set-up of the credit

institution’s cover pool and the monitoring

thereof meets the applicable requirements laid

down in this Act and any regulations and

Covered Bonds Rules issued thereunder;

(e) the credit institution satisfies the

requirements of this Act, and any regulations and

Covered Bonds Rules issued thereunder; and

(f) the credit institution satisfies any

other requirements that may be imposed by the

competent authority.

(4) For the purposes of sub-regulation (3), a credit

institution shall provide the competent authority with

all the information necessary to enable the competent

authority to satisfy itself of the credit institution’s

compliance with the requirements of this Act and any

regulations and Covered Bonds Rules issued

thereunder.

(5) Information which the competent authority

may require in connection with an application shall be

provided in such form, and shall be verified in such

manner, as the competent authority may direct.

(6) In determining an application, the competent

authority may consider any information which it deems

relevant to the application.

(7) The competent authority shall issue and

publish Covered Bonds Rules as may be required in

order to better implement the provisions of this article.

(1) Where the competent authority finds that

an application for the approval of a covered bond

programme does not comply with article 31D(2) or that

the covered bond programme does not meet the

standards of completeness, comprehensibility and

consistency necessary for its approval or that changes

to the application or the covered bond programme are

required or additional information is required

(a)

it shall inform the applicant of that

fact; and

(b) it shall clearly specify the changes or

additional information that are necessary.

(2) Where the applicant is unable or unwilling to

m a k e t h e n e c e s s a r y c h a n g e s o r t o p r o v i d e th e

additional information requested in accordance with

sub-article (1), the competent authority shall be entitled

to refuse the approval of the application and terminate

the review process. In such cases, the competent

authority shall notify the applicant of its decision in

writing and specify the reasons for such refusal.

(3) Without prejudice to the provisions of sub-

article (2), the competent authority shall determine an

application for the approval of a covered bond

programme by acting in any of the following ways

(a) granting

an

approval

without

conditions;

(b) granting an approval subject to such

conditions as it may deem appropriate;

(c)

refusing to grant an approval

Provided that the competent authority may, at

any time, vary or revoke any condition imposed in

terms of paragraph (b).

(4) If the competent authority decides to approve

a covered bond programme, it shall give the applicant

written notice accordingly.

(5) If the competent authority decides to refuse a

covered bond programme, it must give the applicant

notice of its decision in writing stating the reasons for

its refusal.

A credit institution shall provide the

competent authority with details of any changes in the

information provided under this Act or any regulations

or Rules issued thereunder as soon as such credit

institution becomes aware of such changes.

Credit institutions issuing covered bonds shall

register all their transactions in relation to the covered

bond programme and shall have in place adequate and

appropriate documentation systems and processes.

(1) The Minister, acting on the advice of the

competent authority, may make regulations to give

effect to the provisions of this Act, and without

prejudice to the generality of the foregoing may, by

such regulations, in particular, do any of the following

(a) regulate covered bonds and the

issuance thereof, including in the case of the

insolvency or resolution of a credit institution

issuing covered bonds; and establish and provide

for the structural features of covered bonds,

including requirements for cover assets,

collateral assets and other assets securing covered

bonds as well as the methodology and process for

the valuation thereof; requirements for a cover

pool, its composition and for risk diversification

therein; requirements for the segregation of cover

assets including the segregation thereof in the

case of the insolvency or resolution of a credit

institution issuing covered bonds; requirements

on the information to be provided to investors

including on the frequency and publication

thereof; coverage requirements including on the

valuation of derivative contracts and on any

interest payable in respect of outstanding covered

bonds and interest receivable in respect of cover

assets; and requirements for a liquidity buffer;

(b) regulate the drawing-up, approval,

publication and distribution in Malta of covered

bond programmes, including those relating to

covered bonds issued by credit institutions

authorised in a country outside Malta and in such

case, make provision for the approval of such

covered bond programmes taking into account

Malta’s international commitments;

(c) provide for reporting requirements

and the form and frequency thereof, including in

the event of the insolvency or resolution of a

credit institution issuing covered bonds, and for

other requirements and conditions which a credit

institution issuing covered bonds must satisfy on

a continuing and ongoing basis and establish the

circumstances and the manner in which

requirements and conditions may be varied,

suspended or revoked;

(d) provide for the exercise of powers by

the competent authority on credit institutions and

others as may be specified therein;

(e) provide for the establishment and

imposition of administrative penalties or other

administrative measures for breaches of this Act

or any regulations or Covered Bonds Rules

issued thereunder, and for appeals therefrom to

the Financial Services Tribunal, as well as for the

establishment and imposition of fines and other

penalties;

(f) provide for the establishment and

imposition of fines, other punishments and terms

of imprisonment for contraventions of, or failure

to comply with, this Act or any regulations or

Covered Bonds Rules issued thereunder, and for

appeals therefrom;

(g) provide for any matter that the

Minister may deem expedient, including the

creation and exercise of rights by, or for the

benefit of, the public, the imposition of duties

and obligations on credit institutions issuing

covered bonds or persons responsible for the

management or administration thereof and the

regulation of any fees and, or any other charges

imposed directly or indirectly on investors;

(h) provide for the keeping of records and

for disclosure requirements;

(i) regulate the promotion or sale of

covered bonds;

(j) provide for and regulate the payment

by a credit institution issuing covered bonds or

any other person, as the case may be, of

application, approval or other fees and such other

charges payable to the competent authority in

respect of any matter provided for, by or under

this Act or any regulations made under this

article, as may be prescribed;

(k) exempt any covered bonds or any

categories thereof or any covered bonds issued

before 8 July 2022 that comply with the

requirements laid down in Article 52(4) of

Directive 2009/65/EC, as applicable on the date

of their issue, from any one or more of the

provisions of this Act or any regulations made

under this article subject to such variations,

additions, adaptations and modifications as may

be prescribed and subject to such conditions or

other requirements, including other forms of

authorisation and notification procedures, as may

be prescribed;

(l) transpose, implement and give effect

to the provisions and requirements of the CBD

and of any other Directives, Regulations or any

other legislative measures of the European Union

requiring transposition and, or implementation,

as they may be amended from time to time,

including any implementing measures that have

been or may be issued thereunder; regulations

made under this paragraph, and strictly related to

transposition or implementation as aforesaid,

may provide that any provision of this Act or of

any other law shall not apply to matters falling

under the regulations, and that in so far as any of

the provisions of the regulations are inconsistent

with the provisions of this Act or of any other

law, such provisions in any such regulations shall

prevail;

(m) prescribe anything that is to be or

which may be prescribed;

(n) provide for anything that is incidental

to or connected with the matters referred to in

paragraphs (a) to (m).

(2) Regulations made under this article may be

made subject to such exemptions or conditions as may

be specified therein, may make different provisions for

different cases, circumstances or purposes and may

give to the competent authority such powers of

adaptation of the regulations as may also be so

specified.

(3) Regulations made under this article may

impose

(a) administrative penalties which may

not exceed one hundred and fifty thousand euro

(€150,000) for each infringement or failure to

comply, as the case may be;

(b) punishments or other penalties in

respect of any contravention or failure to comply

not exceeding a fine (multa) of four hundred and

sixty-six thousand euro (€466,000) or

imprisonment for a term not exceeding four

years, or both such fine and imprisonment;

(c) administrative penalties higher than

one hundred and fifty thousand euro (€150,000),

and fines higher than four hundred and sixty-six

thousand euro (€466,000), where deemed

necessary or appropriate for any contravention

of, or failure of compliance with, any EU

Directive or EU Regulation or any regulations

made under this article to transpose or to give

effect to any EU Directive or Regulation;

(d) administrative penalties in the form of

a fixed penalty, a daily penalty, or both.

(4) Regulations made under this article may

prescribe administrative penalties and fines as provided

for in sub-article (3)(c), for any breach of any provision

of the Act or of any regulations issued under this article

or for any breach of any Covered Bonds Rules,

transposing and, or implementing any EU Directive or

Regulation.

(5) Where regulations have been issued in terms

of this article, the competent authority may issue

Covered Bonds Rules for the better carrying out, and to

better implement, the provisions of the regulations.

(1) Covered

bond

investors

and

counterparties of derivative contracts that comply with

regulation 8 of the Financial Markets Act (Covered

Bonds) Regulations shall be entitled to the following

(a) a claim against the credit institution

issuing the covered bonds;

(b) in the case of the insolvency or

resolution of the credit institution issuing the

covered bonds, a privileged claim against the

principal and any accrued and future interest on

cover assets;

(c) in the case of the insolvency of the

credit institution issuing the covered bonds and in

the event that the privileged claim referred to in

paragraph (b) cannot be fully satisfied, a claim

against the insolvency estate of that credit

institution, which ranks pari passu with the

claims of the credit institution’s ordinary

unsecured creditors determined in accordance

with the applicable laws in force in Malta at the

time governing the ranking in normal insolvency

proceedings

Provided that the claims referred to in this sub-

article shall be limited to the full payment obligations

attached to the covered bonds.

(2) Credit institutions issuing covered bonds shall

ensure that covered bond investors and counterparties

of derivative contracts that comply with regulation 8 of

the Financial Markets Act (Covered Bonds)

Regulations, are entitled to the claims referred to in

sub-article (1), subject to the conditions laid down in

regulation 68(7) of the Recovery and Resolution

Regulations.

(3) Without prejudice to sub-article (4), the

Minister, acting on the advice of the competent

authority, may make, amend or revoke regulations to

give effect to the provisions of sub-articles (1) and (2).

(4) The competent authority may issue Covered

Bonds Rules for the better implementation of sub-

articles (1) and (2).".

Sub-article (1) of article 32 of the principal Act shall be

6. amended as follows

(a) in paragraph (ii) thereof, for the words "thereunder;

or" there shall be substituted the words "thereunder;";

(b) in paragraph (vi) thereof, for the words "controlled

by them; and, or" there shall be substituted the words "controlled

by them;"; and

(c) immediately after paragraph (vi) there shall be added

the following new paragraph

"(via) any credit institution issuing covered bonds,

which is licensed in terms of the Banking Act, or any Cap. 371.

person who is or was an officer, employee or agent of such

a credit institution or any person that controls such a credit

institution; and, or".

In article 34A of the principal Act, for the words "or Capital Amendment of

7. Markets Rules issued thereunder," there shall be substituted the words article

the principal

"or Financial Market Rules, Capital Markets Rules or Covered Bonds Act.

Rules issued thereunder,".

In article 35 of the principal Act, for the words "regulated Amendment of

8. market", wherever they occur in this article, there shall be substituted article

principal Act.

the words "trading venue", for the words "the competent authority, the

competent authority," there shall be substituted the words "the

competent authority," and for the words "or Capital Markets Rules

made thereunder," there shall be substituted the words "or Financial

Market Rules, Capital Markets Rules or Covered Bonds Rules made

In article 36 of the principal Act, for the words "regulated Amendment of

9. article 36 of the

market" there shall be substituted the words "trading venue".

principal Act.

10. Immediately after article 37D of the principal Act there shall Addition of

article 37E to

be added the following new article

the principal

Act.

(1) The competent authority shall cooperate

closely with the authorities performing the general

supervision of credit institutions in accordance with

relevant European Union law applicable to those

institutions and, in the event of the resolution of a

credit institution issuing covered bonds, with the

Resolution Committee or the relevant European

resolution authority, as applicable.

(2) The competent authority shall cooperate

closely with authorities in other Member States

responsible for covered bond public supervision in

terms of Article 18(2) of the CBD, including by

providing the said authorities with any information

which is relevant for the exercise of their supervisory

tasks under the provisions of their national law

transposing the CBD.

(3) For the purposes of sub-article (2), the

competent authority shall communicate

(a) all relevant information at the request

of an authority in another Member State

responsible for covered bond public supervision

in terms of Article 18(2) of the CBD; and

(b) on its own initiative, any essential

information to authorities in other Member States

responsible for covered bond public supervision

in terms of Article 18(2) of the CBD.

(4) The competent authority shall cooperate with

the EBA or, where relevant, the ESMA, for the

purposes of the CBD.

(5) In the event of the resolution of a credit

institution issuing covered bonds, the competent

authority shall cooperate with the Resolution

Committee or the relevant European resolution

authority, as applicable, in order to ensure that the

rights and interests of the covered bonds investors are

p r e s e r v e d , i n c l u d i n g a t l e a s t b y v e r i f y i n g t he

continuous and sound management of the covered bond

programme during the period of the resolution process.

(6) By 8th July 2024, the competent authority

shall transmit to the European Commission information

on the following

(a) developments regarding the number

of approvals to issue covered bonds;

(b) developments regarding the number

of covered bonds issued in compliance with Part

IV bis and any regulations and Covered Bonds

Rules issued thereunder and in accordance with

Article 129 of the CRR;

(c) developments regarding the assets

collateralising the issue of covered bonds;

(d) developments regarding the level of

overcollateralisation;

(e) cross-border investments in covered

bonds, including inward investment from, and

outward investment to, third-countries;

(f) developments regarding the issue of

covered bonds with extendable maturity

structures;

(g) developments regarding the risks and

benefits of the use of exposures as referred to in

Article 129(1) of the CRR;

(h)

the functioning of covered bond

markets.

(7) For the purposes of this article, information

shall be regarded as essential if it could materially

influence the assessment of the issue of covered bonds

in another Member State.".

Article 38 of the principal Act shall be amended as follows

11. Amendment of

article 38 of the

principal Act.

(a)

in sub-article (1) thereof

(i) for the words "Regulated markets, central

securities depositories," there shall be substituted the

words "Trading venues, central securities depositories,

credit institutions issuing covered bonds,"; and

(ii) in paragraph (a) thereof, for the words

"regulated market or to dealings therewith or therein,"

there shall be substituted the words "trading venue or to

dealings therewith or therein, or to the issue of covered

bonds or to dealings thereof,"; and

(b) in sub-article (2) thereof, for the words "regulated

markets," there shall be substituted the words "trading venues,

credit institutions issuing covered bonds,".

Article 39 of the principal Act shall be amended as follows

12. Amendment of

article 39 of the

principal Act.

(a)

in sub-article (1) thereof

(i) in paragraph (a) thereof, for the words "Listing

Rule," there shall be substituted the words "Capital

Markets Rule, Covered Bonds Rule,"; and

(ii) in paragraph (b) thereof, for the words "Listing

Rule" there shall be substituted the words "Capital Markets

Rule, Covered Bonds Rule";

(b) in paragraph (a) of sub-article (2) thereof, for the

words "Listing Rule," there shall be substituted the words

"Capital Markets Rule, Covered Bonds Rule,"; and

(c) in paragraph (a) of sub-article (3) thereof, for the

words "Listing Rule," there shall be substituted the words

"Capital Markets Rule, Covered Bonds Rule,".

13. Immediately after article 39C of the principal Act there shall

be added the following new article

(1) Without prejudice to the powers of the

penalties and other

competent authority under this Act or any other law,

where the competent authority is satisfied that a

person’s conduct amounts to a breach of any of the

provisions of Part IV bis or any regulations or Covered

Bonds Rules issued thereunder, or that a person has

contravened or failed to comply with any condition,

obligation, requirement or directives made or given by

the competent authority under any of the provisions of

this Act or any regulations or Covered Bonds Rules

issued thereunder, including failure to co-operate in an

investigation, the competent authority may, by notice

in writing and without recourse to a court hearing,

impose on such person an administrative penalty which

may not exceed one hundred and fifty thousand euro

(€150,000) for each breach or failure to comply, as the

case may be and, or any other administrative measure,

as it may deem necessary.

(2) Without prejudice to the generality of sub-

article (1), the competent authority may impose

administrative penalties and other administrative

measures in at least the following circumstances

(a) a credit institution has acquired an

approval for a covered bond programme by

means of false statements or other irregular

means;

(b) a credit institution no longer fulfils

the conditions under which approval for a

covered bond programme was granted;

(c) a credit institution issues covered

bonds without obtaining the approval of the

competent authority in accordance with articles

31D and 31E;

(d) a credit institution issuing covered

bonds fails to meet the requirements set out in

article 31I and in regulation 108(1) of the

Recovery and Resolution Regulations;

(e) a credit institution issues covered

bonds that do not comply with article 31I and

with regulation 68(7) of the Recovery and

Resolution Regulations;

(f) a credit institution issues covered

bonds that are not collateralised in accordance

with regulation 3 of the Financial Markets Act

(Covered Bonds) Regulations;

L.N. 59 of 2023.

(g) a credit institution issues covered

bonds that are collateralised by assets located

outside the European Union in breach of

regulation 4 of the Financial Markets Act

(Covered Bonds) Regulations;

L.N. 59 of 2023.

(h) a credit institution collateralises

covered bonds in an intragroup pooled covered

bond structure in breach of regulation 5 of the

Financial Markets Act (Covered Bonds)

L.N. 59 of 2023.

Regulations;

(i) a credit institution issuing covered

bonds fails to fulfil the conditions for joint

funding laid down in regulation 6 of the Financial

Markets Act (Covered Bonds) Regulations;

L.N. 59 of 2023.

(j)

a credit institution issuing covered

bonds fails to meet the requirements of

composition of the cover pool laid down in

regulation 7 of the Financial Markets Act

(Covered Bonds) Regulations;

L.N. 59 of 2023.

(k) a credit institution issuing covered

bonds fails to meet the requirements regarding

derivative contracts in the cover pool laid down

in regulation 8 of the Financial Markets Act

(Covered Bonds) Regulations;

L.N. 59 of 2023.

(l) a credit institution issuing covered

bonds fails to comply with the requirements of

the segregation of cover assets in accordance

with regulation 9 of the Financial Markets Act

(Covered Bonds) Regulations;

L.N. 59 of 2023.

(m) a credit institution issuing covered

bonds fails to report information or provides

incomplete or inaccurate information in breach of

regulation 11 of the Financial Markets Act

(Covered Bonds) Regulations;

(n) a credit institution issuing covered

bonds repeatedly or persistently fails to maintain

a cover pool liquidity buffer in breach of

regulation 13 of the Financial Markets Act

(Covered Bonds) Regulations;

(o) a credit institution that issues covered

bonds with extendable maturity structures fails to

fulfil the conditions for extendable maturity

structures laid down in regulation 14 of the

Financial Markets Act (Covered Bonds)

Regulations;

(p) a credit institution issuing covered

bonds fails to report information or provides

incomplete or inaccurate information on its

obligations in breach of the requirements on

reporting set out in regulation 15(3) of the

Financial Markets Act (Covered Bonds)

Regulations;

(q) where it has been determined that a

credit institution issuing covered bonds has

committed a serious, repeated or systematic

breach, or a combination thereof, of the

Prevention of Money Laundering Act, of any

regulations made thereunder or of any procedures

or guidance issued in terms of any such

regulations; and, or

(r) a credit institution issuing covered

bonds fails to cooperate with the competent

authority.

(3) Without prejudice to the generality of sub-

article (1), the administrative measures referred to

therein shall include at least the following

(a) a withdrawal of an approval for a

covered bond programme;

(b) a public statement which indicates the

identity of the natural or legal person and the

nature of the breach in accordance with article

39GA;

(c) an order requiring the natural or legal

person to cease the conduct and to desist from a

repetition of that conduct; and, or

(d)

a directive issued in terms of article

(4) Any administrative penalties and other

administrative measures imposed by the competent

authority in terms of this article shall be effective,

proportionate and dissuasive.

(5) The competent authority shall ensure that any

administrative penalties and other administrative

measures imposed by it in terms of this article are

effectively implemented.

(6) When determining the type of administrative

penalties or other administrative measures and the

amount of administrative penalties to be imposed, the

competent authority shall take into account the

following circumstances, where relevant

(a)

the gravity and the duration of the

breach;

(b) the degree of responsibility of the

natural or legal person responsible for the breach;

(c) the financial strength of the natural or

legal person responsible for the breach, including

by reference to the total turnover of the legal

person or the annual income of the natural

person;

(d) the importance of profits gained or

losses avoided because of the breach by the

natural or legal person responsible for the breach,

insofar as those profits or losses can be

determined;

(e) the losses caused to third parties by

the breach, insofar as those losses can be

determined;

(f) the level of cooperation by the natural

or legal person responsible for the breach with

the competent authority;

(g) any previous breaches by the natural

or legal person responsible for the breach;

(h) any actual or potential systemic

consequences of the breach.

(7) Without prejudice to sub-article (1), where the

provisions of Part IV bis, or any regulations or Covered

Bonds Rules issued thereunder, apply to legal persons,

the administrative penalties and other administrative

measures referred to in this article may also be imposed

by the competent authority on members of the board of

directors of any such legal person and on other

individuals who under national law are responsible for

the breach.

(8) Administrative penalties that may be imposed

by the competent authority under this article, may be

imposed in the form of a fixed penalty, a daily penalty,

or both.

(9) The imposition by the competent authority of

an administrative penalty in terms of this article shall

be without prejudice to any other consequences of the

act or omission of the offender under civil or criminal

law

Provided that in all cases where the competent

authority imposes an administrative penalty in respect

of anything done or omitted to be done by any person

and such act or omission also constitutes a criminal

offence, no proceedings may be taken or continued

against the said person in respect of such criminal

offence.".

14. In article 39D of the principal Act, for the words "under

national law." there shall be substituted the words "under national

law:", and immediately after there shall be added the following new

"Provided that this article shall not apply to breaches of any

of the provisions of Part IV bis or any regulations or Covered

Bonds Rules issued thereunder.".

15. In paragraph (i) of article 39E of the principal Act, for the Amendment of

words "its repetition." there shall be substituted the words "its article

the principal

repetition:", and immediately after there shall be added the following Act.

"Provided that this article shall not apply to

administrative

penalties

and

administrative

measures imposed in terms of article 39CA.".

16. Immediately after article 39F of the principal Act, there shall Addition of

article 39FA to

be added the following new article

the principal

Act.

39FA. (1) If the competent authority proposes to

impose an administrative penalty or any other

administrative measure on any person in terms of

article 39CA, it shall give such person a notice in

writing of its intention to do so, setting out the reasons

for the decision it proposes to take and specifying a

period, being a period of not less than forty-eight (48)

hours and not longer than thirty (30) calendar days, in

which the recipient of the notice may make

representations in writing to the competent authority

giving reasons why the proposed decision should not

be taken, and the competent authority shall consider

any representation so made before arriving at a final

decision

Provided that the competent authority shall not

be required to notify its intention to impose an

administrative measure which is not an administrative

penalty where urgent action is necessary to prevent

significant losses to third parties or significant damage

to the financial system

Provided further that, where the competent

authority does not notify its intention to impose an

administrative measure in terms of this sub-article, the

person concerned shall, as soon as possible after the

adoption of the administrative measure, be given the

opportunity to make representations in writing to the

competent authority giving reasons why the decision

should not have been taken, and where necessary, that

measure shall be revised.

(2) The competent authority shall as soon as

practicable notify its decision in writing to any person

on whom an administrative penalty or an

administrative measure has been imposed in terms of

article 39CA. Any such decision shall be reasoned.".

17. Immediately after sub-article (6) of article 39G of the

principal Act, there shall be added the following new sub-article

"(7) This article shall not apply to administrative penalties

and administrative measures imposed in terms of article 39CA.".

18. Immediately after article 39G of the principal Act, there shall

be added the following new article

39GA. (1) The competent authority shall publish

any decision imposing an administrative penalty or any

other administrative measure in terms of article 39CA

on its official website without undue delay after the

person on whom the administrative penalty or

administrative measure was imposed has been

informed of that decision as well as of its publication

on the official website of the competent authority.

(2) The information published pursuant to sub-

article (1) shall include information on the type and

nature of the breach and the identity of the natural or

legal person on whom the administrative penalty or

administrative measure is imposed.

(3) Notwithstanding the provisions of sub-articles

(1) and (2), any decision imposing an administrative

penalty or any other administrative measure in terms of

article 39CA shall, in any of the following

circumstances, be published on an anonymous basis

and in accordance with Maltese law

(a) where the administrative penalty or

administrative measure is imposed on a natural

person and the publication of personal data is

found to be disproportionate;

(b) where

the

publication

would

jeopardise the stability of financial markets or an

ongoing criminal investigation;

(c) where publication would cause,

insofar as it can be determined, disproportionate

damage to the credit institutions or natural

persons involved

Provided that in such cases the publication of

the relevant data may be postponed.

(4) Where the decision to impose an

administrative penalty or any other administrative

measure is subject to appeal before a national judicial,

administrative or other authority, the competent

authority shall, without undue delay, also publish on its

official website information on the status of the appeal

and on the outcome thereof. Any decision annulling a

decision of the competent authority to impose an

administrative penalty or any other administrative

measure shall also be published.

(5) Any decision that is published in accordance

with this article shall remain on the official website of

the competent authority for a period of at least five (5)

years from the date of its publication

Provided that personal data contained in any

such decision shall only be retained on the official

website of the competent authority for the period which

is necessary in accordance with the applicable data

protection legislation. Such a retention period shall be

determined taking into account the limitation periods

provided for under Maltese law, but shall in no case be

longer than ten (10) years.

(6) The competent authority shall inform the EBA

of any administrative penalties and other

administrative measures imposed in terms of article

39CA, including, where relevant, any appeal in relation

thereto and the outcome thereof.

(7) The competent authority shall, from time to

time, contact the Office of the Attorney General and

the Commissioner of Police and seek information about

any criminal punishments that may have been imposed

for any breaches of any provisions of Part IV bis or any

regulations or Covered Bonds Rules issued thereunder.

The Commissioner of Police and, or, the Office of the

Attorney General, as applicable, shall cooperate and

shall provide their reply to the competent authority in a

timely manner, thereby providing any information and

details of the final judgement as necessary and shall,

where relevant, send the competent authority a copy of

the final judgement in relation to any such criminal

punishments imposed. The competent authority shall

submit said information and details and, where

relevant, any such copies of final judgements, to the

EBA.

(8) The provisions of this article shall apply

notwithstanding the provisions of article 41A.".

19. In the second proviso to sub-article (1) of article 39H of the

principal Act, for the words "any regulations or Capital Markets Rules

issued thereunder" there shall be substituted the words "any

regulations or Capital Markets Rules or Covered Bonds Rules issued

20. In the second proviso to sub-article (1) of article 39I of the

principal Act, for the words "any regulation or Capital Markets Rules

issued thereunder" there shall be substituted the words "any

regulations or Capital Markets Rules or Covered Bonds Rules issued

Immediately after article 39K of the principal Act, there shall

21. be added the following new article

(1) In the event of the insolvency or

resolution of a credit institution issuing covered bonds,

which is licensed in terms of the Banking Act, or when

such credit institution has been determined to be failing

or likely to fail pursuant to regulation 32(1) of the

R e c o v e r y a n d R e s o l u t i o n R e g u l a t i o n s o r, i n

exceptional circumstances, where the competent

authority determines that the proper functioning of that

credit institution is seriously at risk, the competent

authority may appoint a special administrator to ensure

that the rights and interests of the covered bonds

investors are preserved, including at least by verifying

the continuous and sound management of the covered

bond programme during the period of the resolution

process

Provided that, without prejudice to any other

powers conferred on the competent authority under this

Act or any other applicable law, the competent authority

shall have the power to order the credit institution to pay

the remuneration due to the special administrator,

including all expenses that may have been incurred by

such special administrator.

(2) The competent authority shall issue Covered

Bonds Rules laying down the tasks and responsibilities

of the special administrator at least in relation to

(a) the discharge of

the

liabilities

attached to the covered bonds;

(b) the management and realisation of

cover assets, including their transfer together

with covered bond liabilities to another credit

institution issuing covered bonds;

(c) the legal transactions necessary for

the proper administration of the cover pool, for

the ongoing monitoring of the coverage of

liabilities attached to the covered bonds, for the

initiation of proceedings in order to bring assets

back into the cover pool and for the transferral of

the remaining assets to the insolvency estate of

the credit institution which issued the covered

bonds after all covered bond liabilities have been

discharged

Provided that for the purposes of paragraph

(c), the special administrator shall be allowed to

operate, in the case of the insolvency of the credit

institution issuing the covered bonds, under the

authorisation held by that credit institution, subject to

the same operational requirements.

(3) The competent authority, the special

administrator appointed in terms of sub-article (1) and

the Resolution Committee shall, for the purposes of the

insolvency or resolution process of t he credit

institution issuing covered bonds, coordinate and

exchange information among each other.".

22. In sub-article (1) of article 40 of the principal Act, for the

words "Listing Rule or regulation made or given" there shall be

substituted the words "Capital Markets Rule or Covered Bonds Rule or

regulations made, provided for or given".

Article 42 of the principal Act shall be amended as follows

23. (a)

in sub-article (1) thereof

(i) paragraph (b) thereof shall be substituted by the

following

"(b) to refuse to grant an approval for a

covered bond programme;";

(ii) in paragraph (h) thereof, for the words

"directive; or" there shall be substituted the words

"directive;";

(iii) in paragraph (i) thereof, for the words

"administrative measures." there shall be substituted the

words "administrative measures; or", and immediately

after there shall be added the following new paragraph

"(j) to withdraw an approval for a covered

bond programme,"; and

(b)

in sub-article (2) thereof

(i) in paragraph (a) thereof, for the words "that

application; or" there shall be substituted the words "that

application;"; and

(ii) in paragraph (b) thereof, for the words "of its

submission." there shall be substituted the words "of its

submission; or", and immediately after there shall be added

the following new paragraph

"(c) any application for the approval of a

covered bond programme,".

24. In the proviso to article 43 of the principal Act, for the words Amendment of

"on an authorised regulated market" there shall be substituted the article

principal Act.

words "on an authorised regulated market, or a decision of the

competent authority to withdraw an approval for a covered bond

programme,".

25. In article 46A of the principal Act, for the words "or Capital Amendment of

Markets Rules" there shall be substituted the words "or Capital article

the principal

Markets Rules or Covered Bonds Rules", and the words "For the Act.

purposes of this article, the "Resolution Committee" shall mean the

Resolution Committee appointed by the Resolution Authority in terms

of article 7B(2) of the Malta Financial Services Authority Act." shall

Article 53 of the principal Act shall be deleted.

26. Deletion of

article 53 of the

principal Act.

27. Immediately after article 53 of the principal Act, as deleted, Addition of

article 54 to the

there shall be added the following new article

principal Act.

(1) Covered bonds issued before 8th July

2022 that comply with the requirements laid down in

the relevant provisions of the Investment Services

Rules, as applicable on the date of their issue, shall not

be subject to the requirements set out in article 31D and

in article 31I(2) with respect to the conditions laid

down in regula tion 68(7) of the Recovery and

Resolution Regulations, but may continue to be

referred to as covered bonds in accordance with this

Act until their maturity.

(2) The competent authority shall monitor the

compliance of covered bonds issued before 8th July

2022 with the requirements laid down in the relevant

provisions of the Investment Services Rules, as

applicable on the date of their issue, as well as with the

requirements of Part IV bis and any regulations and

Covered Bonds Rules issued thereunder, insofar as they

are applicable in accordance with sub-article (1).

(3) Sub-articles (1) and (2) shall apply to tap

issues of covered bonds for which the opening of the

International Security Identification Number (ISIN) is

before 8th July 2022 for up to twenty-four (24) months

after that date, provided that those issues comply with

all the following requirements

(a) the maturity date of the covered bond

is before 8th July 2027;

(b) the total issue size of tap issues made

after 8th July 2022 does not exceed twice the

total issue size of the covered bonds outstanding

on that date;

(c) the total issue size of the covered

bond at maturity does not exceed six billion euro

(€6,000,000,000);

(d)

the collateral assets are located in

Malta.".

Passed by the House of Representatives at Sitting No. 97 of the 8th

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€3.06