Investment Services Act (Exemption) Regulations, 2007

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 18,141, 30 ta’ Ottubru, 2007

L.N. 329 of 2007

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (Exemption) Regulations, 2007

IN exercise of the powers conferred by article 12 of the Investment

Services Act, the Prime Minister and Minister of Finance, acting on the

advice of the Malta Financial Services Authority as the competent

authority for the purposes of the Act, has made the following regulations>

(1) These regulations may be cited as the Investment Services Citation,

commencement and

Act (Exemption) Regulations, 2007.

scope.

(2) These regulations shall come into force on the 1st

November, 2007.

(3) The objective of these regulations is, in part to implement

Article 2 of the Directive, as herein defined, and they shall be interpreted

and applied accordingly.

(1)

In these regulations, unless the context otherwise Interpretation.

requires>

“the Act” means the Investment Services Act<

“the Directive” means Directive 2004#39#EC of the European

Parliament and of the Council of 21 April 2004 on markets in

financial instruments amending Council Directives 85#611#EEC

and 93#6#EEC and Directive 2000#12#EC of the European

Parliament and of the Council and repealing Council Directive

93#22#EEC, as amended from time to time, and includes any

implementing measures that have been or may be issued thereunder<

“European investment firm” means an investment firm as

defined in article 4(1) of the Directive authorised by its European

regulatory authority within the meaning of article 5 of the Directive

or authorised by a European regulatory authority in an EEA State<

“market maker” means a person who holds himself out on

the financial markets on a continuous basis as being willing to

deal on own account by buying and selling instruments against his

or her proprietary capital at prices defined by him or her<

“market operator” shall have the same meaning as that

assigned to it by the Financial Markets Act<

“multilateral trading facility” shall have the same meaning as

that assigned to it by the European Passport Rights for Persons

Operating Multilateral Trading Facilities, Regulations, 2007<

“parent company” shall have the same meaning as that

assigned to it under the Companies Act<

“private company” shall have the same meaning as that

assigned to it by the Companies Act.

(1) The following persons are hereby being exempted for

the purposes of the requirement for a licence for investment services in

terms of article 3 of the Act>

(a)

the Central Bank of Malta<

(b) the competent authority and any person who is appointed

thereby in the course and for the purpose of its regulatory and

supervisory functions<

(c) a liquidator or a curator in bankruptcy acting in the course

of the liquidation or bankruptcy<

(d) a person who deals on own account in terms of paragraph

3 of the First Schedule to the Act, unless such person is a market

maker or deals on own account outside a regulated market or a

multilateral trading facility on an organized, frequent and

systematic basis by providing a system accessible to third parties

in order to engage in dealings with them<

(e) a person, receiving and transmitting orders on behalf of

a client, executing orders on behalf of a client, providing investment

advice or placing instruments without a firm commitment basis,

in terms of paragraphs 1, 2, 6 and 8 of the First Schedule to the

Act, as long as such person does not do any of the following>

(i) receive, directly or indirectly, any remuneration or

other benefit for the service<

(ii) hold himself out as providing an investment

service< or

(iii) solicit members of the public to take such services<

(f) persons which provide investment services exclusively

for their parent companies, for their subsidiaries or for other

subsidiaries of their parent undertakings<

(g) a person operating a scheme or arrangement where the

services provided consist of the execution of orders or the reception

and transmission of orders , in terms of paragraphs 1 and 2 of the

First Schedule to the Act, for its own employees, former employees,

their dependents, or for employees, former employees or their

dependents of companies in the same group, in instruments issued

by the company or other companies in the group and any other

instruments as may be approved by the competent authority<

(h) a person resident outside Malta>

(i) acting as trustee or custodian in terms of paragraph

5 (c) of the First Schedule to the Act, in relation to a collective

investment scheme licensed under the Act and qualifying as

a Professional Investor Fund in terms of the Investment

Services Rules, where the competent authority is satisfied that

such person is of sufficient standing and repute< or

(ii) providing the services of management of

investments and, or investment advice, in terms of paragraphs

4 and, or 6 of the First Schedule to the Act to a collective

investment scheme licensed under the Act and qualifying as

a Professional Investor Fund in terms of the Investment

Services Rules, where the competent authority is satisfied that

such person is of sufficient standing and repute< or

(iii) providing the services of management of

investments and, or investment advice, in terms of paragraphs

4 and, or 6 of the First Schedule to the Act to a collective

investment scheme licensed under the Act and which does

not qualify as a Professional Investor Fund in terms of the

Investment Services Rules, provided that such person is

adequately regulated in its country of residence to the

satisfaction of the competent authority and is considered by

the competent authority to be of sufficient standing and repute<

(i) a person authorised as a credit institution under Directives

2006#48#EC and 2006#49#EC of the European Parliament and of

the Council of the 14 June 2006 relating to the taking up and pursuit

of the business of credit institutions which replace Directive

2000#12#EC of the European Parliament and of the Council of the

20 March 2000 relating to the pursuit and taking up of the business

of credit institutions, or a person licensed under the Financial

Institutions Act, to the extent that the investment service provided

by such person is that of underwriting instruments, and , or placing

instruments on a firm commitment basis or that of arranging for

another person to underwrite instruments and, or to place

instruments on a firm commitment basis, in terms of paragraph 7

of the First Schedule to the Act<

(j) a person authorised as a credit institution under Directives

2006#48#EC and 2006#49#EC of the European Parliament and of

the Council of the 14 June 2006 relating to the taking up and pursuit

of the business of credit institutions which replace Directive

2000#12#EC of the European Parliament and of the Council of the

20 March 2000 relating to the pursuit and taking up of the business

of credit institutions, or a person licensed the Financial Institutions

Act, to the extent that, in the course of the business that the person

is authorised or licenced to carry out, that person is a party to the

purchase and sale of securities to third parties, in a transaction

which involves the sale of securities to be repurchased or the

purchase of securities to be resold, at an agreed future date and

(k) a person, being an individual, who manages investments,

in terms of paragraph 4 of the First Schedule to the Act, in relation

to a portfolio which includes instruments, for his spouse,

descendants and ascendants in the direct line and their relative

spouses, or his brothers and sisters, as long as such portfolio is

owned by the person to whom such services are provided and does

not constitute a collective investment scheme, and as long as the

person providing the service does not do any of the following>

(i) receive, directly or indirectly, any remuneration or

other benefit for the service<

(ii) hold himself out as providing an investment

service< or

(iii) solicit members of the public to take such services<

(l) a person who acts as manager, in terms of paragraph 4

of the First Schedule to the Act, of a portfolio which includes

instruments belonging to him and to no other person, as long as>

(i) such portfolio has not been established for

investment purposes in the interest of other beneficiaries

where such interest is legally enforceable< and

(ii) such portfolio does not constitute a collective

investment scheme<

(m) a person providing an investment service where that

service is provided in an incidental manner in the course of a

professional activity and that activity is regulated by legal or

regulatory provisions or a code of ethics governing the profession

which do not exclude the provision of that service>

Provided that for the purposes of this paragraph, a service

shall be deemed to be provided in an incidental manner in the

course of a professional activity if the person providing such a

service, does not>

(i) receive, directly or indirectly, any remuneration or

other benefit for the service<

(ii) hold himself out as providing an investment

service< or

(iii) solicit members of the public to take such services<

(n) a person whose main business consists of dealing on

own account, in terms of paragraph 3 of the First Schedule to the

Act, in commodities and,or commodity derivatives. This

exemption shall not apply where the person that deals on own

account in commodities and,or commodity derivatives is part of a

group, the main business of which is the provision of other

investment services within the meaning of the Directive or of any

service which a credit institution is authorised to provide under

Directives 2006#48#EC and 2006#49#EC of the European

Parliament and of the Council of the 14 June 2006 relating to the

taking up and pursuit of the business of credit institutions which

replace Directive 2000#12#EC of the European Parliament and of

the Council of the 20 March 2000 relating to the pursuit and taking

up of the business of credit institutions<

(o) a person which provides investment services consisting

exclusively in dealing on own account in terms of paragraph 3 of

the First Schedule to the Act, on markets in financial futures or

options or other derivatives and on cash markets for the sole purpose

of hedging positions on derivatives markets or which deals for the

accounts of other members of those markets or makes prices for

them and which is guaranteed by clearing members of the same

markets, where responsibility for ensuring the performance of

contracts entered into by such a person is assumed by clearing

members of the same markets<

(p) a person dealing on own account in financial instruments

in terms of paragraph 3 of the First Schedule to the Act, or providing

investment services in commodity derivatives or derivative

contracts included in Schedule 2 of the Act to the clients of its

main business, provided this is an ancillary activity to its main

business, when considered on a group basis, and that main business

is not the provision of investment services within the meaning of

the Act or banking services under the Banking Act<

(q) a person who manages and,or operates the business of a

regulated market or which is a regulated market in terms of the

Directive, and who operates a multilateral trading facility in terms

of paragraph 9 of the First Schedule to the Act, subject to the

verification by the competent authority of such person’s compliance

with the requirements of the Directive and with such other

requirements which the competent authority may determine from

time to time<

(r) a person providing investment advice in terms of

paragraph 6 of the First Schedule to the Act, in the course of

providing another professional activity not covered by the Directive

provided that the provision of such advice is not specifically

remunerated<

(s) a person dealing on his own account, in terms of

paragraph 3 of the First Schedule to the Act, as long as he does not

hold himself out as being in the business of buying instruments

with a view to selling them, nor solicits members of the public to

deal with him on the basis of, or consequent to, such representations.

(2) The exemptions laid down in paragraphs (f), (g), (h),(l)

and (q) of these regulations shall not be automatically operative but

their applicability shall be subject to a determination in writing by the

competent authority that the requested exemption applies.

(1) A person resident outside Malta, providing administrative Exemption

recognition.

services to a collective investment scheme licensed under the Act, shall

be exempted from the requirement of recognition in terms of article 9A

of the Act when providing such services to>

(a) a collective investment scheme licensed under the Act

and qualifying as a Professional Investor Fund in terms of the

Investment Services Rules, where the competent authority is

satisfied that such person is of sufficient standing and repute< or

(b) a collective investment scheme licensed under the Act

and which does not qualify as a Professional Investor Fund in terms

of the Investment Services Rules, provided that such person is

adequately regulated in its country of residence to the satisfaction

of the competent authority and is considered by the competent

authority to be of sufficient standing and repute.

(2) The exemptions laid down in this regulation shall not

be automatically operative but their applicability shall be subject to a

determination in writing by the competent authority that the requested

exemption applies.

(1) The following collective investment schemes are hereby Collective

investment scheme

being exempted for the purposes of the requirement for a licence for exemptions.

collective investment schemes in terms of article 4 of the Act>

(a) a scheme involving participants, each of which carries

on a business other than that which constitutes an investment

service and enters into the arrangement for commercial purposes

related to that business<

(b) a scheme which operates according to the principle of

risk spreading or in respect of which the contributions of the

participants and the profits or income out of which payments are

to be made to them are pooled, but only if the general purpose of

the scheme is commercial and not for investment purposes<

(c) a scheme operated by a company for its own employees,

former employees and their dependants, or for employees, former

employees, or their dependants, of companies in the same group,

in instruments issued by the company or other companies in the

group and any other instruments as may be approved by the

competent authority.

(2) The exemptions laid down in this regulation shall not

be automatically operative but their applicability shall be subject to a

determination in writing by the competent authority that the requested

exemption applies.

The Investment Services Act (Exemption) Regulations, 1995,

Repeals L.N. 6 of

1995. are hereby repealed.

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Lm0.16 (€0.37)