Regulations, 2007

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

L.N. 333 of 2007

FINANCIAL MARKETS ACT

(CAP. 345)

Regulated Markets (Authorisation Requirements)

Regulations, 2007

IN exercise of the powers conferred by articles 3 and 49 of the

Financial Markets 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) The title of these regulations is the Regulated Markets Title,

commencement and

(Authorisation Requirements) Regulations, 2007.

objective.

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

November, 2007.

(3) The purpose of these regulations is partially to implement

the relevant provisions of Articles 37, 39, 42 and 43 of the Directive

and shall be interpreted and applied accordingly.

(REGULATION 3)

AUTHORISATION REQUIREMENTS

Financial Resources

1. (1) The regulated market must have financial resources sufficient for the

proper performance of its functions.

(2) Without prejudice to the generality of the foregoing, each regulated

market shall satisfy at all times those minimum financial resources requirements and

minimum financial reporting requirements that may be required by the competent

authority from time to time.

Requirements for the management of the regulated market

2. (1) The regulated market must be a fit and proper person to perform its

functions and be of good standing.

(2) The persons who effectively direct the business and the operations of a

regulated market must satisfy the fit and proper criterion, by being of sufficient good

repute and sufficiently experienced as to ensure the sound and prudent management

and operation of the regulated market

Provided that persons who already effectively direct the business and the

operations of a regulated market or a European Regulated Market, may be deemed to

automatically satisfy this requirement.

Organisational requirements

3. (1) The regulated market shall have arrangements to identify clearly and

manage those potential adverse consequences, for the operation of the regulated market

or for its participants, of any conflict of interest between the interest of the regulated

market, its owners or its operator and the sound functioning of the regulated market,

and in particular where such conflicts of interest might prove prejudicial to the

accomplishment of any functions delegated to the regulated market by the competent

authority.

(2) The regulated market must ensure that

(a) all the systems and controls used in the performance of its functions

are adequate and appropriate;

(b) it is adequately equipped to manage the risks to which it is exposed;

(c) it has appropriate arrangements and systems to identify all significant

risks to its operations and it has effective measures to mitigate those risks;

(d) it has proper arrangements for the sound management of the technical

operations of its systems, including the establishment of effective contingency

arrangements to cope with risks of disruptions to these systems;

(e) it has effective arrangements to facilitate the efficient and timely

finalisation of the transactions executed under its systems.

(3) The regulated market shall have transparent and non-discriminatory

bye-laws and procedures to facilitate the efficient and timely finalisation of the

transactions executed under its systems.

Access to a regulated market

4. (1) The regulated market shall establish and maintain transparent and non-

discriminatory bye-laws, based on objective criteria, governing access to or membership

of the regulated market.

(2) Those bye-laws shall specify any obligations for the members or

participants arising from

(a)

the constitution and administration of the regulated market;

(b) requirements relating to transactions on the market;

(c) professional standards imposed on the staff of the investment firms or

credit institutions that are operating on the market;

(d) the conditions established, for members or participants other than

investment services licence holders;

(e) the requirements and procedures for the clearing and settlement of

transactions concluded on the regulated market.

(3) The operator of the regulated market shall communicate to the

Competent Authority, on a regular basis, the list of its members and participants.

Monitoring of compliance with the bye-laws of the regulated market and with

other legal obligations

5. (1) Regulated markets shall

(a) establish and maintain effective arrangements and procedures for the

regular monitoring of the compliance by their members or participants with their

bye-laws; and

(b) monitor the transactions undertaken by their members or participants

under their systems in order to identify breaches of those bye-laws, disorderly

trading conditions or conduct that may involve market abuse.

(2) Operators of the regulated markets shall>

(a) report significant breaches of their bye-laws or disorderly trading

conditions or conduct that may involve market abuse to the competent authority

of the regulated market; and

(b) supply the relevant information without delay to the competent authority

and provide full assistance to the latter in investigating and prosecuting market

abuse occurring on or through the systems of the regulated market.

Promotion and maintenance of standards

(1)

In these regulations, unless the context otherwise Interpretation.

requires>

“the Act” means the Financial Markets Act<

“applicant” means a person who has submitted an application

to the competent authority to become authorised as a regulated

market<

“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 regulated market” means a regulated market as

defined in Article 4(1)(14) of the Directive authorised by its

European regulatory authority within the meaning of Article 36 of

the Directive<

“the Schedule” means the Schedule to these regulations.

(2) Words and expressions which are also used in the Act

shall have the same meaning as in the Act.

(1) The Schedule sets out the authorisation requirements

which must be satisfied by an applicant if it is to qualify as a regulated

market and which must be satisfied by each regulated market on a

continuing and ongoing basis if it is to remain a regulated market.

(1) In considering whether an applicant or a regulated market

satisfies the authorisation requirements applying to it under these

regulations, the competent authority may take into account any other

circumstances that it may deem relevant in each particular case.

(2) An applicant or a regulated market may satisfy

authorisation requirements applying to it under these regulations by

entering into an agreement to the satisfaction of the competent authority

for any functions specified in the said agreement to be performed on its

behalf by another person.

(3) An agreement as referred to in sub-regulation (2),

hereinafter referred to as the “delegation agreement”, shall be made in

writing, and entered into between an applicant or a regulated market, as

the case may be, and the person who is to perform any functions on

behalf of such applicant or a regulated market. Such delegation

agreement shall be executed by duly authorised officials of the governing

body of the respective entities.

(4) Where an applicant or a regulated market enters into

any delegation agreement, any such agreement shall not affect the

responsibility imposed by the Act on such applicant or regulated market

to satisfy authorisation requirements applying to it under these

regulations.

(5) The liability of the regulated market for any breaches

of the authorisation requirements or any other regulations or Financial

Market Rules issued under the Act, shall not be affected or reduced as

a result of the regulated market entering into any delegation agreement.

(6) Any person who, not being a regulated market, is to

perform any specified function in terms of any delegation agreement

shall be confirmed, after due verification, by the applicant or the

regulated market as the case may be, as being a fit and proper person

being able and willing to perform such functions. This confirmation

shall be made by the governing body of the applicant or regulated market,

as the case may be, in the form of a written declaration to that effect

which shall be submitted to the competent authority together with a

duly authenticated true copy of the relevant delegation agreement.

(7) Notwithstanding anything in the foregoing, the regulated

market shall be responsible towards the competent authority for the

supervision of the proper performance of any functions performed by

any person throughout any such period that any delegation agreement

shall remain in force.

The Recognized Investment Exchange (Recognition Repeal of L.N. 3 of

2003. Requirements) Regulations, 2003 are hereby being repealed.

(1) The regulated market must be able and willing to promote and maintain

high standards of integrity and fair dealing in the carrying on of activities by persons in

the course of using the facilities provided by the regulated market.

(2) The regulated market must be able and willing to cooperate, by the

sharing of information or otherwise, with the competent authority, and with any other

authority, body or person having responsibility for the supervision or regulation of any

regulated activity or other financial service, or with an overseas regulator.

(3) For the purposes of the foregoing provision, the regulated market must

have appropriate arrangements with its members enabling it to obtain confidential

information from its members and to disclose such information to the competent

authority and other appropriate bodies and in particular, to assist and collaborate with

the competent authority without delay in response to a specific written request received

from the competent authority in the performance of its functions according to law.

Complaints

(1) The regulated market must have effective arrangements for the

investigation and resolution of complaints arising in connection with the performance

of, or failure to perform, any of its functions

Provided that the foregoing does not extend to complaints about the content

of bye-laws made by the regulated market.

(2) The arrangements must include arrangements for a complaint to be

fairly and impartially investigated by a person independent of the regulated market,

and for him to report on the result of his investigation to the regulated market and to

the complainant.

(3) The arrangements must confer on the person mentioned in subparagraph

(2) the power to recommend, if he thinks it appropriate, that the regulated market

(a)

makes a compensatory payment to the complainant;

(b) remedies the matter complained of, or takes both of those steps.

(4) Subparagraph (b) is not to be construed as preventing the regulated

market from making arrangements for the initial investigation of a complaint to be

conducted by the regulated market.

Default bye-laws in respect of market contracts

(1) The regulated market must have default bye-laws which, in the event of

a member of the regulated market being or appearing to be unable to meet his obligations

in respect of one or more market contracts, enable action to be taken in respect of

unsettled market contracts to which he is a party.

(2) The bye-laws may authorise the taking of the same or similar action in

relation to a member who appears to be likely to become unable to meet his obligations

in respect of one or more market contracts.

(3) The regulated market must have adequate arrangements for ensuring

that parties to the contract are notified as soon as reasonably practicable of the default,

the identity of the other parties to the contract and of any decision taken under the bye-

laws in relation to contracts to which they are a party.

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