Financial Markets Act (Credit Rating Agencies) Regulations, 2010

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 18,690, 21 ta’ Diċembru, 2010

Taqsima

L.N. 530 of 2010

FINANCIAL MARKETS ACT

(CAP. 345)

Financial Markets Act (Credit Rating Agencies) Regulations, 2010

IN exercise of the powers conferred by article 49 of the

Financial Markets Act, the Minister of Finance, the Economy and

Investment acting on the advice of the Malta Financial Services

Authority, has made the following regulations

(1)

The title of these regulations is the Financial Title,

commencement

Markets Act (Credit Rating Agencies) Regulations, 2010.

and scope.

(2) The purpose of these regulations is to implement the

relevant provisions of the EU Regulation on credit rating agencies as

herein defined, and they shall be interpreted and applied accordingly.

(3) These regulations shall be deemed to have come into force

on the 7 th June, 2010.

(1) In these regulations unless the context otherwise Interpretation.

requires

"the Act" means the Financial Markets Act;

"EU Regulation" means Regulation (EC) No 1060/2009 of the

European Parliament and of the Council of the 16 September 2009 on

credit rating agencies, and words and expressions used in these

Regulations shall have the same meaning as is given to them in the

said EU Regulation unless otherwise defined herein; and

"Financial Services Tribunal" means the Tribunal established in

terms of article 21 of the Malta Financial Services Authority Act.

(2) Words and expressions used in these regulations shall have

the same meaning as is assigned to them in the Act unless otherwise

defined herein.

The Malta Financial Services Authority established by the Competent

Malta Financial Services Authority Act shall be the designated authority.

competent authority in Malta for the purposes of implementing the

relevant provisions of the EU Regulation, and any reference in these

regulations to the competent authority shall be deemed and construed

accordingly.

(1)

The competent authority shall exercise all the

functions, obligations and powers and shall satisfy all the

requirements imposed on competent authorities by the EU

Regulation.

(2) Without prejudice to sub-regulation (1), the competent

authority may, for the better implementation of the EU Regulation,

exercise any of the powers assigned to it under the Act in relation to

credit rating agencies, persons involved in credit rating activities,

rated entities and related third parties, third parties to whom the credit

rating agencies have outsourced certain functions or activities, and

persons otherwise related or connected to credit rating agencies or

credit rating activities.

For the better carrying out of the provisions of the EU

Regulation or these regulations, the competent authority may, from

time to time, issue and publish Financial Market Rules which shall be

binding on all credit rating agencies and others as may be specified

therein. Such rules may lay down additional requirements and

conditions in relation to activities of credit rating agencies, the

conduct of their business, their relations to customers, the public and

other parties, their responsibilities to the competent authority,

reporting requirements, financial resources, capital adequacy and

related requirements, and any other matters as the competent

authority may consider appropriate including

(a)

the operation of the EU Regulation or these

regulations;

(b)

any matter relating to the functions, obligations and

powers of the competent authority under the EU Regulation;

and

(c)

any other matter arising in connection with the EU

Regulation or these regulations.

The provisions of the EU Regulation shall apply to credit

rating agencies based in or operating from Malta and such credit

rating agencies shall exercise all the obligations and satisfy all the

requirements imposed on credit rating agencies by the said EU

Regulation.

(1)

Where a credit rating agency submits an

application for certification in terms of article 5 of the EU Regulation

and Malta is the facilitator, the application shall be drawn up in the

English language.

(2) Where a credit rating agency submits an application for

registration in terms of article 15 of the EU Regulation and Malta is

the home member state of that agency, the application shall be drawn

up in the English language.

(1)

An applicant for registration as a credit rating Fees.

agency which has its registered office in Malta in terms of the EU

Regulation shall pay to the competent authority an application fee of

five thousand euro (€5,000).

(2) The fee mentioned in sub-regulation (1) shall be due upon

submission of an application for registration, irrespective of whether

registration is eventually issued or not.

(3) A credit rating agency registered in Malta shall pay to the

competent authority an annual supervisory fee of fifteen thousand

euro (€15,000) for the continuance of that registration. The fee shall

be due to the competent authority on the 1 st January of each year

following registration.

(1)

An auditor of a credit rating agency shall have the Auditor’s duty

duty to report immediately to the competent authority any fact or to report.

decision of which he becomes aware in his capacity as auditor of such

credit rating agency which –

(a)

is likely to lead to a serious qualification or refusal

of the auditor’s report on the accounts of such credit rating

agency; or

(b)

constitutes or is likely to constitute a material

breach of the EU Regulation or other regulatory requirements

applicable to the credit rating agency in or under the Act; or

(c)

gravely impairs the credit rating agency’s ability to

continue as a going concern; or

(d)

relates to any other matter which may be

prescribed.

(2) No duty, including the duty of professional secrecy, to

which an auditor of a credit rating agency may be subject, shall be

regarded as contravened by reason of his communicating in good

faith to the competent authority, whether or not in response to a

request from it, any information or opinion on a matter of which the

auditor has become aware in his capacity as auditor of that credit

rating agency and which is relevant to any functions of the competent

authority under the provisions of the EU Regulation or the Act or is

required to be communicated by virtue of sub-regulation (1).

(1)

Where the competent authority has established that

a credit rating agency has contravened or has failed to comply with

any provisions of the EU Regulation, these regulations and any

Financial Markets Rules issued by the competent authority in terms of

these regulations, it shall proceed to consider the taking of measures

envisaged in articles 20, 24 or 25 of the EU Regulation as necessary

or appropriate in the circumstances.

(2) The competent authority shall disclose to the public any

penalty imposed in terms of sub-regulation (1) unless the competent

authority deems that such disclosure would seriously jeopardise the

financial markets or cause disproportionate damage to the parties

involved.

(1)

Where a credit rating agency contravenes or fails to

comply with any provisions of the EU Regulation, these regulations

and any Financial Markets Rules issued by the competent authority in

terms of these regulations, the competent authority may, by notice in

writing and without recourse to a court hearing, impose on such credit

rating agency an administrative penalty not exceeding ninety-three

thousand and one hundred and seventy-four euro and ninety-four

cents (€ 93,174.94).

(2) The competent authority shall disclose to the public any

penalty imposed in terms of sub-regulation (1), unless the competent

authority deems that such disclosure would seriously jeopardise the

financial markets or cause disproportionate damage to the parties

involved.

(1)

A right of appeal to the Financial Services Tribunal

shall lie from a decision of the competent authority–

(a)

to refuse registration in terms of article 15 of the

EU Regulation;

(b)

to apply the provisions of article 20 of the EU

Regulation, or otherwise take action against a credit rating

agency in terms of paragraphs (a) to (c) of article 24(1) of the

EU Regulation or in terms of paragraphs (a) to (c) of article

25(1) of the EU Regulation in accordance with regulation 10;

(c)

to apply the provisions of regulation 11,

and the provisions of articles 43 and 44 of the Act shall mutatis

mutandis apply to these regulations.

The provisions of article 38 of the Act shall apply mutatis

mutandis to credit rating agencies.

€0.19