Financial Markets Act (Short Selling) Regulations, 2012

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 18,974, 12 ta’ Ottubru, 2012

L.N. 344 of 2012

FINANCIAL MARKETS ACT

(CAP. 345)

Financial Markets Act (Short Selling) Regulations, 2012

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 Citation and

scope.

Markets Act (Short Selling) Regulations, 2012.

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

relevant provisions of the EU Regulation on short selling and certain

aspects of credit default swaps as herein defined, and they shall be

interpreted and applied accordingly.

In these regulations, unless the context otherwise requires

Interpretation.

"the Act" means the Financial Markets Act;

"credit default swaps" means a derivative contract in which one

party pays a fee to another party in return for a payment or other

benefit in the case of a credit event relating to a reference entity and

of any other default, relating to that derivative contract, which has a

similar economic effect;

"EU Regulation" means Regulation (EU) No 236/2012 of the

European Parliament and of the Council of 14 March 2012 on short

selling and certain aspects of credit default swaps, as amended from

time to time;

"Financial Services Tribunal" means the tribunal established in

terms of article 21 of the Malta Financial Services Authority Act; and Cap. 330.

"short selling", in relation to a share or debt instrument, means

any sale of the share or debt instrument which the seller does not own

at the time of entering into the agreement to sell including such a sale

where at the time of entering into the agreement to sell the seller has

borrowed or agreed to borrow the share or debt instrument for

delivery at settlement, not including

(a)

a sale by either party under a repurchase agreement

where one party has agreed to sell the other a security at a

specified price with a commitment from the other party to sell

the security back at a later date at another specified price;

(b)

a transfer of securities under a securities lending

agreement; or

(c)

entry into a futures contract or other derivative

contract where it is agreed to sell securities at a specified price

at a future date.

(2) Words and expressions used in the Act shall, in these

regulations, have the same meaning as is assigned to them in the Act.

The Malta Financial Services Authority, established by the

Malta Financial Services Authority Act, shall be the designated

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 read 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

persons engaged in short selling and, or who trade in credit default

swaps.

For the better carrying out of the provisions of the EU

Regulation and of these regulations, the competent authority may,

from time to time, issue and publish Financial Market Rules which

shall be binding on all persons engaged in short selling, and, or who

trade in credit default swaps and other financial instruments as may

be specified therein. Such rules may lay down additional

requirements and conditions in relation to short selling and trading in

credit default swaps, and any other matters as the competent authority

may consider appropriate including

(a)

the operation of the EU Regulation or of 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 persons Applicability of

engaged in short selling and, or who trade in credit default swaps in the

Regulation to

or from Malta and such persons shall exercise all the obligations and persons

in short selling,

satisfy all the requirements imposed on such persons by the said EU and, or who

trade in credit

Regulation.

default swaps.

Where a person engaged in short selling and, or who trades Administrative

in credit default swaps contravenes or fails to comply with any penalties.

provisions of the EU Regulation, these regulations and any Financial

Markets Rules issued thereunder, the competent authority may, by

notice in writing and without recourse to a court hearing, impose on

such person an administrative penalty not exceeding one hundred and

fifty thousand euro (€150,000).

A right of appeal to the Financial Services Tribunal shall Appeals.

lie from a decision of the competent authority

(a)

to impose a penalty in terms of regulation 7; or

(b)

to apply the provisions of articles 18 to 21 and 23

of the EU Regulation.

€0.18