Over-reliance on Credit Rating Regulations, 2015

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,364, 6 ta’ Jannar, 2015

L.N. 13 of 2015

INVESTMENT SERVICES ACT

(CAP. 370)

FINANCIAL MARKETS ACT

(CAP. 345)

RETIREMENT PENSIONS ACT

(CAP. 514)

Over-reliance on Credit Rating Regulations, 2015

IN exercise of the powers conferred by article 12(1)(k) of the

Investment Services Act, article 49 of the Financial Markets Act and

article 37(1)(l) of the Retirement Pensions Act, the Minister for

Finance, acting on the advice of the Malta Financial Services

Authority, has made the following regulations:-

(1) The title of these regulations is the Over-Reliance on Citation, scope

and

Credit Rating Regulations, 2015.

commencement.

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

1, 2(2) and 3(2) of Directive 2013/14/EU of the European Parliament

and of the Council of 21 May 2013 amending Directive 2003/41/EC

on the activities and supervision of institutions for occupational

retirement provision, Directive 2009/65/EC on the coordination of

laws, regulations and administrative provisions relating to

undertakings for collective investment in transferable securities

(UCITS) and Directive 2011/61/EU on Alternative Investment Funds

Managers in respect of over-reliance on credit ratings.

(3) These regulations shall come into force on 1 January 2015.

In these regulations, unless the context otherwise requires - Interpretation.

''Alternative Investment Fund'' or ''AIF'' means a collective

investment scheme, including subfunds thereof, which raises capital

from a number of investors, with a view to investing it in accordance

with a defined investment policy for the benefit of those investors,

and which does not qualify as a UCITS Scheme in terms of the

UCITS Directive;

"Alternative Investment Fund Manager" or "AIFM" means a

legal person whose regular business is managing one or more AIFs;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act;

"credit rating" shall have the same meaning as that assigned to it

in paragraph (a) of Article 3(1) of the EU Regulation;

"credit rating agencies" shall have the same meaning as that

assigned to it in paragraph (b) of Article 3(1) of the EU Regulation;

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

European Parliament and of the Council of 16 September 2009 on

credit rating agencies;

"Maltese management company" means a management

company licensed by the competent authority with its head office and

registered office situated in Malta and the regular business of which is

the management of UCITS;

"Maltese UCITS" means -

(a) an investment company, a partnership en

commandite or a limited partnership with its registered office

and head office situated in Malta and licensed in terms of the

Investment Services Act;

(b) where the UCITS is constituted as a common fund, a

UCITS domiciled in Malta in terms of the Investment Services

Act (Contractual Funds) Regulations, and licensed in terms of

the Investment Services Act;

(c)

where the UCITS is established as a unit trust, a unit

trust whose proper law is the law of Malta;

"occupational retirement scheme" means an occupational

scheme as defined in article 2 of the Retirement Pensions Act and

licensed by the competent authority in terms of the said Act;

"sole and mechanistic reliance on credit ratings" occurs when an

action or omission is the consequence of any type of rule based on

credit ratings without any discretion;

"UCITS" means undertakings for collective investment in

transferable securities in terms of regulation 3(2) and (3) of the

Investment Services Act (Marketing of UCITS) Regulations. For the

purposes of these regulations, a UCITS shall also include subfunds

thereof.

Taking into account the nature, scale and complexity of the Over-reliance

activities of UCITS, AIFs and occupational retirement schemes, the on

ratings.

competent authority shall

(a) monitor the adequacy of the credit assessment

processes of the Maltese management company or the Maltese

UCITS, AIFMs and occupational retirement schemes;

(b) assess the use of references to credit ratings issued

by credit rating agencies in the investment policies of UCITS,

AIFs and occupational retirement schemes; and

(c)

where appropriate, encourage mitigation of the

impact of such references to credit ratings, with a view to

reducing sole and mechanistic reliance on credit ratings.

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