Activities by Third- Country Firms) Regulations, 2017

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 19,925, 22 ta’ Diċembru, 2017

Taqsima B

L.N. 405 of 2017

Investment Services Act

(Cap. 370)

Investment Services Act (Provision of Investment Services and

Activities by Third- Country Firms) Regulations, 2017

IN EXERCISE of the powers conferred by article 12 of the

Investment Services Act, the Minister responsible for the regulation of

Financial Services, acting on the advice of the Malta Financial

Services Authority, has made the following regulations:-

(1) The title of these regulations is the Investment Citation, scope

Services Act (Provision of Investment Services and Activities by and

commencement.

Third-Country Firms) Regulations, 2017.

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

4(1) paragraphs 3, 10, 11 and 30, and Articles 39 to 43 of MIFID as

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

These regulations shall come into force on the 3 rd January

(3)

2018.

(1)

In these regulations unless the context otherwise Interpretation.

requires

"the Act" means the Investment Services Act;

"ancillary services" means any of the services listed in the

Third Schedule to the Act;

"branch" means a place of business other than the head

office which is a part of an investment firm, which has no legal

personality and which provides investment services and, or

activities and which may also perform ancillary services for

which the investment firm has been authorised; all the places of

business set up in the same Member State or EEA State by an

investment firm with headquarters in another Member State or

EEA State shall be regarded as a single branch;

"Directive 97/9/EC" means Directive 97/9/EC of the

European Parliament and of the Council of 3 March 1997 on

investor-compensation schemes, as amended from time to time;

"investment firm" means any person, other than persons to

whom MiFID does not apply in terms of Article 2 of the said

directive, whose regular occupation or business is the provision

of any one or more core investment services to third parties on a

professional basis;

"MiFID" means Directive 2014/65/EU of the European

Parliament and of the Council of 15 May 2014 on markets in

financial instruments and amending Directive 2002/92/EC and

Directive 2011/61/EU, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder;

"MiFIR" means Regulation (EU) No 600/2014 of the

European Parliament and of the Council of 15 May 2014 on

markets in financial instruments and amending Regulation (EU)

No 648/2012, as may be amended from time to time, and

includes any implementing measures, implementing technical

standards, regulatory technical standards, guidelines and similar

measures that have been or may be issued thereunder;

"overseas regulatory authorities", in relation to third-

country firms, means the national authorities of a third country

which are empowered by law or regulation to supervise third-

country firms;

"professional client" means a client meeting the criteria laid

down in Annex II of MiFID;

"retail client" means a client who is not a professional

client;

"third country" means a country which is not a Member

State or an EEA State;

"third-country firm" means a firm that would have

qualified as a credit institution providing investment services or

performing investment activities, or as an investment firm, if its

head office or registered office were located within the Union

rather than in a third country.

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

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

(1) A third-country firm intending to provide investment

services or perform investment activities in or from Malta, with or

without any ancillary services to retail clients or to professional

clients, within the meaning of Section II of Annex II of MiFID, shall

establish a branch in Malta.

(2)

The branch of a third-country firm intending to provide

investment services or perform investment activities in or from Malta

in accordance with sub-regulation (1) shall be licensed in terms of

article 3 of the Act.

(3) Without prejudice to any provisions of the Act and any

regulations and rules made thereunder, the branch of third-country

firm shall only obtain a licence from the competent authority if the

following conditions are fulfilled

(a) the provision of services for which the third-country

firm requests licensing is subject to authorisation and

supervision in the third country where the firm is established and

the requesting third-country firm is properly authorised, whereby

the overseas regulatory authority pays due regard to any FATF

recommendations in the context of anti-money laundering and

countering the financing of terrorism;

(b) cooperation arrangements, that include provisions

regulating the exchange of information for the purpose of

preserving the integrity of the market and protecting investors,

are in place between the competent authority and the overseas

regulatory authority of the country where the firm is established;

(c)

sufficient initial capital is at free disposal of the

branch;

(d) one or more persons are appointed to be responsible

for the management of the branch and they all comply with the

requirements applicable to the management body prescribed in

Investment Services Rules and, or Conduct of Business Rules, as

applicable, issued by the competent authority in terms of the Act;

(e) the third country where the third-country firm is

established has signed an agreement with Malta which fully

complies with the standards laid down in Article 26 of the OECD

Model Tax Convention on Income and on Capital and ensures an

effective exchange of information in tax matters, including, if

any, multilateral tax agreements;

(f) the firm belongs to an investor-compensation scheme

authorised or recognised in accordance with Directive 97/9/EC.

An application for a licence shall be submitted by the third- Application for

country firm in accordance with article 5 of the Act. Moreover the an

obligation to

third-country firm intending to obtain licensing for the provision of provide

information.

any investment services or the performance of investment activities

with or without any ancillary services in or from Malta through a

branch shall also provide the competent authority with the following

(a) the name of the overseas regulatory authority

responsible for the supervision of the third- country firm in the

third country concerned

Provided that when more than one overseas

regulatory authority is responsible for supervision, the details of

the respective areas of competence shall be provided;

(b) all relevant details of the third-country firm (name,

legal form, registered office and address, members of the

management body, relevant shareholders) and a programme of

operations setting out the investment services and, or activities

as well as the ancillary services to be provided and the

organisational structure of the branch, including a description of

any outsourcing to third parties of essential operating functions;

(c) the name of the persons responsible for the

management of the branch and the relevant documents to

demonstrate compliance with requirements prescribed in the

applicable Investment Services Rules and, or Conduct of

Business Rulebook as applicable, issued by the competent

authority in terms of the Act;

(d) information about the initial capital at free disposal of

the branch.

(1) Without prejudice to article 6 of the Act, the

competent authority shall only grant a licence to the third-country firm

which intends to establish its branch in Malta when it is satisfied that

(a) the conditions prescribed under regulation 3 of these

regulations are fulfilled; and

(b) the branch of the third-country firm will be able to

comply with the provisions referred to in regulation 6.

(2) The provisions of article 6(1)(a)(ii) of the Act, shall not

apply in the licensing of a branch of a third-country firm.

The branch of the third-country firm authorised in

accordance with sub-regulation (1) above, shall comply with the

obligations laid down in Articles 16 to 20, 23, 24, 25 and 27, Article

28(1), and Articles 30, 31 and 32 of MiFID, as transposed in

regulations issued under the Act or in Investment Services Rules or in

Conduct of Business Rules issued by the competent authority in terms

of the Act and in Articles 3 to 26 of the MiFIR and the measures

adopted pursuant thereto.

(1) The branch of the third-country firm shall be subject Supervision by

the competent

to the supervision of the competent authority.

authority.

(2) The competent authority shall not impose any additional

requirements on the organisation and operation of the branch in respect

of the matters covered by MiFID and any branch of a third-country

firm shall not be treated more favourably than European Union firms.

(1) Where a retail client or professional client, Provision of

established or situated in Malta, initiates at its own exclusive initiative services

exclusive

the provision of an investment service or activity by a third-country initiative

client.

firm, the requirement for licensing under regulation 3 shall not apply

to the provision of that service or activity by the third-country firm to

that person including a relationship specifically relating to the

provision of that service or activity.

(2) An initiative by such clients shall not entitle the third-

country firm to market otherwise than through the branch, where one

is required in accordance with Maltese law, new categories of

investment products or investment services to that client.

Without prejudice to article 7 of the Act, the competent Power of

authority may at any time cancel or suspend a licence issued to a third- competent

authority to

country firm where such a firm

cancel or

suspend a

licence.

(a)

does not make use of the licence within 12 months;

(b) expressly renounces the licence or has provided no

investment services or performed no investment activity for the

preceding six months;

(c) has obtained the licence by making false statements

or by any other irregular means;

(d) no longer meets the conditions under which licensing

was granted;

(e) has seriously and systematically infringed the

provisions adopted pursuant to MiFID governing the operating

conditions for investment firms and applicable to third-country

firms.

(1) Where a person falling within the scope of these

regulations fails to comply with any provisions of such regulations or

any rules issued thereunder further implementing such regulations, the

competent authority may, by notice in writing and without recourse to

a court hearing, impose on such person an administrative penalty and

other administrative measures in accordance with the provisions of the

Investment Services Act and Banking Act (MiFID and MiFIR

Administrative Penalties, Measures and Investigatory Powers)

Regulations.

(2) A right of appeal to the Financial Services Tribunal shall lie

from the decisions which the competent authority shall take under

these regulations and the provisions of article 19 of the Act shall apply

mutatis mutandis.

€0.27