Requirements Directive) Regulations, 2021

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 20,757, 24 ta’ Diċembru, 2021

L.N. 495 of 2021

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (Supervisory Consolidation) (Capital

Requirements Directive) Regulations, 2021

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 Title, scope and

Services Act (Supervisory Consolidation) (Capital Requirements commencement.

Directive) Regulations, 2021.

(2) The scope of these regulations is to transpose Articles 2(6),

3 (partly), 20(3), 48(1), 49, 51, 111, 112, 113, 114, 115, 116, 117, 118,

119, 120, 122, 123(1), 124, 127, 151, 155, 156 and 158 of Directive

2013/36/EU.

(3) These regulations shall come into force on such date as the

Minister for Finance and Employment may, by notice in the Gazette

establish and a different date or dates may be so established for

different provisions of these regulations.

(1)

In these regulations, unless the context otherwise Interpretation.

requires -

"the Act" means the Investment Services Act;

"ancillary services undertaking" shall have the same

meaning as that assigned to it in point (18) of Article 4(1) of the

CRR;

"branch" shall have the same meaning as that assigned to it

in point (17) of Article 4(1) of the CRR;

"consolidated basis" shall have the same meaning as that

assigned to it in point (48) of Article 4(1) of the CRR;

"consolidated situation" shall have the same meaning as

that assigned to it in point (47) of Article 4(1) of the CRR;

"the competent authority" means the Malta Financial

Services Authority established by the Malta Financial Services Cap. 330.

Authority Act;

"consolidating supervisor" shall have the same meaning as

that assigned to it in point (41) of Article 4(1) of the CRR;

"CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of

credit institutions, amending Directive 2002/87/EC and

repealing Directives 2006/48/EC and 2006/49/EC;

"CRR" means Regulation (EU) No 575/2013 of the

European Parliament and of the Council of 26 June 2013 on

prudential requirements for credit institutions and amending

Regulation (EU) No 648/2012;

"EBA" means the European Banking Authority as

established by Regulation (EU) No 1093/2010 of the European

Parliament and of the Council of 24th November 2010

establishing a European Supervisory Authority;

"EEA" means a State which is a contracting party to the

Agreement on the European Economic Area signed at Oporto on

the 2nd May, 1992 as amended by the protocol signed at Brussels

on 17th March, 1993 and as amended by any subsequent Act;

"EIOPA" means the European Insurance and Occupational

Pensions Authority as established by Regulation (EU) No. 1093/

2010 of the European Parliament and of the Council of 24th

November 2010 establishing a European Supervisory Authority;

"ESCB central banks" shall have the same meaning as that

assigned to it in point (45) of Article 4(1) of the CRR;

"ESRB" means the European Systemic Risk Board

established by Regulation (EU) No 1092/2010;

"EU investment firm" means a firm as defined in Article

4(1)(2) of the CRR, authorised by its European regulatory

authority within the meaning of Article 5 of the MiFID Directive

or authorised by a European regulatory authority in an EEA

State;

"EU parent financial holding company" shall have the same

meaning as that assigned to it in point (31) of Article 4(1) of the

CRR;

"EU parent institution" shall have the same meaning as that

assigned to it in point (29) of Article 4(1) of the CRR;

"EU parent mixed financial holding company" shall have

the same meaning as that assigned to it in point (33) of Article

4(1) of Article 4(1) of the CRR;

"European regulatory authority" means an authority which

is situated in a country or territory outside Malta that is a

Member State and is empowered by law or regulation to

supervise investment firms;

"financial holding company" shall have the same meaning

as that assigned to it in point (20) of Article 4(1) of the CRR;

"financial institution" shall have the same meaning as that

assigned to it in point (26) of Article 4(1) of the CRR

Provided that the entities referred to in point (1) and

in points (3) to (23) of Article 2(5) of the CRD shall be treated as

financial institutions;

"home Member State" shall have the same meaning as that

assigned to it in point (43) of Article 4(1) of the CRR;

"host Member State" shall have the same meaning as that

assigned to it in point (44) of Article 4(1) of the CRR;

"insurance undertaking" shall have the same meaning as

that assigned to it in point (5) of Article 4(1) of the CRR;

"investment firm" means a person who holds an investment

services licence issued by the competent authority under the Act

and which is subject to the requirements of the CRD and CRR;

"Member State" includes an EU and EEA State;

"mixed activity holding company" shall have the same

meaning as that assigned to it in point (22) of Article 4(1) of the

CRR;

"mixed financial holding company" shall have the same

meaning as that assigned to it in point (21) of Article 4(1) of the

CRR;

"parent financial holding company in a Member State"

shall have the same meaning as that assigned to it in point (30) of

Article 4(1) of the CRR;

''parent institution in Malta" means an institution in Malta

which has an institution or a financial institution as a subsidiary

or which holds a participation in such an institution or financial

institution, and which is not itself a subsidiary of another

institution authorised in Malta, or of a financial holding

company or mixed financial holding company set up in Malta;

"parent mixed financial holding company in a Member

State" shall have the same meaning as that assigned to it in point

(32) of Article 4(1) of the CRR;

"parent undertaking" shall have the same meaning as that

assigned to it in point (15) of Article 4(1) of the CRR;

"participation" shall have the same meaning as that

assigned to it in point (35) of Article 4(1) of the CRR;

"Rules" means Rules for investment firms issued by the

competent authority in terms of the Act;

"sub-consolidation basis" shall have the same meaning as

that assigned to it in point (49) of Article 4(1) of the CRR;

"subsidiary" shall have the same meaning as that assigned

to it in point (16) of Article 4(1) of the CRR;

"third country" means a country that is not a Member State;

"third country regulatory authority" means an authority

which is in a country or territory that is not a Member State and

is empowered by law or regulation to supervise investment

firms.

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

have the same meaning as that assigned to it in the Act.

Part I - Consolidated Supervision

(1) The competent authority shall exercise supervision on a

consolidated basis

(a) where the parent undertaking is a parent institution in

Malta or an EU parent institution, licensed in terms of the Act;

(b) where the parent of an investment firm licensed in

terms of the Act is a parent financial holding company or parent

mixed financial holding company in a Member State or an EU

parent financial holding company or EU parent mixed financial

holding company;

(c) where investment firms authorised in two or more

Member States, and one of the investment firms is an investment

firm licensed in terms of the Act, have as their parent the same

parent financial holding company, the same parent mixed

financial holding company in a Member State, the same EU

parent financial holding company or the same EU parent mixed

financial holding company established in Malta;

(d) where the parent financial holding company or parent

mixed financial holding company is established in a Member

State other than Malta and it has more than one investment firm

authorised in the European Union other than the Member State

where the financial holding company is set up, one of which is

licensed in Malta, and the investment firm licensed in Malta has

the largest balance sheet total. That investment firm shall be

considered to be controlled by an EU parent financial holding

company or an EU parent mixed financial holding company.

(2) In particular cases, the competent authority may, by

common agreement with other European regulatory authorities, waive

the criteria referred to in sub-regulation (1)(c) and (e) if their

application would be inappropriate, taking into account the investment

firms and the relative importance of their activities in different

countries, and appoint a European regulatory authority to exercise

supervision on a consolidated basis. In these cases, before taking its

decision, the competent authority shall give the EU parent institution,

EU parent financial holding company, EU parent mixed financial

holding company or the institution with the largest balance sheet total,

as appropriate, an opportunity to state its opinion on that decision. The

competent authority shall notify the Commission and the EBA of any

such agreement.

(1) In addition to the obligations imposed by the Functions of the

provisions of the Act and any regulations or Rules made thereunder competent

authority with

transposing the requirements of the CRD, and by the CRR, the respect

supervision on a

competent authority acting as consolidating supervisor, shall carry out consolidated

basis.

the following tasks

(a) co-ordination of the gathering and dissemination of

relevant or essential information in going concern and

emergency situations;

(b) planning and co-ordination of supervisory activities

in going concern situations, including in relation to the activities

relating to supervision on a consolidated basis in co-operation

with the European regulatory authorities; and

(c) planning and co-ordination of supervisory activities

in co-operation with the European regulatory authorities

involved, and if necessary with ESCB central banks, in

preparation for and during emergency situations, including

adverse developments in investment firms or in financial

markets using, where possible, existing channels of

communication for facilitating crisis management. These include

exceptional measures referred to in regulation 9(3)(e), the

preparation of joint assessments, the implementation of

contingency plans and communication to the public.

(2) Where European regulatory authorities do not co-operate

with the competent authority, to the extent required in carrying out the

tasks in this regulation, the competent authority may refer the matter to

the EBA and request its assistance under Article 19 of Regulation (EU)

No 1093/2010.

(3) Where the competent authority does not act as

consolidating supervisor and either the consolidating supervisor fails

to carry out the tasks referred to in Article 112(1) of the CRD or any

European regulatory authority does not co-operate with the

consolidating supervisor to the extent required in carrying out the tasks

in Article 112(1) of the CRD, it may refer the matter to the EBA and

request its assistance under Article 19 of Regulation (EU) No 1093/

2010.

(1) Where an emergency situation, including a situation

as described in Article 18 of Regulation (EU) No 1093/2010 or a

situation of adverse developments in markets arises, which potentially

jeopardises the market liquidity and the stability of the financial

system in any of the Member States where entities of a group have

been authorised or where significant branches as referred to in

regulation 14 are established and where the competent authority is the

consolidating supervisor, it shall, subject to confidentiality

requirements in the Malta Financial Services Authority Act and any

other applicable law, alert as soon as is practicable the EBA and the

authorities referred to in Articles 58(4) and 59 of the CRD and it shall

communicate to the said authorities all the information that is essential

for the pursuance of their tasks.

(2) To the extent possible, the competent authority shall use

existing channels of communication with ESCB central banks.

(3) Where the competent authority is the consolidating

supervisor, it shall, when it needs information which has already been

given to a European regulatory authority, contact this authority,

whenever possible, in order to prevent duplication of reporting to the

various authorities involved in supervision.

(1) Where the competent authority is the consolidating Written co-

supervisor, it shall have written co-ordination and co-operation ordination

co-operation

arrangements in place with European regulatory authorities agreements

European

responsible for supervising the other members of the group.

regulatory

authorities.

(2) Under the arrangements made pursuant to sub-regulation

(1), additional tasks may be entrusted to the competent authority as

consolidating supervisor and procedures for the decision-making

process and for co-operation with other European regulatory

authorities may be specified.

(3) Where the competent authority is responsible for the

licensing of the subsidiary of a parent undertaking which is an

investment firm, it may, by bilateral agreement in accordance with

Article 28 of Regulation (EU) No 1093/2010, delegate its

responsibility for supervision of such subsidiary to the European

regulatory authority which authorised and supervises the parent

undertaking so that the latter assume responsibility for supervising the

subsidiary in accordance with the CRD. The competent authority shall

forward the content of such agreements to the EBA.

(1) Where the competent authority is the consolidating Establishment

supervisor, it shall establish colleges of supervisors to facilitate the of

of supervisors

exercise of the tasks referred to in regulation 4, regulation 5(1) and (2) by

consolidating

and regulation 8, and it shall also, subject to the confidentiality supervisor.

requirements of sub-regulation (3) and compatibility with European

Union law, ensure appropriate co-ordination and co-operation with

third country regulatory authorities where appropriate.

(2) When forming part of a college of supervisors, the

competent authority shall contribute towards the provision of a

framework for the consolidating supervisor, EBA and other European

regulatory authorities or third country regulatory authorities forming

part of that college, to carry out the following tasks

(a) exchange information with European regulatory

authorities and third country regulatory authorities forming part

of that college and with EBA in accordance with Article 21 of

Regulation (EU) No 1093/2010;

(b) agreeing on voluntary entrustment of tasks and

voluntary delegation of responsibilities where appropriate;

(c) determining supervisory examination programmes

referred to in Article 99 of the CRD based on a risk assessment

of the group in accordance with Article 97 of the CRD;

(d) increasing the efficiency of supervision by removing

unnecessary duplication of supervisory requirements, including

in relation to the information requests referred to in Article 114

and Article 117(3) of the CRD;

(e) consistently applying the prudential requirements

under the CRD and the CRR across all entities within a group of

investment firms, without prejudice to the options and

discretions available in European Union law; and

(f) applying Article 112(1)(c) of the CRD taking into

account the work of other fora that may be established in that

area.

(3) The competent authority, when forming part of a college of

supervisors, shall co-operate closely with EBA and all the European

regulatory authorities and third country regulatory authorities forming

part of the relevant college of supervisors. The confidentiality

requirements under the Malta Financial Services Authority Act and the

Act shall not prevent the competent authority from exchanging

confidential information within colleges of supervisors. The

establishment and functioning of colleges of supervisors shall not

affect the rights and responsibilities of the competent authority under

the provisions of the Act, and any regulations or Rules made

thereunder transposing the requirements of the CRD, and under the

CRR.

(4) Where the competent authority is the consolidating

supervisor of these regulations, it shall establish and manage the

colleges of supervisors based on written arrangements referred to in

regulation 6, determined after consultation with European regulatory

authorities and third country regulatory authorities concerned.

(5) The competent authority may form part of a college of

supervisors when

(a) it is responsible for the supervision of subsidiaries of

an EU parent institution, an EU parent financial holding

company or an EU parent mixed financial holding company; and

(b) Malta is the host Member State where significant

branches as referred to in regulation 14 are established.

(6) Where the competent authority is the consolidating

supervisor, it shall chair the meetings of the college and shall decide

which European regulatory authorities and third country regulatory

authorities, where relevant, participate in a meeting or in an activity of

the college. The decision shall take into account the relevance of the

supervisory activity to be planned or co-ordinated for those authorities,

and in particular, the potential impact on the stability of the financial

system in the Member States concerned and, in particular, in

emergency situations, based on the information available at the

relevant time and the obligations referred to in regulation 14(6) and

(7).

(7) The competent authority, as consolidating supervisor, shall

keep all members of the college fully informed, in advance, of the

organisation of the meetings of the college, about the main issues to be

discussed and the activities to be considered and shall also keep all the

members of the college fully informed, in a timely manner, of the

actions taken in those meetings or the measures carried out.

(8) The competent authority as consolidating supervisor shall,

subject to the confidentiality requirements of the Malta Financial Cap. 330.

Services Authority Act and the Act, inform the EBA of the activities of

the college of supervisors, including in emergency situations, and

communicate to the EBA all the information that is of particular

relevance for the purposes of supervisory convergence.

(9) In the case of disagreement between the competent

authorities on the functioning of the supervisory colleges, the

competent authority may refer the matter to the EBA and request its

assistance in accordance with Article 19 of Regulation (EU) No 1093/

2010. (10) Without prejudice to the provisions of sub-regulation (6),

when the competent authority is the consolidating supervisor it may

invite the following entities to participate in the college which it shall

chair

(a) the European regulatory authorities responsible for

the supervision of subsidiaries of an EU parent institution, an EU

parent financial holding company or an EU parent mixed

financial holding company;

(b) the European regulatory authorities of a host member

state where significant branches, as referred to in Article 51 of

the CRD, are established;

(c)

ECSB central banks, where appropriate; and

(d) third-country

regulatory

authorities

where

appropriate, subject to confidentiality requirements that are

equivalent, in the opinion of the competent authority and all the

European regulatory authorities concerned, to the requirements

under Chapter 1, Section II of the CRD, and where applicable,

Articles 54 and 53 of the MiFID Directive.

(1) The competent authority, whether acting as

consolidating supervisor or as a competent authority responsible for

the supervision of subsidiaries of an EU parent institution, an EU

parent financial holding company or EU parent mixed financial

holding company, within a college of supervisors, shall do everything

within its power to reach a joint decision with the other competent

authorities forming part of the said college

(a) on the application of Articles 73 and 97 of the CRD to

determine the adequacy of the consolidated level of own funds

held by the group of investment firms with respect to its financial

situation and risk profile and the required level of own funds for

the application of Article 104(1)(a) of the CRD to each entity

within the group of investment firms and on a consolidated basis;

(b) on measures to address any significant matters and

material findings relating to liquidity supervision including

relating to the adequacy of the organisation and the treatment of

risks as required pursuant to Article 86 of the CRD and relating

to the need for investment firm-specific liquidity requirements in

accordance with Article 105 of the CRD.

(2) For the purposes of the joint decision referred to in sub-

regulations (1), the competent authority as consolidated supervisor

shall submit –

(a) a report containing the risk assessment of the group

of investment firms in accordance with the Act, and any

regulations or Rules made thereunder transposing the

requirements of Articles 73 and 97 and Article 104(1)(a) of the

CRD; and

(b) a report containing the assessment of the liquidity

risk profile of the group of investment firms in accordance with

the Act, and any regulations or Rules made thereunder

transposing the requirements of Articles 86 and 105 of the CRD,

to the other relevant European regulatory authorities.

(2A) The joint decision referred to in sub-regulation (1)(a) shall

be reached within four (4) months after submission of the report

referred to in sub-regulation (2)(a).

(2B) The joint decision referred to in sub-regulation (1)(b) shall

be reached within one (1) month after submission of the report referred

to in sub-regulation (2)(b).

(3) Where the competent authority is the consolidating

supervisor, it shall provide the EU parent institution concerned with

the joint decision referred to in sub-regulation (1), set out in a

document containing full reasons. In the event of disagreement, the

competent authority shall at the request of any of the other European

regulatory authorities concerned consult the EBA. The competent

authority as consolidating supervisor of these regulations may consult

the EBA on its own initiative.

(4) In the absence of such a joint decision between the

competent authorities within the time periods referred to in Article

113(2) of the CRD, a decision on the application of the relevant

provisions of the Act and any regulations or Rules made thereunder

transposing the requirements of Articles 73, 86, 97, 104(1)(a) and 105

of the CRD shall be taken on a consolidated basis by the competent

authority as consolidating supervisor after duly considering the risk

assessment of subsidiaries performed by relevant European regulatory

authorities

Provided that

(a) if at the end of the time periods referred to above any

of the European regulatory authorities concerned have referred

the matter to the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010, the competent authority as

consolidated supervisor shall defer its decision and await any

decision the EBA may take in accordance with Article 19(3) of

the said Regulation, and shall take its decision in conformity

with the decision of the EBA;

(b) where the competent authority is not acting as

consolidated supervisor but is responsible for the supervision of

subsidiaries of an EU parent institution or an EU parent financial

holding company or an EU parent mixed financial holding

company, it may refer the matter to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010. Such referral shall

not be made after the end of the time periods referred to above in

this regulation or after a joint decision has been reached.

(5) Where the competent authority is responsible for the

supervision of a subsidiary of an EU parent credit institution or an EU

parent financial holding company or an EU parent mixed financial

holding company and in the absence of a joint decision in terms of this

regulation, the competent authority shall decide on the application of

the relevant provisions of the Act, and any regulations or Rules made

thereunder transposing the requirements of Articles 73, 86, 97,

104(1)(a) and 105 of the CRD, on an individual or sub-consolidated

basis, after duly considering the views and reservations expressed by

the consolidating supervisor

Provided that if at the end of the time periods referred to in

this regulation any of the European regulatory authorities concerned

have referred the matter to the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010, the competent authority shall defer its

decision and await any decision that the EBA shall take in accordance

with Article 19(3) of the said Regulation, and shall take its decision in

conformity with the decision of the EBA.

(6) The competent authority may, in the event of disagreement,

refer a dispute to the EBA on its own initiative but prior to a joint

decision being made, and provided that no referral shall be made once

the specified time periods have expired.

(7) (a) The joint and separate decisions referred to in this

regulation shall be set out in a document containing the fully reasoned

decisions and shall take into account the risk assessment, views and

reservations of the competent authority or the European regulatory

authorities as applicable, expressed during the time periods referred to

therein.

(b) The competent authority as consolidating supervisor

shall provide these documents to the European regulatory

authorities concerned and to the EU parent institution. Where the

EBA has been consulted the competent authority shall consider

its advice and explain any significant deviation therefrom.

(c) The joint decision referred to in sub-regulation (1)

and the decisions taken by the competent authority or European

regulatory authorities in terms of sub-regulations (4) and (5)

shall be recognised as determinative and shall be applied by the

competent authority in Malta.

(8) The joint and separate decisions referred to in sub-

regulation (1) shall be updated on an annual basis or, in exceptional

circumstances, where the competent authority is responsible for the

supervision of subsidiaries of an EU parent institution or an EU parent

financial company or an EU parent mixed financial holding company,

it may make a written and fully reasoned request to the consolidating

supervisor to update the decision on the application of Articles

104(1)(a) and 105 of the CRD. In the latter case, the update may be

addressed on a bilateral basis between the competent authority and the

consolidating supervisor

Provided that where the competent authority is the

consolidating supervisor, it shall update the decisions at the request of

the European regulatory authorities responsible for the supervision of

subsidiaries of an EU parent institution or an EU parent financial

company or an EU parent mixed financial holding company. The

competent authority may address the update to the European

regulatory authority making the request, on a bilateral basis.

(1) The competent authority shall co-operate closely with Co-operation

European regulatory authorities. Such co-operation shall include the with

authorities.

provision to such authorities of any information which is essential or

relevant for the exercise of their respective supervisory tasks under the

CRD, and the CRR. The competent authority shall communicate on

request all relevant information and shall communicate on its own

initiative all essential information.

(2) The competent authority shall co-operate with the EBA for

the purposes of the CRD and the CRR in accordance with Regulation

(EU) No 1093/2010. Such co-operation shall include the provision to

the EBA of all information necessary to carry out its duties under the

CRD and the CRR and under Regulation (EU) No 1093/2010, in

accordance with Article 35 of Regulation (EU) No 1093/2010.

(3) For the purpose of sub-regulation (1) information shall be

regarded as essential if it could materially influence the assessment of

the financial soundness of an investment firm or a financial institution

in another Member State and shall include, in particular, the following

items

(a) identification of the group’s legal structure and the

governance structure including organisational structure, covering

all regulated entities, non-regulated entities, non-regulated

subsidiaries and significant branches belonging to the group, and

the parent undertakings, in accordance with the relevant

provisions of the Act and any regulations or Rules made

thereunder transposing the requirements of Article 14(3), 74(1)

and 109(2) of the CRD;

(b) identification of the European regulatory authorities

of the regulated entities in the group, as the case may be;

(c) procedures for the collection of information from the

investment firms in a group and the verification of that

information;

(d) adverse developments in investment firms or in other

entities of a group, which could seriously affect the investment

firms; and

(e) significant penalties and exceptional measures taken

by the competent authority in accordance with the CRD,

including the imposition of a specific own fund requirement

under Article 104 of the CRD and the imposition of any

limitation on the use of Advanced Measurement Approach for

the calculation of the own funds requirements under Article

312(2) of the CRR.

(4) Where the competent authority is acting as consolidating

supervisor, it shall provide European regulatory authorities who

supervise subsidiaries of parent undertakings with all relevant

information. In determining the extent of relevant information, the

importance of those subsidiaries within the financial system in those

Member States shall be taken into account.

(5) Where the competent authority is responsible for the

supervision of an investment firm controlled by an EU parent

institution, it shall whenever possible contact the consolidating

supervisor when it needs information regarding the implementation of

approaches and methodologies set out in the CRD and the CRR that

may already be available to that consolidating supervisor.

(6) Where the competent authority intends to decide on

significant penalties or exceptional measures to be imposed by it,

including the imposition of a specific own funds requirement under the

Investment Services Act (Supervisory Review) Regulations, and the

imposition of any limitation on the use of the advanced measurement

approaches for the calculation of the own funds requirements under

Article 312(2) of the CRR, and where any such decision is of

importance for the supervisory tasks of the European regulatory

authorities concerned, the competent authority shall consult with the

said European regulatory authorities before taking any such decision

Provided that where the competent authority intends to

decide on such significant penalties or exceptional measures, it shall

always consult the consolidating supervisor and may decide not to

consult European regulatory authorities in cases of urgency or where

such consultation could jeopardise the effectiveness of its decision. In

such cases, the competent authority shall, without delay, inform the

European regulatory authorities after taking its decision.

(7) The competent authority may refer to the EBA any of the

following situations

(a)

where a European regulatory authority has not

communicated essential information;

(b) where a request for co-operation, in particular to

exchange relevant information, has been rejected or has not been

acted upon within a reasonable time.

(1) The competent authority shall ensure that there are no Exchange of

legal impediments preventing the exchange, between undertakings information.

included within the scope of supervision on a consolidated basis,

mixed-activity holding companies and their subsidiaries, or

subsidiaries of an investment firm, a financial holding company or

mixed financial holding company, which are not included within the

scope of supervision on a consolidated basis, of any information which

would be relevant for the purposes of supervision in accordance with

the relevant provisions of the Act, and any regulations or Rules made

thereunder transposing the requirements of Article 110 and Chapter 3

of the CRD.

(2) Where a subsidiary that is an investment firm licensed in

terms of the Act is not included in supervision on a consolidated basis

under one of the cases provided for in Article 19 of the CRR, the

competent authority may ask the parent undertaking of such

investment firm for information which may facilitate supervision of

that subsidiary.

(3) The competent authority, as consolidating supervisor, may

ask the subsidiaries of an investment firm, a financial holding

company or mixed financial holding company which are not included

within the scope of supervision on a consolidated basis for information

which would be relevant for the purpose of supervising those

subsidiaries. In such a case, the procedures for transmitting and

verifying the information set out in regulation 16 shall apply.

(4) Where a parent undertaking and any of its subsidiaries that

are investment firms are situated in different Member States, the

competent authority shall communicate to the European regulatory

authorities concerned all relevant information which may allow or aid

the exercise of supervision on a consolidated basis.

(5) The competent authority, as consolidating supervisor, may

invite the European regulatory authorities of the parent undertaking to

ask the parent undertaking to provide any information which would be

relevant for the purposes of supervision on a consolidated basis. Such

information shall be transmitted to the competent authority by the

European regulatory authority concerned.

(6) Where a parent undertaking is situated in Malta and the

competent authority does not itself exercise supervision on a

consolidated basis in terms of regulation 3, it shall, upon request by the

European regulatory authority responsible for exercising such

supervision, require the parent undertaking to provide any information

relevant for the purposes of supervision on a consolidated basis and

the competent authority shall transmit such information to the

European regulatory authority making the request.

(7) The competent authority shall exchange the information

referred to in sub-regulation (4) with other European regulatory

authorities, on the understanding that, in the case of financial holding

companies, mixed financial holding companies, financial institutions

or ancillary services undertakings, the collection or possession of

information shall not imply that the competent authority is required to

play a supervisory role in relation to those investment firms or

undertakings standing alone.

(8) The competent authority shall exchange the information

referred to in regulation 19 with the European regulatory authorities

concerned, on the understanding that the collection or possession of

information does not imply that the competent authority plays a

supervisory role in relation to the mixed-activity holding company and

those of its subsidiaries which are not subsidiaries of an investment

firm, a financial holding company or mixed financial holding

company, which are not included within the scope of supervision on a

consolidated basis.

(1) Where an investment firm, financial holding

company, mixed financial holding company or mixed-activity holding

company is situated in Malta and controls one or more subsidiaries

authorised in another Member State which are insurance undertakings

or other undertakings providing investment services, the competent

authority shall co-operate closely with European regulatory authorities

and with other authorities entrusted with the public task of supervising

insurance undertakings in other Member States. Without prejudice to

its responsibilities, the competent authority shall provide the

authorities referred to in this sub-regulation with any information

likely to simplify their task and to allow supervision of the activity and

overall financial situation of the undertakings they supervise.

(2) Information received, within the framework of supervision

on a consolidated basis, and in particular any exchange of information

between the competent authority and European regulatory authorities

which is provided for in the CRD, shall be subject to professional

secrecy requirements at least equivalent to those pursuant to the Malta

Financial Services Authority Act and the Act.

(3) The competent authority as consolidating supervisor shall

establish a list of the financial holding companies or mixed financial

holding companies referred to in Article 11 of the CRR. Such a list

shall be communicated to the European regulatory authorities, to the

EBA and to the Commission.

(1) The competent authority, in applying the provisions Request for

of the Act, and of any regulations or Rules made thereunder verification

information.

transposing the requirements of the CRD, and the CRR, may, in

specific cases, request a European regulatory authority to verify

information concerning an investment firm, a financial holding

company, a mixed financial holding company, a financial institution,

an ancillary services undertaking, a mixed-activity holding company, a

subsidiary which is an insurance company or other undertaking

providing investment services which is subject to authorisation, or a

subsidiary of an investment firm, a financial holding company or

mixed financial holding company which is not included within the

scope of supervision on a consolidated basis, situated in another

Member State. The competent authority may carry out the verification

itself, or if it so wishes participate in the verification.

(2) Where the competent authority receives a request from a

European regulatory authority to verify information referred to in sub-

regulation (1), it shall, within the framework of its competence, act

upon it by either carrying out the verification itself, by allowing the

European regulatory authority making the request to carry out such

verification or by allowing an auditor or expert to carry out such

verification. The European regulatory authority making the request

may participate in the verification where it does not carry out the

verification itself.

(1) Where an investment firm licensed in terms of the Third country

Act, the parent undertaking of which is an investment firm or a consolidated

supervision.

financial holding company or mixed financial holding company, the

head office of which is established in a third country, is not subject to

consolidated supervision, the competent authority shall assess whether

the investment firm is subject to consolidated supervision by a third

country regulatory authority which is equivalent to that governed by

the principles laid down in this regulation and the requirements of Part

One, Title II, Chapter 2 of the CRR.

(2) The competent authority as consolidating supervisor, if

sub-regulation (4) were to apply, shall carry out the assessment at the

request of the parent undertaking or of any of the regulated entities

authorised in the Union or on its own initiative. The competent

authority shall consult the other European regulatory authorities.

(3) In carrying out the assessment referred to in sub-regulation

(1), the competent authority shall take into account any guidance

issued by the European Banking Committee as to whether the

consolidated supervision arrangements of third country regulatory

authorities are likely to achieve the objectives of consolidated

supervision as defined in this regulation, in relation to investment

firms licensed in terms of the Act, the parent undertaking of which has

its head office in a third country. For this purpose, the competent

authority shall consult the EBA before making a decision.

(4) In the absence of such equivalent supervision, the

competent authority shall apply the provisions of the Act, and of any

regulations or Rules made thereunder transposing the requirements of

the CRD, and the CRR to the investment firm mutatis mutandis or

apply other appropriate supervisory techniques which achieve the

objectives of supervision on a consolidated basis of investment firms.

Such supervisory techniques shall be agreed upon by the competent

authority, as consolidating supervisor, after consultation with other

European regulatory authorities involved. The supervisory techniques

shall be designed to achieve the objectives of consolidated supervision

as set out in this regulation and shall be notified to other European

regulatory authorities involved, the EBA and the Commission.

(5) The competent authority may in particular require the

establishment of a financial holding company or mixed financial

holding company with its head office in the European Union, and

apply the provisions on consolidated supervision to the consolidated

position of that financial holding company or the consolidated position

of the investment firms of that mixed financial holding company.

(6) The competent authority may, in terms of Article 48 of the

CRD, request the Commission to submit proposals to the Council to

negotiate agreements with one or more third countries regarding the

means of exercising supervision on a consolidated basis over the

following

(a) investment firms the parent undertakings of which

have their head offices in a third country;

(b) investment firms situated in third countries the parent

undertakings of which, whether investment firms, financial

holding companies or mixed financial holding companies, have

their head offices in the Union.

Part II - Establishment of Significant Branches

(1) Where an investment firm, other than a EU

investment firm subject to Article 95 of the CRR, authorised in another

Member State has established a branch in Malta, the competent

authority may make a request to the European regulatory authority

which is the consolidating supervisor, where Article 112(1) applies, or

to the European regulatory authority of the home Member State of

such investment firms, for that branch to be considered as significant.

(2) The request referred to in sub-regulation (1) shall provide

reasons for considering the branch to be significant with particular

regard to the following

(a) whether the market share of the branch in terms of

deposits exceeds 2% in Malta;

(b) the likely impact of a suspension or closure of the

operations of the investment firm on systemic liquidity and the

payment, clearing and settlement systems in Malta; and

(c) the size and the importance of the branch in terms of

number of clients within the context of the banking or financial

system of Malta.

(3) The competent authority shall do everything within its

power to reach a joint decision with the European regulatory authority

of the home Member State and, where Article 112(1) applies, with the

European regulatory authority which is the consolidating supervisor,

on the designation of a branch as being significant.

(4) If no joint decision is reached within two months of receipt

of a request under sub-regulation (1), the competent authority shall

take its own decision within a further period of two months on whether

the branch is significant. In taking its decision, the competent authority

shall take into account any views and reservations of the European

regulatory authority which is the consolidating supervisor or the

European regulatory authority of the home Member State.

(5) The decisions referred to in sub-regulations (3) and (4)

shall be set out in a document containing full reasons and shall be

transmitted to the European regulatory authorities concerned. It shall

be recognised as determinative and applied by the European regulatory

authorities in the Member States concerned.

(6) Where the European regulatory authority of the home

Member State does not consult the competent authority, or where,

following such consultation, the competent authority maintains that

operational steps required by the Act and any regulations or Rules

made thereunder transposing the requirements of Article 86(11) of the

CRD, are not adequate, the competent authority may refer the matter to

the EBA and request its assistance in accordance with Article 19 of

Regulation (EU) No 1093/2010.

(1) Where the competent authority is responsible for the

supervision of an investment firm licensed in terms of the Act or, other

than an investment firm subject to Article 95 of the CRR, which has

established a branch in another Member State or is the consolidating

supervisor, it may receive a request from the European regulatory

authority of the host Member State where the branch is established, for

such branch to be considered as significant. This request shall provide

reasons for considering the branch to be significant with particular

regard to the following

(a) whether the market share of the branch in terms of

deposit exceeds 2% in the host Member State;

(b) the likely impact of a suspension or closure of the

operations of the investment firm on systemic liquidity and the

payment and clearing and settlement systems in the host Member

State; and

(c) the size and the importance of the branch in terms of

number of clients within the context of the banking or financial

system of the host Member State.

(2) The competent authority shall do everything within its

power to reach a joint decision on the designation of a branch as

significant, with the European regulatory authority of the host Member

State where the branch is established and, where Article 112(1) of the

CRD applies, the European regulatory authority which is the

consolidating supervisor.

(3) The competent authority shall communicate to the

European regulatory authority of the host Member State, where a

significant branch is established, the following information referred to

in regulation 9(3)(d) and (e) and carry out the tasks referred to in

regulation 4(1)(c) in co-operation with the European regulatory

authority of the host Member State.

(4) Where the competent authority becomes aware of an

emergency situation as referred to in regulation 5(1), it shall alert as

soon as practicable

(a) ESCB central banks, when this information is

relevant for the exercise of their statutory tasks, including the

conduct of monetary policy and related liquidity provision, the

oversight of payments, clearing and settlement systems, and

safeguarding the stability of the financial system, and it shall

communicate all information that is essential for the pursuance

of their tasks;

(b) the ESRB where such information is relevant for the

exercise of its statutory tasks; and

(c) departments of government administrations in other

Member States responsible for law on the supervision of

investment firms, financial institutions and insurance

undertakings and to inspectors acting on behalf of those

departments.

(5) The competent authority shall communicate to the

European regulatory authority of the host Member State where the

significant branch is established, the results of the risk assessment

carried out in terms of the Investment Services Act (Supervisory S.L. 370.15.

Review) Regulations with respect to the investment firm licensed in

Malta with such a branch and, where applicable, joint decisions on

investment firm specific prudential requirements taken pursuant to the

provisions of the Act and any regulations or Rules made thereunder

transposing the requirements of Article 113(2) of the CRD. The

competent authority shall also communicate decisions required by the

Act and any regulations or Rules made thereunder transposing the

requirements of Articles 104 and 105 of the CRD in so far as those

assessments and decisions are relevant to the branch.

(6) The competent authority shall consult the European

regulatory authority of the host Member State where the significant

branch is established about operational steps required by the Act and

any regulations or Rules made thereunder transposing the

requirements of Article 86(11) of the CRD, where relevant for

liquidity risks in the host Member State’s currency.

The designation of a branch as being significant shall not Establishment

affect the rights and responsibilities of the competent authority under of

branches

the Act, and any regulations or Rules made thereunder transposing the (General).

requirements of the CRD.

(1) Where regulation 7 does not apply and the competent Colleges of

authority supervises an investment firm licensed in Malta with supervisors

the context of

significant branches in other Member States, it shall establish and branches.

chair a college of supervisors to facilitate the co-operation in terms of

regulation 15(3) to (6) and in terms of the Act and any regulations or

Rules made thereunder transposing the requirements of Article 50 of

the CRD. The establishment and functioning of the college shall be

based on written arrangements determined after consulting the

European regulatory authorities concerned by the competent authority.

The competent authority shall decide which European regulatory

authorities participate in a meeting or in an activity of the college.

(2) In its decision the competent authority shall take account of

the relevance of the supervisory activity to be planned or co-ordinated

for those European regulatory authorities, in particular, the potential

impact on the stability of the financial system in the Member States

concerned, and, in particular, in emergency situations based on the

information available at the relevant time and the obligations referred

to in regulation 15(3) to (5).

(3) The competent authority shall keep all members of the

college fully informed, in advance, of the organisation of such

meetings, the main issues to be discussed and the activities to be

considered. The competent authority shall also keep all the members

of the college fully informed, in a timely manner, of the actions taken

in those meetings or the measures carried out.

(1) The prudential supervision of an investment firm,

including that of the activities it carries out in accordance the

European Passporting Rights for Investment Firms Regulations shall

be the responsibility of the competent authority when such an

investment firm is licensed in Malta, without prejudice to those

provisions of the CRD and MiFID which give responsibility to the

European regulatory authorities of the host Member State.

(2) Sub-regulation (1) shall not prevent supervision on a

consolidated basis in terms of regulation 3.

(3) Where the branch of an investment firm authorised in a

Member State other than Malta, is established in Malta, any measures

taken by the competent authority with respect to such branch shall not

allow discriminatory or restrictive treatment on the basis that the

investment firm to which the branch belongs is authorised in another

Member State.

Part III - Supervision of Mixed Activity Holding Companies and

their subsidiaries and of Mixed Financial Holding Companies

(1) Where the parent undertaking of one or more

investment firms licensed in terms of the Act is a mixed-activity

holding company, the competent authority shall, by approaching the

mixed-activity holding company and its subsidiaries either directly or

via subsidiaries that are investment firms, require them to supply any

information which would be relevant for the purpose of supervising

those subsidiaries.

(2) The competent authority may carry out on-the-spot

inspections, or have on-the-spot inspections carried out by external

inspectors, to verify information received from mixed-activity holding

companies and their subsidiaries. If the mixed-activity holding

company or one of its subsidiaries is an insurance undertaking, the

procedure set out in regulation 11 may also be used. If a mixed-activity

holding company or one of its subsidiaries is situated in a Member

State other than Malta but is the parent undertaking of an investment

firm licensed in terms of the Act, on-the-spot verifications of

information shall be carried out in accordance with the procedure set

out in regulation 12.

(3) Without prejudice to Part Four of the CRR, where the

parent undertaking of one or more investment firms licensed in terms

of the Act is a mixed-activity holding company, the competent

authority shall exercise general supervision over transactions between

the investment firms and the mixed-activity holding company and its

subsidiaries.

(1) Where a mixed financial holding company is subject Supervision of

to equivalent provisions under the Act and any regulations or Rules mixed

holding

made thereunder transposing the requirements of the CRD, and under companies.

Directive 2002/87/EC of the European Parliament and of the Council

of 16 December 2002 on the supplementary supervision of credit

institutions, insurance undertakings and investment firms in a financial

conglomerates, in particular in terms of risk-based supervision, the

competent authority may, as consolidating supervisor, after consulting

the other European regulatory authorities responsible for the

supervision of subsidiaries, apply only the latter Directive to that

mixed financial holding company.

(2) Where a mixed financial holding company is subject to

equivalent provisions under the Act and any regulations or Rules made

thereunder transposing the requirements of the CRD, and under

Directive 2009/138/EC of the European Parliament and of the Council

of 25 November 2009 on the taking-up and pursuit of the business of

Insurance and Reinsurance (Solvency II), in particular in terms of risk-

based supervision, the competent authority as consolidating supervisor

may, in agreement with the group supervisor in the insurance sector,

apply to that mixed financial holding company only the provisions

under the Act, and any regulations or Rules made thereunder

transposing the requirements of the CRD relating to the most

significant financial sector as defined in regulation 3 of the Financial S.L. 330.06.

Conglomerates Regulations.

(3) The competent authority, as consolidating supervisor, shall

inform the EBA and the EIOPA of the decisions taken under sub-

regulations (1) and (2).

€1.08