MALTA FINANCIAL SERVICES AUTHORITY ACT (INDICES USED AS BENCHMARKS IN FINANCIAL INSTRUMENTS AND FINANCIAL CONTRACTS OR

SUBSIDIARY LEGISLATION 330.10

MALTA FINANCIAL SERVICES AUTHORITY ACT

(INDICES USED AS BENCHMARKS IN FINANCIAL

INSTRUMENTS AND FINANCIAL CONTRACTS OR

TO MEASURE THE PERFORMANCE OF

INVESTMENT FUNDS) REGULATIONS

7th March, 2017

LEGAL NOTICE 77 of 2017, as amended by Legal Notices 185 of 2018,

312 of 2022 and 6 of 2026.

(1)

The title of these regulations is the Malta

Financial Services Authority Act (Indices used as benchmarks in

financial instruments and financial contracts or to measure the

performance of investment funds) Regulations.

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

relevant provisions of the Benchmarks Regulation as herein defined.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Malta Financial Services Authority Act;

"administrator" means a natural or legal person that has control

over the provision of a benchmark;

"Authority" means the Malta Financial Services Authority

established by article 3 of the Act;

"benchmark" means any index by reference to which the

amount payable under a financial instrument or a financial contract,

or the value of a financial instrument, is determined, or an index that

is used to measure the performance of an investment fund with the

purpose of tracking the return of such index or of defining the asset

allocation of a portfolio or of computing the performance fees;

"Benchmarks Regulation" means Regulation (EU) 2016/1011

of the European Parliament and of the Council of 8 June 2016 on

indices used as benchmarks in financial instruments and financial

contracts or to measure the performance of investment funds and

amending Directives 2008/48/EC and 2014/17/EU and Regulation

(EU) No 596/2014 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;

"Council Directive 86/635/EEC" means Council Directive of 8

December 1986 on the annual accounts and consolidated accounts of

banks and other financial institutions 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;

"Council Directive 91/674/EEC" means Council Directive of

19 December 1991 on the annual accounts and consolidated accounts

of insurance undertakings 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;

"Directive 2013/34/EU" means Directive 2013/34/EU of the

European Parliament and of the Council of 26 June 2013 on the

annual financial statements, consolidated financial statements and

related reports of certain types of undertakings, amending Directive

2006/43/EC of the European Parliament and of the Council and

repealing Council Directives 78/660/EEC and 83/349/EEC 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;

"financial contract" means

(a)

any credit agreement as defined in point (c) of

Article 3 of Directive 2008/48/EC;

(b)

any credit agreement as defined in point (3) of

Article 4 of Directive 2014/17/EU;

"financial instrument" means any of the instruments listed in

Section C of Annex I to Directive 2014/65/EU for which a request for

admission to trading on a trading venue, as defined in point (24) of

Article 4(1) of Directive 2014/65/EU, has been made or which is

traded on a trading venue as defined in point (24) of Article 4(1) of

Directive 2014/65/EU or via a systematic internaliser as defined in

point (20) of Article 4(1) of that Directive;

"index" means any figure

(a)

that is published or made available to the public;

(b)

that is regularly determined

(i)

entirely or partially by the application of a formula or

any other method of calculation, or by an assessment;

and

(ii) on the basis of the value of one or more underlying

assets or prices, including estimated prices, actual or

estimated interest rates, quotes and committed quotes,

or other values or surveys;

"provision of a benchmark" means

(a)

administering the arrangements for determining

a benchmark;

(b)

collecting, analysing or processing input data for

the purpose of determining a benchmark; and

(c)

determining a benchmark through the

application of a formula or other method of calculation or by

an assessment of input data provided for that purpose;

"Regulation (EU) No 596/2014" means Regulation (EU) No

596/2014 of the European Parliament and of the Council of 16 April

2014 on market abuse (market abuse regulation) and repealing

Directive 2003/6/EC of the European Parliament and of the Council

and Commission Directives 2003/124/EC, 2003/125/EC and 2004/

72/EC 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;

"supervised entity" means any of the following

(a)

a credit institution as defined in point (1) of

Article 4(1) of Regulation (EU) No 575/2013 of the European

Parliament and of the Council;

(b)

an investment firm as defined in point (1) of

Article 4(1) of Directive 2014/65/EU;

(c)

an insurance undertaking as defined in point (1)

of Article 13 of Directive 2009/138/EC of the European

Parliament and of the Council;

(d)

a reinsurance undertaking as defined in point (4)

of Article 13 of Directive 2009/138/EC;

(e)

a UCITS as defined in Article 1(2) of Directive

2009/65/EC or, where applicable, a UCITS management

company as defined in point (b) of Article 2(1) of that

Directive;

(f)

an alternative investment fund manager (AIFM)

as defined in point (b) of Article 4(1) of Directive 2011/61/EU

of the European Parliament and of the Council;

(INDICES USED AS BENCHMARKS IN FINANCIAL

INSTRUMENTS AND FINANCIAL CONTRACTS OR TO

MEASURE THE PERFORMANCE OF INVESTMENT FUNDS)

(g)

an institution for occupational retirement

provision as defined in point (a) of Article 6 of Directive 2003/

41/EC of the European Parliament and of the Council;

(h)

a creditor as defined in point (b) of Article 3 of

Directive 2008/48/EC for the purposes of credit agreements as

defined in point (c) of Article 3 of that Directive;

(i)

a non-credit institution as defined in point (10)

of Article 4 of Directive 2014/17/EU for the purposes of credit

agreements as defined in point (3) of Article 4 of that

Directive;

(j)

a market operator as defined in point (18) of

Article 4(1) of Directive 2014/65/EU;

(k)

a central counterparty as defined in point (1) of

Article 2 of Regulation (EU) No 648/2012 of the European

Parliament and of the Council;

(l)

a trade repository as defined in point (2) of

Article 2 of Regulation (EU) No 648/2012;

(m)

an administrator authorised or registered in

accordance with Article 34 of the Benchmarks Regulation.

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

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

(3) In the event that there is any conflict between any of

these regulations and the provisions of the Benchmarks Regulation,

the provisions of the Benchmarks Regulation shall prevail.

The Authority shall be the designated competent

authority in Malta for the purposes of implementing the relevant

provisions of the Benchmarks Regulation and these regulations, and

any reference in these regulations to the competent authority shall be

read and construed accordingly.

(1)

The Authority shall be a designated relevant

national authority in Malta for the purposes of carrying out the

assessment in terms of point (a) of paragraph 5 of Article 23b of the

Benchmarks Regulation.

(2)

For the purposes of sub-regulation (1), the Authority

shall act jointly with the Central Bank of Malta, designated as a

relevant national authority in terms of the Central Bank of Malta Act

(Appointment of Relevant Authority on Benchmarks) Regulations,

2022. (3)

For the purposes of these regulations, the Authority and

the Central Bank of Malta shall collaborate, cooperate and exchange

information in their possession and for such purpose the Authority

and the Central Bank of Malta may also enter into a bilateral

agreement or other forms of arrangement for the better collaboration,

cooperation and exchange of information.

(1)

The competent authority shall exercise and fulfil

all the functions, obligations and powers which are required or may

be imposed on competent authorities in accordance with the

Benchmarks Regulation and it shall satisfy all the obligations and

requirements imposed on competent authorities by the Benchmarks

Regulation.

(2) Without prejudice to the provisions of sub-regulation

(1), the competent authority may, for the better implementation of the

Benchmarks Regulation, exercise any of the powers assigned to it

under the Act in relation to persons acting as administrators and to

supervised entities.

Without prejudice to any other regulatory and

investigatory powers of the competent authority, in order to fulfil its

duties under the Benchmarks Regulation, the competent authority

shall have the following supervisory and investigatory powers

(a)

access to any document and other data in any

form, and to receive or take a copy thereof;

(b)

require or demand information from any person

involved in the provision of, and contribution to, a benchmark,

including any service provider to which functions, services or

activities in the provision of a benchmark have been outsourced

as provided for in Article 10 of the Benchmarks Regulation, as

well as their principals, and if necessary, summon and question

any such person with a view to obtaining information;

(c)

request, in relation to commodity benchmarks,

information from contributors on related spot markets

according, where applicable, to standardised formats and

reports on transactions, and direct access to traders' systems;

(d)

carry out on-site inspections or investigations, at

sites other than the private residences of natural persons;

(e)

enter premises of legal persons, without prejudice

to Regulation (EU) No 596/2014, in order to seize documents

and other data in any form, where a reasonable suspicion exists

that documents and other data related to the subject-matter of

the inspection or investigation may be relevant to prove a

breach of the Benchmarks Regulation;

(f)

require

existing

recordings

of

telephone

(INDICES USED AS BENCHMARKS IN FINANCIAL

INSTRUMENTS AND FINANCIAL CONTRACTS OR TO

MEASURE THE PERFORMANCE OF INVESTMENT FUNDS)

conversations, electronic communications or other data traffic

records held by supervised entities;

(g)

request the freezing or sequestration of assets or

both;

(h)

require temporary cessation of any practice that

the competent authority considers contrary to the Benchmarks

Regulation;

(i)

impose a temporary prohibition on the exercise of

professional activity;

(j)

take all necessary measures to ensure that the

public is correctly informed about the provision of a

benchmark, including by requiring the relevant administrator or

a person that has published or disseminated the benchmark or

both to publish a corrective statement about past contributions

to or figures of the benchmark ;

(k)

designate a benchmark as significant in

accordance with Article 24(3) of the Benchmarks Regulation;

(l)

in the case of reasonable grounds to suspect a

breach of any of the requirements established in Chapter 3A of

Title III of the Benchmarks Regulation, require an administrator

to cease, for a maximum period of twelve (12) months, to

(i)

provide EU Climate Transition Benchmarks or

EU Paris-aligned Benchmarks;

(ii) use the terms "EU Climate Transition

Benchmarks" or "EU Paris-aligned Benchmarks"

in the names of benchmarks it makes available

for use in the EU, or in the legal or marketing

documentation for those benchmarks;

(iii) suggest compliance with the requirements

applicable to the provision of such benchmarks

in the name of the benchmarks it makes

available for use in the EU, or in the legal or

marketing documentation for those benchmarks.

Without prejudice to the supervisory and investigatory

powers of the competent authority in accordance with regulation 5,

where a person contravenes or fails to comply with any of the

requirements contained in Articles 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14,

15, 16, 19a, 19b, 19c, 21, 23, 24, 24a, 25, 26, 27, 28, 29 and 34 of the

Benchmarks Regulation, where they apply; and, or fails to cooperate

or comply with an investigation or with an inspection or request

covered by Article 41 of the Benchmarks Regulation, the competent

authority shall impose the following administrative penalties and

administrative measures

(a)

an order requiring the administrator or supervised

entity responsible for the infringement to cease the conduct and

to desist from repeating that conduct;

(b)

the disgorgement of the profits gained or losses

avoided because of the infringement where those can be

determined;

(c)

a public warning which indicates the

administrator or supervised entity responsible and the nature of

the infringement;

(d)

withdrawal or suspension of the authorisation or

the registration of an administrator;

(e)

a temporary ban prohibiting any natural person,

who is held responsible for such infringement, from exercising

management functions in administrators or supervised

contributors;

(f)

the imposition of maximum administrative

penalty of at least three times the amount of the profits gained

or losses avoided because of the infringement where those can

be determined;

(g)

in respect of a natural person, maximum

administrative penalty of

(i)

for infringements of the following Articles

of the Benchmarks Regulation:- Articles 4, 5, 6, 7, 8, 9,

10, points (a), (b), (c) and (e) of Article 11(1), Article

11(2) and Article 11 (3), and Articles 12, 13,14, 15, 16,

21, 23, 24, 24a, 25, 26, 27, 28, 29 and 34, euro

(€500 000); or

(ii)

for infringements of point (d) of Article

11(1) or of Article 11(4) of the Benchmarks Regulation,

euro (€100 000);

(h)

in respect of a legal person, maximum

administrative penalty of

(i)

for infringements of the following Articles

of the Benchmarks regulation:- Articles 4, 5, 6, 7, 8, 9,

10, points (a), (b), (c) and (e) of Article 11(1), Article

11(2) and (3), and Articles 12, 13,14, 15, 16, 21, 23, 24,

24a, 25, 26, 27, 28, 29 and 34, either euro (€1,000,000)

or, 10% of its total annual turnover according to the last

available accounts approved by the management body,

whichever is the higher; or

(ii)

for infringements of point (d) of Article

11(1) or of Article 11(4) of the Benchmarks Regulation,

either euro (€250,000) or, 2% of its total annual turnover

according to the last available accounts approved by the

management body, whichever is the higher.

For the purposes of regulation 6(h) (i) and (ii), where the

legal person is a parent undertaking or a subsidiary of a parent

undertaking which has to prepare consolidated financial accounts in

accordance with Directive 2013/34/EU of the European Parliament

and of the Council, the relevant total annual turnover shall be the

total annual turnover or the corresponding type of income in

accordance with Council Directive 86/635/EEC for banks and

Council Directive 91/674/EEC for insurance companies according to

the last available consolidated accounts approved by the management

body of the ultimate parent undertaking or if the person is an

association, 10% of the aggregate turnovers of its members.

When determining the type and level of administrative

penalty and other administrative measures, the competent authority

shall take into account all relevant circumstances, including where

appropriate

(a)

the gravity and duration of the infringement;

(b)

the criticality of the benchmark to financial

stability and the real economy;

(c)

the degree of responsibility of the responsible

person;

(d)

the financial strength of the responsible person, as

indicated, in particular, by the total annual turnover of the

responsible legal person or the annual income of the

responsible natural person;

(e)

the level of profits gained or losses avoided by the

responsible person, insofar as they can be determined;

(f)

the level of cooperation of the responsible person

with the competent authority, without prejudice to the need to

ensure disgorgement of profits or losses avoided by that person;

(g)

previous infringements by the person concerned;

(h)

measures taken, after the infringement, by a

responsible person to prevent the repetition of the infringement

(1)

The competent authority shall publish any

decision imposing an administrative penalty or other administrative

measure in relation to infringements of the Benchmarks Regulation

on its official website immediately after the person subject to that

decision has been informed of that decision. Such publication shall

include at least information on the type and nature of the

infringement and the identity of the persons subject to the decision.

The foregoing does not apply to decisions imposing measures

that are of an investigatory nature.

(2) Where the competent authority considers that the

publication of the identity of the legal person or of the personal data

of a natural person, would be disproportionate following a case-by-

case assessment conducted on the proportionality of the publication

of such data, or where such publication would jeopardise the stability

of financial markets or an on-going investigation, it shall do any of

the following

(a)

defer the publication of the decision until such

time as the reasons for that deferral cease to exist;

(b)

publish the decision on an anonymous basis in

accordance with national law where such anonymous

publication ensures an effective protection of the personal data

concerned;

(c)

not publish the decision at all in the event that the

competent authority is of the opinion that publication in

accordance with sub-regulation (2)(a) or (b) will be insufficient

to ensure

(i)

that the stability of financial markets is not

jeopardised; or

(ii)

the proportionality of the publication of

such decisions with regard to measures which are

deemed to be of a minor nature.

Where the competent authority decides to publish a decision

on an anonymous basis as referred to in regulation 8(2)(b), it may

postpone the publication of the relevant data for a reasonable period

of time where it is foreseeable that the reasons for anonymous

publication shall cease to exist during that period.

(3) Where the decision is subject to an appeal in terms of

regulation 9, the competent authority shall also publish, immediately,

on its official website such information and any subsequent

information on the outcome of such appeal. Any decision annulling a

previous decision to impose an administrative penalty or a measure

shall also be published.

(4) Any decision that is published by the competent

authority in accordance with this regulation shall remain accessible

on the official website of the competent authority for a period of at

least five years after its publication. Personal data contained in the

publication shall only be kept on the official website of the competent

authority for the period which is necessary in accordance with the

applicable data protection rules.

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 21 of the Act shall

apply mutatis mutandis.