MALTA FINANCIAL SERVICES AUTHORITY ACT (TRANSPARENCY OF SECURITIES FINANCING TRANSACTIONS AND OF REUSE) REGULATIONS

SUBSIDIARY LEGISLATION 330.11

MALTA FINANCIAL SERVICES AUTHORITY ACT

(TRANSPARENCY OF SECURITIES FINANCING

TRANSACTIONS AND OF REUSE) REGULATIONS

7th March, 2017

LEGAL NOTICE 78 of 2017, as amended by Legal Notice 166 of 2020.

(1)

The title of these regulations is the Malta

Financial Services Authority Act (Transparency of securities

financing transactions and of reuse) Regulations.

(2) The purpose of these regulations is to lay down rules on

the transparency of securities financing transactions and of reuse, and

to implement the relevant provisions of the SFTR as herein defined,

and they shall be interpreted and applied accordingly.

(1)

In these regulations, unless the context otherwise

requires

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

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

which is part of a counterparty and which has no legal personality;

"buy-sell back transaction" or "sell-buy back transaction"

means a transaction by which a counterparty buys or sells securities,

commodities, or guaranteed rights relating to title to securities or

commodities, agreeing, respectively, to sell or to buy back securities,

commodities or such guaranteed rights of the same description at a

specified price on a future date, that transaction being a buy-sell back

transaction for the counterparty buying the securities, commodities or

guaranteed rights, and a sell-buy back transaction for the

counterparty selling them, such buy-sell back transaction or sell-buy

back transaction not being governed by a repurchase agreement or by

a reverse-repurchase agreement within the meaning of a repurchase

transaction;

"counterparties" means financial counterparties and non-

financial counterparties;

"established" means

(a)

if the counterparty is a natural person, where it

has its head office;

(b)

if the counterparty is a legal person, where it has

its registered office;

(c)

if the counterparty has, under its national law, no

(TRANSPARENCY OF SECURITIES FINANCING

TRANSACTIONS AND OF REUSE)

registered office, where it has its head office;

"financial counterparty" means

(a)

an investment firm authorised in accordance

with Directive 2014/65/EU of the European Parliament and of

the Council;

(b)

a credit institution authorised in accordance with

Directive 2013/36/EU of the European Parliament and of the

Council or with Regulation (EU) No 1024/2013;

(c)

an insurance undertaking or a reinsurance

undertaking authorised in accordance with Directive 2009/

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

(d)

a UCITS and, where relevant, its management

company, authorised in accordance with Directive 2009/65/

EC;

(e)

an AIF managed by AIFMs authorised or

registered in accordance with Directive 2011/61/EU;

(f)

an institution for occupational retirement

provision authorised or registered in accordance with

Directive 2003/41/EC of the European Parliament and of the

Council;

(g)

a central counterparty authorised in accordance

with Regulation (EU) No 648/2012;

(h)

a central securities depository authorised in

accordance with Regulation (EU) No 909/2014;

(i)

a third-country entity which would require

authorisation or registration in accordance with the legislative

acts referred to in points (a) to (h) if it were established in the

Union;

"Financial Services Tribunal" means the Tribunal established

in terms of article 21 of the Act;

"margin lending transaction" means a transaction in which a

counterparty extends credit in connection with the purchase, sale,

carrying or trading of securities, but not including other loans that are

secured by collateral in the form of securities;

"non-financial counterparty" means an undertaking established

in the Union or in a third country other than entities falling under the

definition of a financial counterparty;

"repurchase transaction" means a transaction governed by an

agreement by which a counterparty transfers securities, commodities,

or guaranteed rights relating to title to securities or commodities

where that guarantee is issued by a recognised exchange which holds

the rights to the securities or commodities and the agreement does not

allow a counterparty to transfer or pledge a particular security or

commodity to more than one counterparty at a time, subject to a

commitment to repurchase them, or substituted securities or

commodities of the same description at a specified price on a future

date specified, or to be specified, by the transferor, being a

repurchase agreement for the counterparty selling the securities or

commodities and a reverse repurchase agreement for the counterparty

buying them;

"reuse" means the use by a receiving counterparty, in its own

name and on its own account or on the account of another

counterparty, including any natural person, of financial instruments

received under a collateral arrangement, such use comprising transfer

of title or exercise of a right of use in accordance with Article 5 of

Directive 2002/47/EC but not including the liquidation of a financial

instrument in the event of default of the providing counterparty;

"securities or commodities lending" or "securities or

commodities borrowing" means a transaction by which a

counterparty transfers securities or commodities subject to a

commitment that the borrower will return equivalent securities or

commodities on a future date or when requested to do so by the

transferor, that transaction being considered as securities or

commodities lending for the counterparty transferring the securities

or commodities and being considered as securities or commodities

borrowing for the counterparty to which they are transferred;

"securities financing transaction" or "SFT" means

(a)

a repurchase transaction;

(b)

securities or commodities lending and securities

or commodities borrowing;

(c)

a buy-sell back transaction or sell-buy back

transaction;

(d)

a margin lending transaction;

"SFTR" means Regulation (EU) 2015/2365 of the European

Parliament and of the Council of the 25 November, 2015 on

transparency of securities financing transactions and of reuse and

amending Regulation (EU) No 648/2012, as may be amended from

time to time.

(2) Words and expressions used in these regulations shall

have the same meaning as is assigned to them in the Act unless

otherwise defined herein.

(3) In the event that any of these regulations conflict with

the provisions of the SFTR, the latter shall prevail.

The Malta Financial Services Authority established by

the Act shall be the designated competent authority in Malta for the

purposes of implementing the relevant provisions of the SFTR, 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 SFTR.

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

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

SFTR, exercise any of the powers assigned to it under the Act in

relation to

(a) a counterparty to an SFT that is established

(i)

in Malta, including all its branches irrespective

of where they are located;

(ii) in a third country, if the SFT is concluded in the

course of the operations of a branch in Malta of

that counterparty;

(b) management companies of undertakings for UCITS

and UCITS investment companies in accordance with

Directive 2009/65/EC;

(c) AIFMs authorized in accordance with Directive 2011/

61/EU;

(d) a counterparty engaged in reuse that is established

(i)

in Malta, including all its branches irrespective

of where they are located;

(ii) in a third country, where either, the reuse is

effected in the course of operations of a branch

in Malta of that counterparty, or the reuse

concerns financial instruments provided under a

collateral arrangement by a counterparty

established in Malta or a branch in Malta of a

counterparty established in a third country.

(1) Without prejudice to the powers of the competent

authority under the Act or any other law, the competent authority shall

have the power to impose administrative penalties and other

administrative measures for breaches of Article 4 and Articles 13 to 15

of the SFTR.

(2)

Without prejudice to the generality of sub-regulation (1),

the competent authority shall have the power to impose the following

administrative penalties and other administrative measures for

breaches of Articles 4 and 15 of the SFTR

(a)

an order requiring the person responsible for the

breach to cease the conduct and to desist from a repetition of

that conduct;

(b)

a public statement which indicates the person

responsible and the nature of the breach in accordance with

Article 26 of SFTR;

(c)

withdrawal or suspension of the authorisation;

(d)

a temporary ban against any person discharging

managerial responsibilities, or any natural person who is held

responsible for such a breach, from exercising management

functions;

(e)

maximum administrative penalties of three times

the amount of the profits gained or losses avoided because of

the breach where the said profits or losses can be determined by

the competent authority, even if those penalties exceed the

amounts referred to in paragraphs (f) and (g);

(f)

in respect of a natural person, a maximum

administrative penalties of five million euro (€5,000,000);

(g)

in respect of

legal

persons,

maximum

administrative penalties of

(i)

five million euro (€5,000,000) or up to ten per

cent (10%) of the total annual turnover of the

legal person according to the last available

accounts approved by the management body for

breaches of Article 4 of the SFTR;

(ii) fifteen million euro (€15,000,000) or up to ten

per cent (10%) of the total annual turnover of

the legal person according to the last available

accounts approved by the management body for

breaches of Article 15 of the SFTR;

Provided that for the purpose of paragraph (g)(i) and (ii),

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

parent undertaking which has to prepare consolidated financial

accounts in accordance with Directive 2013/34/EU, the relevant total

annual turnover shall be the total annual turnover or the corresponding

type of income according to the relevant accounting regime according

to the last available consolidated accounts approved by the

management body of the ultimate parent undertaking.

(3)

Without prejudice to the generality of sub-regulation (1),

the competent authority shall have the power to impose an

administrative penalty which may not exceed one hundred and fifty

thousand euro (€150,000) for each breach of Articles 13 and 14 of the

SFTR.

(4)

Where the provisions of Article 4 and Articles 13 to 15

of the SFTR apply to a legal person, the competent authority may

impose administrative penalties and other administrative measures on

members of the management body of such legal person and to other

individuals who are responsible for the breach of the said provisions.

(5)

The administrative penalties and other administrative

measures taken by the competent authority shall be effective,

proportionate and dissuasive.

(6)

When determining the type and level of administrative

penalties and other administrative measures, the competent authority

shall take into account all relevant circumstances, including, where

appropriate

(a)

the gravity and duration of the breach;

(b)

the degree of responsibility of the person

responsible for the breach;

(c)

the financial strength of the person responsible for

the breach, by considering factors such as the total turnover in

the case of a legal person or the annual income in the case of a

natural person;

(d)

the importance of the profits gained or losses

avoided by the person responsible for the breach, insofar as

they can be determined;

(e)

the level of cooperation of the person responsible

for the breach with the competent authority, without prejudice

to the need to ensure disgorgement of profits gained or losses

avoided by that person;

(f)

previous breaches by the person responsible for

the breach;

(g)

any additional factors which the competent

authority deems relevant.

(1)

The competent authority shall publish any

decision imposing an administrative penalty or other administrative

measure in relation to breaches of Article 4 and Articles 13 to 15 of

SFTR on its website immediately after the person subject to that

decision has been informed of that decision.

(2)

The information published pursuant to sub-regulation (1)

shall specify the type and nature of the breach, the identity of the

person subject to the decision and any other information which the

competent authority deems relevant.

(3)

The provisions of sub-regulations (1) and (2) shall not

apply to decisions of the competent authority imposing measures that

are of an investigatory nature.

(4)

Where the competent authority considers, following a

case-by-case assessment, that the publication of the identity of the

legal person subject to the decision, or the personal data of a natural

person, would be disproportionate, or where such publication would

jeopardise an ongoing investigation or the stability of the financial

markets, the competent authority shall

(a)

defer publication of the decision until the reasons

for that deferral cease to exist; or

(b)

publish the decision on an anonymous basis where

such publication ensures effective protection of the personal

data concerned and, where appropriate, postpone publication of

the relevant data for a reasonable period of time where it is

foreseeable that the reasons for anonymous publication will

cease to exist during that period; or

(c)

not publish the decision in the event that the

competent authority is of the opinion that publication in

accordance with paragraphs (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.

(5)

Where the decision is subject to an appeal before a

national judicial, administrative or other authority, the competent

authority shall also publish immediately on its website such

information and any subsequent information on the outcome of such

an appeal. Any decision annulling a decision subject to appeal shall

also be published.

(6)

Any decision that is published in accordance with this

regulation shall remain accessible on the website of the competent

authority for a period of at least five (5) years after its publication

Provided that personal data contained in any such

decision shall be retained on the website of the competent authority for

the period which is necessary, in accordance with the applicable data

protection legislation.

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.