FINANCIAL MARKETS ACT (OTC DERIVATIVES, CENTRAL COUNTERPARTIES AND TRADE REPOSITORIES) REGULATIONS

TRADE REPOSITORIES

SUBSIDIARY LEGISLATION 345.17

FINANCIAL MARKETS ACT (OTC DERIVATIVES,

CENTRAL COUNTERPARTIES AND TRADE

REPOSITORIES) REGULATIONS

1st March, 2013;

11th October, 2013 *

LEGAL NOTICE 81 of 2013, as amended by Legal Notice 431 of 2018.

(1) The title of these regulations is the Financial Markets

A c t ( O T C D e r i v a t i v e s , C e n t r a l C o u n t e r p a r t i e s a n d Tr a d e

Repositories) Regulations.

(2) The purpose of these regulations is to create a registration

framework for OTC Derivatives, central counterparties and trade

repositories and, in part, to implement the relevant provisions of

the EMIR Regulation on OTC derivatives, central counterparties

and trade repositorie s a s herei n d e f i n e d , a nd t h e y sh a l l b e

interpreted and applied accordingly.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Financial Markets Act;

"C6 energy derivative contracts" means options, futures, swaps, and

any other derivative contracts mentioned in Section C.6 of Annex I of

MiFID relating to coal or oil that are traded on an OTF and must be

physically settled;

"central counterparty" means a legal person that interposes itself

between the counterparties to the contracts traded on one or more

financial markets, becoming the buyer to every seller and the seller

to every buyer;

"EMIR Regulation" means Regulation (EU) No 648/2012 of the

European Parliament and of the Council of the 4th July, 2012 on

OTC derivatives, central counterparties and trade repositories as

amended from time to time;

"Financial Services Tribunal" means the tribunal established in

terms of article 21 of the Malta Financial Services Authority Act;

"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;

"OTC derivative" means a derivative contract the execution of

which does not take place on a regulated market or on a third

country market considered as equivalent to a regulated market in

*see regulation 1(3) of these Regulations, as originally promulgated, and Legal Notice

316 of 2013.

TRADE REPOSITORIES

accordance with article 19(6) of Directive 2004/39/EC on markets

in financial instruments, as amended;

"proposed acquirer" means any natural or legal person or persons

acting in concert, who have taken a decision either to acquire,

directly or indirectly, a qualifying holding in a central counterparty

or to further increase, directly or indirectly, such a qualifying

holding in a central counterparty as a result of which the proportion

of the voting rights or of the capital held would reach or exceed

10%, 20%, 30% or 50% or so that the central counterparty would

become its subsidiary;

"trade repository" means a legal person that centrally collects

and maintains the records of derivatives.

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

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

Act.

The Malta Financial Services Authority established by the

Malta Financial Services Authority Act shall be the designated

competent authority in Malta for the purposes of implementing the

relevant provisions of the EMIR Regulation, and any reference in

these regulations to the competent authority shall be read and

construed accordingly.

(1) The competent authority shall exercise all the

f u nc t io n s , o b li g a t i o ns a nd p ow e r s a n d s ha ll s a ti s f y a l l th e

requirements imposed on competent authorities by the EMIR

Regulation.

(2) Without prejudice to sub-regulation (1), the competent

a u t h o r i t y m a y, f o r t h e b e t t e r i m p l e m e n t a t i o n o f t h e E M I R

Regulation, exercise any of the powers assigned to it under the Act

in relation to persons acting as central counterparties or trade

repositories and, or who are responsible for clearing and bilateral

risk-management requirements for OTC derivatives and, or who are

responsible for reporting requirements for derivative contracts.

(1) No person shall operate a central counterparty in or

from Malta, or shall provide, or hold itself out to be or provide the

services of a central counterparty in Malta unless such person has

been granted a registration for this purpose issued by the competent

authority in terms of this regulation.

(2) An application for registration to operate a central

counterparty in terms of sub-regulation (1) shall be made to the

competent authority in writing and shall be accompanied by such

documents as the competent authority may specify.

(3) The competent authority shall not grant registration to

operate a central counterparty in terms of sub-regulation (1) unless

it is satisfied that the applicant or applicants are fit and proper

persons and are in a position to comply with any conditions which

the competent authority may deem fit to impose.

TRADE REPOSITORIES

The competent authority shall not register, and it shall

withdraw a registration issued under regulation 5, as the case may

be, where

(a) the holder thereof is not fit and proper to act as a

central counterparty;

(b) the holder thereof does not fulfil the requirements of

registration, or has contravened any of the conditions

of registration;

(c) the holder thereof, or a person acting on its behalf, has

furnished the competent authority with information

which is false, inaccurate or misleading;

(d) registration has been obtained through false statements

or by other irregular means; or

(e) at the request of the holder thereof.

Nothing in these regulations shall be construed as enabling

or empowering a central counterparty to perform a function or

activity which requires an approval or authorisation in terms of the

Central Bank of Malta Act.

For the better carrying out of the provisions of the EMIR

Regulation and of these regulations, the competent authority may,

from time to time, issue and publish Financial Market Rules which

shall be binding on all persons acting as central counterparties or

trade repositories and, or who are responsible for clearing and

bilateral risk-management requirements for OTC derivatives and,

or who are responsible for reporting requirements for derivative

contracts. Such rules may lay down additional requirements and

conditions in relation to these matters as the competent authority

may consider appropriate including

(a) the operation of the EMIR Regulation or of these

regulations;

(b) any matter relating to the functions, obligations and

powers of the competent authority under the EMIR

Regulation; and

(c) any other matter arising in connection with the EMIR

Regulation or these regulations.

The provisions of the EMIR Regulation shall apply to

persons acting as central counterparties or trade repositories and, or

who are responsible for clearing and bilateral risk-management

requirements for OTC derivatives and, or who are responsible for

reporting requirements for derivative contracts in or from Malta

and such persons shall exercise all the obligations and satisfy all

the requirements imposed on such persons by the said EMIR

Regulation.

For the purposes of article 31(5) of the EMIR Regulation,

the competent authority may, whether or not at the request of the

propo sed acqui re r in a cen tral coun terparty, i ssu e a pub li c

statement indicating the reasons as to why it has refused the

TRADE REPOSITORIES

proposed acquisition of the central counter party requested by the

proposed acquirer.

Where a person acting as a central counterparty or trade

repository and, or who is responsible for clearing and bilateral risk-

management requirements for OTC derivatives and, or who is

responsible for reporting requirements for derivative contracts

contravenes or fails to comply with any provisions of the EMIR

Regulation, these regulations and any Financial Markets Rules

issued thereunder, the competent authority may, by notice in

writing and without recourse to a court hearing, impose on such

person an administrative penalty not exceeding one hundred and

fifty thousand euro (€150,000).

A right of appeal to the Financial Services Tribunal shall

lie from a decision of the competent authority to impose a penalty

under regulation 11.

Upon the coming into force of Title III of the EMIR

Regulation, these regulations shall be construed and applied in

accordance therewith and, insofar as the provisions of these

regulations are inconsistent with the provisions of the said EMIR

Regulation, the provisions of the EMIR Regulation shall prevail

and the provisions of these regulations shall not apply to the extent

of the inconsistency.

(1) Until 3 July 2020

(a) the clearing obligation set out in Article 4 of the EMIR

Regulation and the risk mitigation techniques set out

in Article 11(3) thereof shall not apply to C6 energy

derivative contracts entered into by non-financial

counterparties that meet the conditions in Article 10(1)

of the EMIR Regulation or by non-financial

counterparties that shall be authorised for the first time

as investment firms as from 3 January 2017; and

(b) such C6 energy derivative contracts shall not be

considered to be OTC derivative contracts for the

purposes of the clearing threshold set out in Article 10

of the EMIR Regulation

Provided that C6 energy derivative contracts

benefiting from the transitional regime set out in the

first sub-paragraph shall be subject to all other

requirements laid down in the EMIR Regulation.

(2) The exemption referred to in sub-regulation (1) shall be

granted by the competent authority. The competent authority shall

notify ESMA of the C6 energy derivative contracts which have

been granted an exemption in accordance with sub-regulation (1).".