REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) REGULATIONS

(AUTHORISATION REQUIREMENTS)

SUBSIDIARY LEGISLATION 345.04

REGULATED MARKETS AND MARKET OPERATORS

(AUTHORISATION REQUIREMENTS)

REGULATIONS

1st November, 2007

LEGAL NOTICE 333 of 2007, and as amended by Legal Notices 385 of

2017, 60 and 249 of 2024 and 214 of 2025.

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

and Market Operators (Authorisation Requirements) Regulations.

(2) The scope of these regulations is to transpose Article 4(1)

paragraph (37), Article 45(1) to (3), sub-paragraphs (a) to (d) of

Article 45(4), Article 45(5) to (8), Article 47, Article 53(1) and (2) and

Article 54(1) to (3) of MiFID, as herein defined and shall be

interpreted and applied accordingly.

(3) The purpose of these regulations is partially to implement

the relevant provisions of Articles 37, 39, 42 and 43 of the

Directive and shall be interpreted and applied accordingly.

Amended by

L.N. 385 of 2017;

(Regulations 3)

L.N. 249 of 2024;

L.N. 214 of 2025.

AUTHORISATION REQUIREMENTS

Financial Resources

1. (1) The regulated market must have financial resources sufficient for the

proper performance of its functions.

(2) Without prejudice to the generality of the foregoing, each regulated market

shall satisfy at all times those minimum financial resources requirements and

minimum financial reporting requirements that may be required by the competent

authority from time to time.

Requirements for the management body of a market operator or regulated market

2. (1)The market operator or regulated market must be a fit and proper person

to perform its functions and be of good standing.

(2) The persons who effectively direct the business and the operations of a

regulated market must satisfy the fit and proper criterion, by being of sufficient good

repute and possess sufficient knowledge, skills and experience to perform their

duties so as to ensure the sound and prudent management and operation of the

regulated market. The overall composition of the management body shall reflect an

adequately broad range of experience

Provided that in the process of authorisation of a regulated market, the

person or persons who effectively direct the business and operations of an already

authorised regulated market in accordance with the provisions of MiFID shall be

deemed to comply with the requirements prescribed in sub-paragraph (2) above.

(3) Members of the management body shall, in particular, fulfil the following

requirements

(a)

All members of the management body shall commit sufficient time to

perform their functions in the market operator. The number of

directorships a member of the management body can hold, in any legal

entity, at the same time shall take into account individual circumstances

and the nature, scale and complexity of the market operator’s activities.

(b)

Unless representing the Government of Malta, members of the

management body of a market operators that is significant in terms of its

size, internal organisation and the nature, the scope and the complexity of

its activities shall not at the same time hold positions exceeding more

than one of the following combinations

(i)

one executive directorship with two non-executive directorships;

(ii)

four non-executive directorships

Provided that executive or non-executive directorships held within

the same group or undertakings where the market operator owns a

qualifying holding shall be considered to be one single

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directorship;

Provided further that directorships in organisations which do not

pursue predominantly commercial objectives shall be exempt from

the limitation on the number of directorships a member of a

management body can hold.

(c)

The competent authority may authorise members of the management

body to hold one additional non-executive directorship. The competent

authority shall regularly inform ESMA of such authorisations.

(d)

The management body shall possess adequate collective knowledge,

skills and experience to be able to understand the market operator’s

activities, including the main risks.

(e)

Each member of the management body shall act with honesty, integrity

and independence of mind to effectively assess and challenge the

decisions of the senior management where necessary and to effectively

oversee and monitor decision-making.

(4) A market operator shall devote adequate human and financial resources to

the induction and training of members of the management body.

(5) A market operator which is significant in terms of its size, internal

organisation and the nature, scope and complexity of its activities shall establish a

nomination committee composed of members of the management body who do not

perform any executive function in the market operator concerned.

(6)

The nomination committee shall carry out the following functions

(a)

identify and recommend, for the approval of the management body or for

approval of the general meeting, candidates to fill management body

vacancies. In doing so, the nomination committee shall evaluate the

balance of knowledge, skills, diversity and experience of the management

body. Further, the committee shall prepare a description of the roles and

capabilities for a particular appointment, and assess the time commitment

expected. Furthermore, the nomination committee shall decide on a target

for the representation of the under-represented gender in the management

body and prepare a policy on how to increase the number of the under-

represented gender in the management body in order to meet that target;

(b)

periodically, and at least annually, assess the structure, size, composition

and performance of the management body, and make recommendations to

the management body with regard to any changes;

(c)

periodically, and at least annually, assess the knowledge, skills and

experience of individual members of the management body and of the

management body collectively, and report to the management body

accordingly;

(d)

periodically review the policy of the management body for selection and

appointment of senior management and make recommendations to the

management body.

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(7) In performing its duties, the nomination committee shall, to the extent

possible and on an ongoing basis, take account of the need to ensure that the

management body’s decision making is not dominated by any one individual or

small group of individuals in a manner that is detrimental to the interests of the

market operator as a whole.

(8) In performing its duties, the nomination committee shall be able to use any

forms of resources it deems appropriate, including external advice.

(9) A market operator and its respective nomination committee shall engage a

broad set of qualities and competences when recruiting members to the management

body. A policy promoting diversity on the management body shall be put in place for

this purpose.

(10) The management body of a market operator shall define and oversee the

implementation of the governance arrangements that ensure effective and prudent

management of an organisation, including the segregation of duties in the

organisation and the prevention of conflicts of interest, and in a manner that

promotes the integrity of the market.

(11) The management body shall monitor and periodically assess the

effectiveness of the market operator’s governance arrangements and take appropriate

steps to address any deficiencies.

(12) Members of the management body shall have adequate access to information

and documents which are needed to oversee and monitor management decision-

making.

(13) The competent authority shall refuse authorisation if it is not satisfied that

the members of the management body of the market operator are of sufficiently good

repute, possess sufficient knowledge, skills and experience and commit sufficient

time to perform their functions, or if there are objective and demonstrable grounds

for believing that the management body of the market operator may pose a threat to

its effective, sound and prudent management and to the adequate consideration of the

integrity of the market.

(14) The market operator shall notify the competent authority of the identity of

all members of its management body and of any changes to its membership, along

with all the information needed to assess whether the market operator complies with

sub-paragraphs (1) to (8) above.

Organisational requirements

3. (1) The regulated market shall have arrangements to identify clearly and

manage those potential adverse consequences, for the operation of the regulated

market or for its participants, of any conflict of interest between the interest of the

regulated market, its owners or its operator and the sound functioning of the

regulated market, and in particular where such conflicts of interest might prove

prejudicial to the accomplishment of any functions delegated to the regulated market

by the competent authority.

(2)

The regulated market must ensure that

(a) it has available on an ongoing basis, sufficient financial resources to

facilitate its orderly functioning, having regard to the nature and extent of

the transactions concluded on the market and the range and degree of the

risks to which it is exposed;

(b) it is adequately equipped to manage the risks to which it is exposed ,

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including to manage ICT risk in accordance with Chapter II of the DORA

Regulation;

(c) it has appropriate arrangements and systems to identify all significant

risks to its operations and it has effective measures to mitigate those

risks;

(d) Repealed by Legal Notice 249 of 2024;

(e) it has effective arrangements to facilitate the efficient and timely

finalisation of the transactions executed under its systems;

(f)

it has arrangements in place to ensure that it meets data quality

standards pursuant to Article 22b of MiFIR;

(g) it has at least three (3) materially active members or users, each having the

opportunity to interact with all the others in respect of price formation.

(3) The regulated market shall have transparent and non-discretionary bye-laws and

procedures that provide for fair and orderly trading and establish objective criteria for

the execution of orders.

(4) A market operator shall not be allowed to execute client orders against

proprietary capital, or to engage in matched principal trading on any of the regulated

markets it operates.

Access to a regulated market

4. (1) The regulated market shall establish and maintain transparent and non-

discriminatory bye-laws, based on objective criteria, governing access to or

membership of the regulated market.

(2) Those bye-laws shall specify any obligations for the members or

participants arising from

(a) the constitution and administration of the regulated market;

(b) requirements relating to transactions on the market;

(c) professional standards imposed on the staff of the investment firms or

credit institutions that are operating on the market;

(d) the conditions established, for members or participants other than

investment services licence holders;

(e) the requirements and procedures for the clearing and settlement of

transactions concluded on the regulated market.

Monitoring of compliance with the bye-laws of the regulated market and

with other legal obligations

5. (1)

Regulated markets shall

(a) establish and maintain effective arrangements and procedures including

the necessary resource for the regular monitoring of the compliance by

their members or participants with their bye-laws; and

(b) monitor orders sent including cancellations and the transactions undertaken

by their members or participants under their systems in order to identify

infringements of those rules, disorderly trading conditions or conduct that

may indicate behaviour prohibited under Regulation (EU) No 596/2014 or

system disruptions in relation to a financial instrument.

(2) A market operator of a regulated market shall

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(a) immediately inform the competent authority of significant

infringements of its rules or disorderly trading conditions or conduct

that may indicate behaviour that is prohibited under Regulation (EU)

No. 596/2014 or system disruptions in relation to a financial instrument

Provided that the competent authority shall communicate this

information to ESMA and to the competent authorities of the other

Member States or EEA States;

Provided further that in relation to conduct that may indicate behaviour

that is prohibited under Regulation (EU) No. 596/2014, the competent

authority shall be convinced that such behaviour is being or has been

carried out before it notifies the competent authorities of the other

Member States or EEA States and ESMA;

(b) supply the relevant information without undue delay to the authority

competent for the investigation and prosecution of market abuse on the

regulated market and to provide full assistance to the latter in

investigating and prosecuting market abuse occurring on or through the

systems of the regulated market.

Promotion and maintenance of standards

(1)

In these regulations, unless the context otherwise

requires

"Act" means the Financial Markets Act;

"applicant" means a person who has submitted an application to the

competent authority to become authorized as a regulated market or

market operator;

"DORA Regulation" means Regulation (EU) 2022/2554 of the

European Parliament and of the Council of 14 December 2022 on

digital operational resilience for the financial sector and amending

Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/

2014, (EU) No 909/2014 and (EU) 2016/1011, as may be amended

from time to time, and includes any implementing measures that have

been or may be issued thereunder;

"European regulated market" means a regulated market as defined

in Article 4(1)(21) of MiFID authorised by its European regulatory

authority within the meaning of Article 44 of MiFID;

"market operator" means a person or persons who manages and,

or operates the business of a regulated market and may be the

regulated market itself;

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

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

financial instruments, as amended from time to time, and includes

any implementing measures that have been or may be issued

thereunder;

"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 as amended from time to time, and includes

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any implementing measures that have been or may be issued

thereunder;

"Regulation (EU) No 600/2014" means Regulation (EU) No 600/

2014 of the European Parliament and of the Council of 15 May 2014

on markets in financial instruments and amending Regulation (EU) No

648/2012;

"the Schedule" means the Schedule to these regulations.

"senior management" means natural persons who exercise executive

functions within an investment firm, a market operator, or a data

reporting services provider as defined in point (36a) of Article 2(1) of

Regulation (EU) No 600/2014, and who are responsible and

accountable to the management body for the day-to-day management

of the entity, including for the implementation of the policies

concerning the distribution of services and products to clients by the

firm and its personnel.

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

have the same meaning as in the Act.

The Schedule sets out the authorisation requirements which

must be satisfied by an applicant if it is to qualify as a regulated

market or a market operator and which must be satisfied by each

regulated market or market operator on a continuing and ongoing basis

if it is to remain a regulated market or a market operator.

(1) In considering whether an applicant, a regulated market

or a market operator satisfies the authorisation requirements

applying to it under these regulations, the competent authority may

take into account any other circumstances that it may deem relevant

in each particular case.

(2) An applicant, a regulated market or a market operator may

satisfy authorisation requirements applying to it under these

regulations by entering into an agreement to the satisfaction of the

competent authority for any functions specified in the said

agreement to be performed on its behalf by another person.

(3) An agreement as referred to in subregulation (2),

hereinafter referred to as the "delegation agreement", shall be made

in writing, and entered into between an applicant, a regulated market

or a market operator, as the case may be, and the person who is to

perform any functions on behalf of such applicant, regulated market

or market operator. Such delegation agreement shall be executed by

duly authorised officials of the governing body of the respective

entities.

(4) Where an applicant, a regulated market or a market operator

enters into any delegation agreement, any such agreement shall not

affect the responsibility imposed by the Act on such applicant,

regulated market or market operator to satisf y au thor isati on

requirements applying to it under these regulations.

(5) The liability of the regulated market or market operator for

any breaches of the authorisation requirements or any other

regulations or Financial Market Rules issued under the Act, shall

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not be affected or reduced as a result of the regulated market or the

market operator entering into any delegation agreement.

(6) Any person who, not being a regulated market or a market

operator, is to perform any specified function in terms of any

delegation agreement shall be confirmed, after due verification, by

the applicant, the regulated market or the market operator as the case

may be, as being a fit and proper person being able and willing to

perform such functions. This confirmation shall be made by the

governing body of the applicant, the regulated market or the market

operator, effect which shall be submitted to the competent authority

together with a duly authenticated true copy of the relevant

delegation agreement.

(7) Notwithstanding anything in the foregoing, the regulated

market or the market operator shall be responsible towards the

competent authority for the supervision of the proper performance

of any functions performed by any person throughout any such

period that any delegation agreement shall remain in force.

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

regulations fails to comply with any provisions of such regulations

or any rules issued thereunder further implementing such

regulations, the competent authority may, by notice in writing and

without recourse to a court hearing, impose on such person an

administrative penalty and other administrative measures in

accordance with the provisions of the Financial Markets Act

(MiFID and MiFIR Administrative Penalties, Measures and

Investigatory Powers) Regulations, 2017.

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

from the decisions which the competent authority shall take under

these regulations and the provisions of Part VI of the Act shall

apply mutatis mutandis.

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(1) The regulated market must be able and willing to promote and maintain

high standards of integrity and fair dealing in the carrying on of activities by persons

in the course of using the facilities provided by the regulated market.

(2) The regulated market must be able and willing to cooperate, by the sharing

of information or otherwise, with the competent authority, and with any other

authority, body or person having responsibility for the supervision or regulation of

any regulated activity or other financial service, or with an overseas regulator.

(3) For the purposes of the foregoing provision, the regulated market must have

appropriate arrangements with its members enabling it to obtain confidential

information from its members and to disclose such information to the competent

authority and other appropriate bodies and in particular, to assist and collaborate

with the competent authority without delay in response to a specific written request

received from the competent authority in the performance of its functions according

to law.

Complaints

(1) The regulated market must have effective arrangements for the

i nv e s t ig a t io n a nd r e s ol ut i on o f c om p la in t s a ri s i ng in c on n e c t ion w it h t he

performance of, or failure to perform, any of its functions

Provided that the foregoing does not extend to complaints about the content

of bye-laws made by the regulated market.

(2) The arrangements must include arrangements for a complaint to be fairly

and impartially investigated by a person independent of the regulated market, and for

him to report on the result of his investigation to the regulated market and to the

complainant.

(3) The arrangements must confer on the person mentioned in paragraph (2) the

power to recommend, if he thinks it appropriate, that the regulated market

(a) makes a compensatory payment to the complainant;

(b) remedies the matter complained of, or takes both of those steps.

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(4) Paragraph (3)(b) is not to be construed as preventing the regulated market

from making arrangements for the initial investigation of a complaint to be

conducted by the regulated market.

Default bye-laws in respect of market contracts

(1) The regulated market must have default bye-laws which, in the event of

a member of the regulated market being or appearing to be unable to meet his

obligations in respect of one or more market contracts, enable action to be taken in

respect of unsettled market contracts to which he is a party.

(2) The bye-laws may authorise the taking of the same or similar action in

relation to a member who appears to be likely to become unable to meet his

obligations in respect of one or more market contracts.

(3) The regulated market must have adequate arrangements for ensuring that

parties to the contract are notified as soon as reasonably practicable of the default,

the identity of the other parties to the contract and of any decision taken under the

bye-laws in relation to contracts to which they are a party.