EUROPEAN PASSPORT RIGHTS FOR PERSONS OPERATING MULTILATERAL TRADING FACILITIES OR ORGANIZED TRADING FACILITIES REGULATIONS

ORGANIZED TRADING FACILITIES REGULATIONS

SUBSIDIARY LEGISLATION 370.13

EUROPEAN PASSPORT RIGHTS FOR PERSONS OPERATING

MULTILATERAL TRADING FACILITIES OR ORGANIZED

TRADING FACILITIES REGULATIONS

1st November, 2007

LEGAL NOTICE 326 of 2007, as amended by Legal Notice 215 of 2012

and 399 of 2017.

(1) The title is the European Passport Rights for Persons

Operating Multilateral Trading Facilities or Organised Trading

Facilities Regulations.

(2) The objective is to implement the relevant provisions of

Articles 34(6) and (7), Article 79(2) and Articles 86(3) and (4) of

MiFID as herein defined, as well as to transpose, in part, Article

6(27)(c) of Directive 2010/78/EU of the European Parliament and of

the Council of 24 November 2010 amending Directives 98/26/EC,

2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC,

2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC

in respect of the powers of the European Supervisory Authority

(European Banking Authority), the European Supervisory Authority

(European Insurance and Occupational Pensions Authority) and the

European Supervisory Authority (European Securities and Markets

Authority), and the regulations shall be interpreted and applied

accordingly.

(1)

In these regulations, unless the context otherwise

requires -

"Act" means the Investment Services Act;

"competent authority" means the Malta Financial Services

Authority appointed under article 2A of the Act;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act;

"ESMA" means the European Securities and Markets Authority

established by Regulation (EU) No. 1095/2010 of the European

Parliament and of the Council of 24 November 2010;

"European right" means the entitlement of a person operating a

multilateral trading facility or an organised trading facility to

provide appropriate arrangements in the territory of a Member State

or EEA State other th an that in which that p erso n has been

authorized to operate such facility, so as to facilitate access to and

use of their systems by remote users;

"Home Member State or EEA State" means the Member State or

EEA State in which the persons operating the multilateral trading

facility or an organised trading facility are so authorised;

"Host Member State or EEA State" means the Member State or

EEA State in which, a person authorised to operate a multilateral

trading facility in Malta, provides appropriate arrangements so as

to facilitate access to and use of its system by remote members

established in that same Member State or EEA State;

ORGANIZED TRADING FACILITIES REGULATIONS

""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;

"multilateral system" means any system or facility in which

multiple third-party buying and selling trading interests in financial

instruments are able to interact in the system;

"multilateral trading facility" or "MTF" means a multilateral system,

operated by an investment services licence holder or a market operator,

which brings together multiple third-party buying and selling interests

in financial instruments – in the system and in accordance with non-

discretionary rules – in a way that results in a contract in accordance

with Title II of MiFID;

"organised trading facility" or "OTF" means a multilateral system

which is not a regulated market or an MTF and in which multiple

third-party buying and selling interests in bonds, structured finance

products, emission allowances or derivatives are able to interact in the

system in a way that results in a contract in accordance with Title II of

MiFID;

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

have the same meaning as in the Act.

Part I – Exercise of European Passport Rights by Persons

operating a Multilateral Trading Facility or an Organised Trading

Facility established in a Member State or EEA State

(1) A person who operates a multilateral trading facility or

an organised trading facility in any Member State or EEA state other

than Malta and which is seeking to provide appropriate

arrangements in Malta in exercise of a European right shall satisfy

the conditions specified in subregulation (2) and shall be exempt

from the provisions of article 3 of the Act.

(2)

The conditions for the purposes of this regulation are that

(a) the person operating the multilateral trading facility or

an Organised Trading Facility has communicated to its

European regulatory authority that it intends to

provide arrangements to facilitate access to and trading

on those markets by remote users, members or

participants established in Malta;

(b) the supervisory authority of the persons operating a

multilateral trading facility or an organised trading

facility in terms of Article 34(7) of MiFID has, within

one month of the receipt of the information specified

in paragraph (a), notified the competent authority of

this information.

ORGANIZED TRADING FACILITIES REGULATIONS

Part II – Exercise of Passport Rights by Persons operating a

Multilateral Trading Facility or Organised Trading Facility

established in Malta

(1) Persons operating a multilateral trading facility or an

organised trading facility established in Malta may exercise a

European right to provide appropriate arrangements to facilitate

access to and trading on those markets by remote users, members or

participants in another Member State or in an EEA State subject to

the requirements of this regulation.

(2) A person operating a multilateral trading facility or

organised trading facility established in Malta shall give the

competent authority a notice of its intention to exercise a European

right wherein it shall communicate the Member State or the EEA

State in which it intends to provide such arrangements.

(3) The competent authority shall communicate, within one

month, the information provided in terms of subregulation (2) to

the European regulatory authority of the Member State or EEA

State in which the person operating a multilateral trading facility or

an organised trading facility established in Malta intends to provide

such arrangements.

(4) The competent authority shall, on the request of the

European regulatory authority of the Member State or EEA State in

which the person operating a multilateral trading facility

established in Malta intends to provide such arrangements, and

without undue delay, communicate the identity of the remote

m em bers o r participants of th e m ultilateral tr ading facility

established in Malta.

Part III - Contraventions by Persons operating a Multilateral

Trading Facility in Malta in exercise of a European Right

(1) Where the competent authority has clear and

demonstrable grounds for believing that a person, authorised to

operate a multilateral trading facility or an organised trading facility

in any Member State or EEA state and who is providing access to

its systems in Malta in exercise of a European right, is in breach of

its obligations arising from the provisions adopted pursuant to

MiFID, it shall refer those findings to the European regulatory

authority of the home Member State or EEA State.

(2) If, despite the measures taken by the European regulatory

authority or because such actions prove inadequate, the person

providing access to its systems in Malta in exercise of a European

right, persists in acting in a manner which is clearly prejudicial to

the interests of investors in Malta or the orderly functioning of

m ar kets, the co mpeten t auth ority sh all, after inf orm ing the

European regulatory authority, take all the appropriate measures

needed in order to protect investors and the proper functioning of

the markets. This shall include the possibility of preventing the

person providing access to its systems in Malta, in exercise of a

European Right from making the said arrangements available to

re m o te m em b e rs o r p ar ti c ip an t s es t a b li s h e d in M a lt a. T h e

Commission of the European Union and ESMA shall be informed

ORGANIZED TRADING FACILITIES REGULATIONS

of such m easures without delay. In addition, the competent

authority may refer the matter to ESMA.

(3) Any measure adopted pursuant to this regulation shall be

communicated to the person concerned, in writing, together with

reasons justifying such measures and shall be subject to a right of

appeal to the Financial Services Tribunal and the provisions of

article 19 of the Act shall apply mutatis mutandis.

Part IV - Cooperation between the Competent Authority and

European Regulatory Authorities

Where the operations of a trading venue that has established

arrangements in Malta have become of substantial importance for

the functioning of the securities markets and the protection of

Maltese investors, the European regulatory authority of the home

Member State or EEA State of the trading venue and the competent

authority shall establish proportionate cooperation arrangements.

Part V - Administrative Penalties, other Administrative Measures

and Appeals

(1)Where a person falling within the scope, fails to comply

with any provisions of such r egulation s 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

Investment Services Act and Banking 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 article 19 of the Act

shall apply mutatis mutandis.