INVESTMENT SERVICES ACT (TIED AGENTS) REGULATIONS *

SUBSIDIARY LEGISLATION 370.14

INVESTMENT SERVICES ACT (TIED AGENTS)

REGULATIONS *

1st November, 2007

LEGAL NOTICE 327 of 2007, as amended by Legal Notice 356 of 2009.

(1) The title of these regulations is the Investment Services

Act (Tied Agents) Regulations.

(2) The objective of these regulations is to implement Article

23 of the Directive, as herein defined, and they shall be interpreted

and applied accordingly.

In these regulations, unless the context otherwise requires -

"Act" means the Investment Services Act;

"ancillary services" shall have the same meaning as that assigned

to it by the Investment Services Rules;

"the competent authority" means the Malta Financial Services

Authority appointed under article 2 of the Act;

"the Directive" means Directive 2004/39/EC of the European

Parliament and of the Council of 21 April 2004 on markets in

financial instruments amending Council Directives 85/611/EEC

and 93/6/EEC and Directive 2000/12/EC of the European

Parliament and of the Council and repealing Council Directive 93/

22/EEC, as amended from time to time, and includes any

implementing measures that have been or may be issued

thereunder;

"European investment firm" means an investment firm as defined

in Article 4(1) of the Direc tive authorised by its European

regulatory authority within the meaning of Article 5 of the

Directive or authorised by a European regulatory authority in an

EEA State;

"European right" means the entitlement of a person to establish a

branch, or provide services in a Member State or EEA State other

than that in which it has its head office -

(a) in accordance with the Treaty as applied in the

Member States or EEA States; and

(b) subject to the requirements of the Directive and

subject to any regulations made under the Act and, or

Investment Services Rules issued by the competent

authority in terms of article 6 of the Act, implementing

such requirements as may be applicable;

"investment services licence holder" means a person who holds

an investment services licence granted by the competent authority

*These regulations were repealed by Legal Notice 403 of 2017.

in terms of article 6 of the Act;

"tied agent" means a natural or legal person, who under the full

and unconditional responsibility of only one investment services

licence holder or European investment firm and on whose behalf it

acts, promotes investment and, or ancillary services to clients or

prospective clients, receives and transmits instructions or orders

from the client in respect of investment services or instruments,

places instruments and, or provides investment advice to clients or

prospective clients in respect of those instruments or services.

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

have the same meaning as in the Act.

(1) Investment services licence holders and European

investment firms exercising a European right may appoint tied

agents for the purposes of promoting their services, soliciting

business or receiving orders from clients or potential clients and

transmitting them, placing instruments and providing investment

advice in respect of such instruments and services offered by the

investment services licence holder or the European investment

firm.

(2) Tied agents may, subject to these regulations and the

European Passport Rights for Investment Firms Regulations, where

applicable, be established in Malta or in a Member State or EEA

State.

(1) An investment services licence holder or a European

investment firm wishing to appoint a tied agent established in

Malta to carry out business in Malta or elsewhere shall apply to the

competent authority for the registration of such tied agent.

(2) An investment services licence holder or a European

investment firm may appoint a tied agent established in Malta in

terms of subregulation (1) only if such tied agent has been

registered by the competent authority in the public register kept in

terms of regulation 9.

(3) Tied agents established in Malta and registered in terms of

regulation 9 shall be exempt from the provisions of article 3 of the

Act.

An investment services licence holder may appoint a tied

agent in a Member State or EEA State which provides for the

appointment of tied agents in terms of Article 23 of the Directive

only if such tied agent is registered in the public register which the

Member or EEA State concerned has established for this purpose.

(1) Where the investment services licence holder appoints

a tied agent established in a Member State or EEA State which, in

terms of Article 23 of the Directive, does not provide for the

appointment of tied agents, such licence holder shall be obliged to

apply to the competent authority for the registration of the said tied

agent.

(2) The provisions of regulation 4 shall apply mutatis mutandis

to investment services licence holders and tied agents falling within

the scope of subregulation (1).

(1)

Tied agents may not hold or control clients’ money and

or assets.

(2)

Tied agents shall only act for one licence holder at any one

time.

(1) Where an investment services licence holder decides to

appoint a tied agent, it remains fully and unconditionally

responsible for any act or omission on the part of the tied agent

when the latter is acting on behalf of the investment services

licence holder.

(2) The investment services licence holder shall ensure that its

tied agent discloses the capacity in which such tied agent is acting

and the name of the investment services licence holder which such

tied agent is representing when contacting or before dealing with

any client or potential client.

(3) The investment services licence holder that appoints tied

agents shall monitor the activities of its tied agents so as to ensure

that they continue to comply with the requirements of these

regulations and the Investment Services Rules that may be issued

by the competent authority in terms of article 6 of the Act, when

acting through tied agents.

(4) The investment services licence holder that appoints tied

agents shall take adequate measures in order to avoid any negative

impact that the activities of the tied agents, which are not covered

by the scope of the Directive, could have on the activities carried

out by the tied agents on behalf of the investment services licence

holder.

(1) The competent authority shall keep a register of all tied

agents which are

(a) established in Malta and appointed by an investment

services licence holder or by a European investment

firm; or

(b) established in a Member State or EEA State which, in

terms of Article 23 of the Directive, does not provide

for the appointment of tied agents and such tied agent

is appointed by an investment services licence holder.

Such register shall be updated on a regular basis and shall

be accessible to the public.

(2) The competent authority shall only admit a tied agent to the

register established in subregulation (1) if the investment services

licence holder or the European investment firm appointing the tied

agent has established and has confirmed to the competent authority

that the tied agent is of sufficiently good repute and possesses

appropriate general, commercial and professional knowledge so as

to be able to communicate accurately all relevant information

regarding the proposed service to the potential clients

Provided that where the tied agent will provide investment

advice, the competent authority shall itself establish whether the

tied agent possesses the level of competence required by the

competent authority for this purpose.

(3) The competent authority shall not register, or shall

withdraw registration of a tied agent where

(a) the activities actually carried on clearly indicate that a

tied agent has opted for registration in Malta for the

purpose of evading the stricter standards in force in

another Member State or EEA State within the

territory of which it intends to carry out or carries out

the greater part of its activities; or

(b) it is no longer satisfied that the tied agent fulfils the

requirements of this subregulation.

For the better carrying out of the requirements set out in

these regulations the competent authority may from time to time,

issue and publish Investment Services Rules in terms of article 6 of

t h e A c t , a p p l i ca b l e t o i n v e s t m e n t se r v i c e s l i c e n c e h o l d e r s

appointing tied agents.

Where the competent authority has refused to register a

tied agent or has withdrawn a registration issued to a tied agent in

terms of regulation 9(3), it shall notify the person to whom such

registration was refused or the tied agent whose registration was

withdrawn of its decision, in writing and such person, shall have a

right of appeal from such decision of the competent authority to the

Financial Services Tribunal and the provisions of article 19 of the

Act shall apply mutatis mutandis.

The provisions of these regulations shall apply mutatis

mutandis to a European credit institution as defined in regulation 2

of the European Passport Rights for Credit Institutions

Regulations, authorised under the Directive to provide investment

services and seeking to appoint a tied agent in terms of the

Directive. Reference to the term "European investment firm" shall

be deemed to be a reference to the term "European credit

institution".