INVESTMENT SERVICES ACT (SUPERVISORY REVIEW) REGULATIONS

SUBSIDIARY LEGISLATION 370.15

INVESTMENT SERVICES ACT

(SUPERVISORY REVIEW) REGULATIONS

24th January, 2014

LEGAL NOTICE 30 of 2014, as amended by Legal Notices 299 of 2015,

30 of 2022, 71 of 2023 and 252 of 2024.

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

Act (Supervisory Review) Regulations, 2013.

(2) The purpose of these regulations is to transpose articles 3 (in

part), 4(1), 6, 7, 50, 52, 53(2), 56, 57, 58(1), 58 (3), 59, 60, 61, 74(4),

75(1), 75(3), 77(2), 78(2), 78(3), 78(4), 78(5), 86(3), 91(6), 91(11), 97,

98, 99, 100 to 105 inclusive, 107, 110, 143, 144, 151, 157, 159, 159a

of the CRD.

Substituted by

L.N. 30 of 2022.

SUPERVISORY REVIEW AND EVALUATION

(Regulation 11)

(1)

In addition to credit, market and operational risks, the review and

evaluation performed by the competent authority pursuant to regulation 11 shall include

(a) the results of the stress test carried out in accordance with Article 177 of

the CRR by investment firms applying an internal ratings based

approach to calculate their credit risk-weighted exposure;

(b) the exposure to and management of concentration risk by investment

firms including their compliance with the Investment Services Rules

transposing the requirements of the CRD and the requirements set out in

Part Four of the CRR;

(c) the robustness, suitability and manner of application of the policies and

procedures implemented by investment firms for the management of the

residual risk associated with the use of recognised credit risk mitigation

techniques;

(d) the extent to which the own funds held by an investment firm in respect

of assets which it has securitised are adequate having regard to the

economic substance of the transaction, including the degree of risk

transfer achieved;

(e) the exposure to, measurement and management of liquidity risk by

investment firms including the development of alternative scenario

analyses, the management of risk mitigants (in particular the level,

composition and quality of liquidity buffers) and effective contingency

plans;

(f)

the impact of diversification effects and how such effects are factored

into the risk measurement system;

(g) the results of stress tests carried out by investment firms using an

internal model to calculate market risk own funds requirements under

Part Three, Title IV of Chapter 5 of the CRR;

(h) the geographical location of investment firm’s exposures;

(i)

the business model of the investment firm;

(2)

For the purposes of point (e) of paragraph 1 of this Schedule, the competent

authority shall regularly carry out a comprehensive assessment of the overall liquidity

risk management by investment firms and promote the development of sound internal

methodologies. In its review, the competent authority shall have regard to the role played

by investment firms in the financial markets. The competent authority shall also duly

consider the potential impact of their decisions on the stability of the financial system in

all other Member States concerned.

(3)

The competent authority shall monitor whether an investment firm has

provided implicit support to a securitisation. If an investment firm is found to have

provided implicit support on more than one occasion the competent authority shall take

appropriate measures reflective of the increased expectation that it will provide future

support to its securitisation thus failing to achieve a significant transfer of risk.

(4)

For the purposes of the determination to be made under regulation 11(3),

the competent authority shall consider whether the valuation adjustments taken for

positions or portfolios in the trading book, as set out in Article 105 of the CRR, enable

the investment firm to sell or hedge out its positions within a short period without

incurring material losses under normal market conditions.

(5)

(1) The review and evaluation performed by the competent authority shall

include the exposure of investment firms to the interest rate risk arising from non-trading

activities.

(2)

The supervisory powers shall be exercised at least in the following cases

(a) where an investment firm’s economic value of equity as referred to in

Article 84(1) of the CRD as transposed in Maltese Law declines by

more than 15% of its Tier 1 capital as a result of a sudden and

unexpected change in interest rates as set out in any of the six

supervisory shock scenarios applied to interest rates;

(b) where an investment firm’s net interest income referred to in Article

84(1) of the CRD as transposed in Maltese Law experiences a large

decline as a result of a sudden and unexpected change in interest rates as

set out in any of the two supervisory shock scenarios applied to interest

rates.

(3)

Notwithstanding sub-paragraph (2) of paragraph (5), the competent

authority shall not be obliged to exercise supervisory powers where it considers, based

on the review and evaluation referred to in this paragraph, that the investment firm’s

management of interest rate risk arising from non-trading book activities is adequate and

that the investment firm is not excessively exposed to interest rate risk arising from non-

trading book activities.

(4)

For the purpose of this paragraph, the term "supervisory powers" means the

powers referred to in paragraph 1 of Schedule III or the power to specify modelling and

parametric assumptions, other than those identified by the EBA pursuant to point (b) of

paragraph 5a of Article 98 of the CRD as transposed in Maltese Law, to be reflected by

investment firms in their calculation of the economic value of equity under Article 84(1)

of the CRD as transposed in Maltese Law.

(5)

The review and evaluation performed by the competent authority shall

include the exposure of investment firms to the risk of excessive leverage as reflected by

indicators of excessive leverage, including the leverage ratio determined in accordance

with Article 429 of the CRR. In determining the adequacy of the leverage ratio of

investment firms and of the arrangements, strategies, processes and mechanisms

implemented by investment firms to manage the risk of excessive leverage, the

competent authority shall take into account the business model of those investment

firms.

(6) The review and evaluation conducted by the competent authority shall

include governance arrangements of investment firms, their corporate culture and

values, and the ability of members of the management body to perform their duties.

In conducting that review and evaluation, the competent authority shall, at least,

have access to agendas and supporting documents for meetings of the management

body and its committees, and the results of the internal or external evaluation of

performance of the management body.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Investment Services Act;

"CRD" means Directive 2013/36/EU of the European Parliament

and of the Council of 26 June 2013 on access to the activity of

credit institutions and the prudential supervision of credit institutions,

amending Directive 2002/87/EC and repealing Directives 2006/48/

EC and 2006/49/EC, as amended from time to time, and includes

any implementing measures that have been or may be issued

thereunder;

"credit institution" means a person licensed in terms of the

Banking Act, whose head office is in Malta or an undertaking

whose business is to receive deposits or other repayable funds from

the public and to grant credits for its own account, authorised by a

European Regulatory Authority in terms of the CRD or authorised

by a European regulatory authority in an EEA Member State;

"CRR" means Regulation (EU) No. 575/2013 of the European

Parliament and of the Council of 26 June 2013 on prudential

requirements for credit institutions and investment firms and

amending Regulation Mi FIDU) No. 648/2012, as amended from

time to time, and includes any implementing measures that have

been or may be issued thereunder;

"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 binding legal instruments,

guidelines and other measures that have been or may be issued

thereunder;

"EBA" means the European Banking Authority established by

Regulation (EU) No. 1093/2010 of the European Parliament and of

the Council of the 24 November 2010;

"EIOPA" means the European Insurance and Occupational

Pensions Authority as established by Regulation (EU) No. 1093/

2 0 10 of th e E u r op e a n P a r l ia m e n t an d o f t h e C o un c i l o f 2 4

November, 2010 establishing a European Supervisory Authority;

"ESCB central banks" shall have the same meaning as that

assigned to it in point 45 of Article 4(1) of the CRR;

"ESFS" means European System of Financial Supervision;

"ESRB" means the European Systemic Risk Board established

by regulation EU No. 1092/2010;

"European investment firm" means a firm as defined in article

4(1)(2) of the CRR, authorised by its European regulatory authority

within the meaning of Article 5 of the MiFID Directive, or

authorised by a European regulatory authority in an EEA State;

"home member state" means

(a) in the case of an investment firm, within the meaning

of these regulations, Malta;

(b) in the case of a "European investment firm", within the

meaning of these regulations, the Member State where

such European investment Firm is authorised by its

European regulatory authority;

"host member state" means a Member State or an EEA State

where an investment firm has established a branch or provides

services on a cross border basis in terms of the European Passport

Rights for Investment Firms Regulations;

"investment firm" means a person who holds an investment

services licence issued by the competent authority under the Act,

and which is subject to the requirements of the CRD;

"third country" means a country which is not a Member State or

an EEA State.

(2) Words and expressions used in these regulations which are

also used in the Act shall have the same meaning assigned to them

as in the Act.

Amended by

L.N. 30 of 2022.

SUPERVISORY EXAMINATION

PROGRAMME

(Regulation 13)

(1) The annual supervisory examination programme referred to in regulation 13,

shall contain the following

(a) an indication of how the competent authority intends to carry out its

tasks and allocate its resources;

(b) an identification of which investment firms are intended to be subject to

enhanced supervision and the measures taken for such supervision as set

out in paragraph 3;

(c) a plan for inspections at the premises used by an investment firm,

including its branches and subsidiaries established in other Member

States in accordance with regulation 7 of these regulations and

regulations 3, 10, and 19 of the Supervisory Consolidation Regulations.

(2)

Supervisory examination programmes shall include the following

investment firms

(a) investment firms for which the results of the stress tests referred to in

points (a) and (g) of paragraph (1) of Schedule I and regulation 14, or

the outcome of the supervisory review and evaluation process under

regulation 11, indicate significant risks to their on going financial

soundness or indicate breaches of the Act, and any regulations and rules

issued thereunder transposing the requirements of the CRD and of the

CRR;

(b) any other investment firm which the competent authority may deem

necessary.

(3) Where appropriate under regulation 11 the following measures shall, in

particular, be taken if necessary

(a) an increase in the number or frequency of on-site inspections of the

investment firm;

(b) a permanent presence of the competent authority at the investment firm;

(c) additional or more frequent reporting by the investment firm;

(d) additional or more frequent review of the operational, strategic or

business plans of the investment firm;

(e) thematic examinations monitoring specific risks that are likely to

materialise.

(4)

Adoption of a supervisory examination programme by a home Member State

European regulatory authority with respect to a European Investment Firm which has

established a branch in Malta, shall not prevent the competent authority in its

capacity as the host Member State from carrying out, on a case-by-case basis, on-

the-spot checks and inspections of the activities carried out by branches of

investment firms in Malta in accordance with the Act and these regulations.

(1) 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 CRD and the CRR and any reference in

these regulations to the competent authority shall be read and

construed accordingly.

(2) The competent authority shall exercise all the functions,

obligations and powers pursuant to the CRD and the CRR and shall

satisfy all the requirements imposed on competent authorities by

the CRD and the CRR.

Amended by

L.N. 299 of 2015;

SUPERVISORY POWERS

Substituted by

(Regulations 11, 16, paragraphs (4) and (5) of

L.N. 30 of 2022.

Amended by

Schedule I and regulation 15(4))

(1)

For the purposes of regulations 11, 16 and paragraphs (4) and (5) of

Schedule I, regulation 15(4), and the application of the CRR, the competent authority

shall have at least the following powers

(a) to require investment firms to have additional own funds in excess of

the requirements set out in the CRR under the conditions set out in

paragraphs 3 to 7 of this Schedule;

(b) to require the reinforcement of the arrangements, processes,

mechanisms and strategies implemented in accordance with Articles 73

and 74 of the CRD as transposed in Maltese Law;

(c) to require investment firms to present a plan to restore compliance with

supervisory requirements pursuant to the Act, regulations or Investment

Services Rules issued thereunder, and to the CRR and set a deadline for

its implementation, including improvements to that plan regarding the

scope and the deadline;

(d) to require investment firms to apply a specific provisioning policy or

treatment of assets in terms of own funds requirements;

(e) to restrict or limit the business, operations or network of institutions or

to request the divestment of activities that pose excessive risks to the

soundness of an investment firm;

(f)

to require the reduction of the risk inherent in the activities, products

and systems of investment firms, including outsourced activities;

(g) to require investment firms to limit variable remuneration as a

percentage of net revenues where it is inconsistent with the maintenance

of a sound capital base;

(h) to require investment firms to use net profits to strengthen own funds;

(i)

to restrict or prohibit distributions or interest payments by an

investment firm to shareholders, members or holders of Additional Tier

1 instruments within the meaning of the CRR, where the prohibition

does not constitute an event of default of the investment firm;

(j)

to impose additional or more frequent reporting requirements, including

reporting on own funds, liquidity and leverage;

(k) to impose specific liquidity requirements, including restrictions on

maturity mismatches between assets and liabilities;

(l)

to require additional disclosures.

(2)

(1)

For the purpose of paragraph 1(j) of this Schedule, the competent

authority may only impose additional or more frequent reporting requirements on

investment firms where the relevant requirement is appropriate and proportionate with

regard to the purpose for which the information is required and where the information

requested is not duplicative.

(2)

For the purposes of regulations 11 to 16, any additional information that

may be required from investment firms shall be deemed as duplicative where the same,

or substantially the same, information has already been otherwise reported to the

competent authority or may be produced by the competent authority.

(3)

The competent authority shall not require an investment firm to report

additional information where it has previously received it in a different format or level of

granularity and that different format or granularity does not prevent the competent

authority from producing information of the same quality and reliability as that produced

on the basis of the additional information that would be otherwise reported.

(3)

(1)

The competent authority shall impose the additional own funds

requirement referred to in paragraph 1(a) of this Schedule where, on the basis of the

reviews carried out in accordance with regulations 11 and 15, it determines any of the

following situations for an individual investment firm

(a) the investment firm is exposed to risks or elements of risk that are not

covered or sufficiently covered, as specified in paragraph 4 of this

Schedule, by the own funds requirements set out in Parts Three, Four

and Seven of the CRR and in Chapter 2 of Regulation (EU) No. 2017/

2402;

(b) the investment firm does not meet the requirements set out in Articles

73 and 74 of the CRD as transposed in the Investment Services Rules or

in Article 393 of the CRR and it is unlikely that other supervisory

measures would be sufficient to ensure that those requirements can be

met within an appropriate time frame;

(c) the adjustments referred to in paragraph (4) of Schedule I are deemed to

be insufficient to enable the investment firm to sell or hedge out its

positions within a short period without incurring material losses under

normal market conditions;

(d) the evaluation carried out in accordance with regulation 15(4) reveals

that the non-compliance with the requirements for the application of the

permitted approach shall likely lead to inadequate own funds

requirements;

(e) the investment firm repeatedly fails to establish or maintain an adequate

level of additional own funds to cover the guidance communicated in

accordance with paragraph 10 of this Schedule;

(f)

other institution-specific situations deemed by the competent authority

to raise material supervisory concerns.

(2)

The competent authority shall only impose the additional own funds

requirement referred to in paragraph 1(a) of this Schedule to cover the risks incurred by

individual investment firms due to their activities, including those reflecting the impact

of certain economic and market developments on the risk profile of an individual

investment firm.

(4)

(1)

For the purpose of paragraph 3(1)(a) of this Schedule, risks or

elements of risk shall only be considered as not covered or sufficiently covered by the

own funds requirements set out in Parts Three, Four and Seven of the CRR and in

Chapter 2 of Regulation (EU) No. 2017/2402 where the amounts, types and distribution

of capital considered adequate by the competent authority, taking into account the

supervisory review of the assessment carried out by investment firms in accordance with

the first paragraph of Article 73 of the CRD as transposed in Maltese Law are higher

than the own funds requirements set out in Parts Three, Four and Seven of the CRR and

in Chapter 2 of Regulation (EU) No. 2017/2402.

(2)

For the purpose of the first sub-paragraph, the competent authority shall

assess, taking into account the risk profile of each individual investment firm, the risks to

which the investment firm is exposed, including

(a) institution-specific risks or elements of such risks that are explicitly

excluded from or not explicitly addressed by the own funds

requirements set out in Parts Three, Four and Seven of the CRR and in

Chapter 2 of Regulation (EU) No. 2017/2402;

(b) institution-specific risks or elements of such risks likely to be

underestimated despite compliance with the applicable requirements set

out in Parts Three, Four and Seven of the CRR and in Chapter 2 of

Regulation (EU) No. 2017/2402.

(3)

To the extent that risks or elements of risk are subject to transitional

arrangements or grandfathering provisions laid down in the CRD and transposed in

Maltese Law or in the CRR, they shall not be considered risks or elements of such risks

likely to be underestimated despite compliance with the applicable requirements set out

in Parts Three, Four and Seven of the CRR and in Chapter 2 of Regulation (EU) No.

2017/2402.

(4)

For the purposes of sub-paragraph (1), the capital considered adequate shall

cover all risks or elements of risks identified as material pursuant to the assessment laid

down in sub-paragraph (2) that are not covered or not sufficiently covered by the own

funds requirements set out in Parts Three, Four and Seven of the CRR and in Chapter 2

of Regulation (EU) No. 2017/2402.

(5)

Interest rate risk arising from non-trading book positions may be

considered material at least in the cases referred to in paragraph 5 of Schedule I, unless

the competent authority, in performing the review and evaluation, come to the

conclusion that the investment firm’s management of interest rate risk arising from non-

trading book activities is adequate and that the investment firm is not excessively

exposed to interest rate risk arising from non-trading book activities.

(5)

(1)

Where additional own funds are required to address risks other than

the risk of excessive leverage not sufficiently covered by point (d) of Article 92(1) of the

CRR, the competent authority shall determine the level of additional own funds required

under paragraph 3(a) of this Schedule as the difference between the capital considered

adequate pursuant to paragraph 4 of this Schedule and the relevant own funds

requirements set out in Parts Three, Four and Seven of Regulation (EU) No. 575/2013

and in Chapter 2 of Regulation (EU) No. 2017/2402.

(2)

Where additional own funds are required to address the risk of excessive

leverage not sufficiently covered by point (d) of Article 92(1) of the CRR, the competent

authority shall determine the level of the additional own funds required under paragraph

3(a) of this Schedule as the difference between the capital considered adequate pursuant

to paragraph 4 of this Schedule and the relevant own funds requirements set out in Parts

Three, Four and Seven of the CRR.

(6)

(1)

The investment firm shall meet the additional own funds

requirement imposed by the competent authority under paragraph 1(a) of this Schedule

to address risks other than the risk of excessive leverage with own funds that satisfy the

following conditions

(a) at least three quarters of the additional own funds requirement shall be

met with Tier 1 capital;

(b) at least three quarters of the Tier 1 capital referred to in point (a) shall

be composed of Common Equity Tier 1 capital.

(2)

By way of derogation from the first sub-paragraph (1), the competent

authority may require the investment firm to meet its additional own funds requirement

with a higher portion of Tier 1 capital or Common Equity Tier 1 capital, where

necessary, and having regard to the specific circumstances of the investment firm.

(3)

Own funds that are used to meet the additional own funds requirement

referred to in paragraph 1(a) of this Schedule imposed by the competent authority to

address the risk of excessive leverage not sufficiently covered by point (d) of Article

92(1) of the CRR shall not be used to meet any of the following

(a) the own funds requirement set out in point (d) of Article 92(1) of the

CRR;

(b) the combined buffer requirement;

(c) the guidance on additional own funds referred to in paragraph 10 of this

Schedule where that guidance addresses the risks other than the risk of

excessive leverage.

(4) Own funds that are used to meet the additional own funds requirement

referred to in paragraph 1(a) of this Schedule imposed by the competent authority to

address the risk of excessive leverage not sufficiently covered by point (d) of Article

92(1) of the CRR shall not be used to meet any of the following

(a) the own funds requirement set out in point (d) of Article 92(1) of the

CRR;

(b) the leverage ratio buffer requirement referred to in Article 92(1a) of the

CRR;

(c) the guidance on additional own funds referred to in paragraph 10 of this

Schedule, where that guidance addresses risks of excessive leverage.

(7)

The competent authority shall duly justify in writing to each investment

firm the decision to impose an additional own funds requirement under paragraph 1(a) of

this Schedule. That justification shall include, in the case set out in paragraph 3(e) of this

Schedule, a specific statement of the reasons for which the imposition of guidance on

additional own funds is no longer considered sufficient.

(8)

Pursuant to the strategies and processes referred to in Article 73 of the

CRD as transposed in Maltese Law, investment firms shall set their internal capital at an

adequate level of own funds that is sufficient to cover all the risks that an investment

firm is exposed to and to ensure that the investment firm’s own funds can absorb

potential losses resulting from stress scenarios, including those identified under the

supervisory stress test referred to in regulation 14.

(9)

(1)

The competent authority shall regularly review the level of the

internal capital set by each investment firm in accordance with paragraph 8 of this

Schedule as part of the reviews and evaluations performed in accordance with regulation

11(1) and 15(1).

(2)

Pursuant to that review, the competent authority shall determine for

each investment firm the overall level of own funds it considers appropriate.

(10) (1)

The competent authority shall communicate its guidance on

additional own funds to investment firms.

(2)

The guidance on additional own funds shall be the own funds exceeding

the relevant amount of own funds required pursuant to Parts Three, Four and Seven of

the CRR, Chapter 12 of Regulation (EU) No. 2017/2402, paragraph 1(a) of this Schedule

and Article 128(6) of the CRD as transposed in Maltese Law or pursuant to Article

92(1a) of the CRR as relevant, which are required to reach the overall level of own funds

considered appropriate by the competent authority pursuant to paragraph 9 of this

Schedule.

(11) The competent authority’s guidance on additional own funds pursuant to

paragraph 10 of this Schedule shall be institution-specific. The guidance may cover risks

addressed by the additional own funds requirement imposed pursuant to paragraph (1)(a)

of this Schedule only to the extent that it covers aspects of those risks that are not already

covered under that requirement.

(12) (1)

Own funds that are used to meet the guidance on additional own

funds communicated in accordance with paragraph 10 of this Schedule to address risks

other than the risk of excessive leverage shall not be used to meet any of the following

(a) the own funds requirements set out in points (a), (b) and (c) of Article

92(1) of the CRR;

(b) the requirement laid down in paragraphs 3 to 7 of this Schedule imposed

by the competent authority to address risks other than the risk of

excessive leverage and the combined buffer requirement.

(2)

Own funds that are used to meet the guidance on additional own

funds communicated in accordance with paragraph 10 of this Schedule to address the

risk of excessive leverage shall not be used to meet the own funds requirement set out in

point (d) of Article 92(1) of the CRR, the requirement laid down in paragraphs 3 to 7 of

this Schedule imposed by the competent authority to address the risk of excessive

leverage and the leverage ratio buffer requirement referred to in Article 92(1a) of the

CRR.

(13)

Failure to meet the guidance referred to in paragraph 10 of this Schedule

where an investment firm meets the relevant own funds requirements set out in Parts

Three, Four and Seven of the CRR and in Chapter 2 of Regulation (EU) No. 2017/2402,

the relevant additional own funds requirement referred to in paragraph 1(a) of this

Schedule and, as relevant, the combined buffer requirement or the leverage ratio buffer

requirement referred to in Article 92(1a) of the CRR shall not trigger the restrictions

referred to in Article 141 or 141b of the CRD as transposed in the Investment Services

Rules.

(14) The competent authority shall notify the Resolution Committee of the

additional own funds requirement imposed on investment firms pursuant to

paragraph 1(a) of this Schedule and of any guidance on additional own funds

communicated to investment firms in accordance with paragraph 10 of this

Schedule.

In the exercise of its duties, the competent authority shall

take into account the convergence in respect of supervisory tools

and supervisory practices in the application of the laws, regulations

and administrative requirements adopted pursuant to the CRD and

the CRR. For that purpose, the competent authority

(a) as party to the ESFS shall cooperate with trust and full

mutual respect, in particular when ensuring the flow of

appropriate and reliable information between the other

parties to the ESFS in accordance with the principle of

sincere cooperation set out in Article 4(3) of the Treaty

on European Union;

(b) shall participate in the activities of the EBA and, as

appropriate, in the colleges of supervisors;

(c) shall make every effort to comply with those

guidelines and recommendations issued by the EBA in

accordance with Article 16 of Regulation (EU) No.

1093/2010 and to respond to the warnings and

recommendations issued by the ESRB pursuant to

Article 16 of Regulation (EU) No. 1092/2010;

(d) shall cooperate closely with the ESRB;

(e) shall not be inhibited by other national legislative

provisions in the performance of its duties as member

of the EBA and the ESRB, or its duties under the CRD

and the CRR.

DISCLOSURE REQUIREMENTS

(Regulation 22)

(1) The competent authority shall publish the following information pursuant to

regulation 22 herein

(a) the general criteria and methodologies adopted to review compliance

with Articles 405 to 409 of the CRR;

(b) without prejudice to the confidentiality provisions in the Act, a

summary description of the outcome of the supervisory review and

description of the measures imposed in cases of non-compliance with

Articles 405 to 409 of the CRR identified on an annual basis.

(2) If the competent authority exercises the discretion laid down in Article 7(3)

of the CRR it shall publish the following information

(a)

the criteria it applies to determine that there is no current or foreseen

material practical or legal impediment to the prompt transfer of own

funds or repayment of liabilities;

(b) the number of parent investment firms or credit institutions which

benefit from the exercise of the discretion laid down in Article 7(3) of

the CRR and the number of those which incorporate subsidiaries in a

third country;

(c) on an aggregate basis for Malta

(i)

the total amount of own funds on the consolidated basis of the

parent investment firm or credit institution in Malta, which

benefits from the exercise of the discretion laid down in Article

7(3) of the CRR, which are held in subsidiaries in a third country;

(ii) the percentage of total own funds on the consolidated basis of

parent investment firms in Malta which benefit from the exercise

of the discretion laid down in Article 7(3) of the CRR,

represented by own funds which are held in subsidiaries in a third

country;

(iii) the percentage of total own funds required under Article 92 of the

CRR on the consolidated basis of parent investment firms or

credit institutions in Malta, which benefit from the exercise of the

discretion laid down in Article 7(3) of the CRR, represented by

own funds which are held in subsidiaries in a third country.

(3) If the competent authority exercises the discretion laid down in Article 9(1)

of the CRR it shall publish all the following

(a) the criteria it applies to determine that there is no current or foreseen

material practical or legal impediment to the prompt transfer of own

funds or repayment of liabilities;

(b) the number of parent investment firms or credit institutions which

benefit from the exercise of the discretion laid down in Article 9(1) of

the CRR and the number of such parent investment firms which

incorporate subsidiaries in a third country;

(c) on an aggregate basis for Malta

(i)

the total amount of own funds of parent investment firms which

benefit from the exercise of the discretion laid down in Article

9(1) of the CRR which are held in subsidiaries in a third country;

(ii) the percentage of total own funds of parent investment firms or

credit institutions which benefit from the exercise of the

discretion laid down in Article 9(1) of the CRR represented by

own funds which are held in subsidiaries in a third country;

(iii) the percentage of total own funds required under Article 92 of the

CRR of parent investment firms or credit institutions which

benefit from the exercise of the discretion laid down in Article

9(1) of the CRR represented by own funds which are held in

subsidiaries in a third country.

The competent authority shall, in the exercise of its general

duties, duly consider the potential impact of its decisions on the

stability of the financial system in the other Member States

concerned and, in particular, in emergency situations, based on the

information available at the relevant time.

BODIES WITH WHOM THE COMPETENT

AUTHORITY MAY EXCHANGE INFORMATION

(Regulation 6)

The competent authority may exchange information with

(1) Other European regulatory authorities and may transmit information to the

ESRB, EBA, or ESMA in accordance with the CRD, the CRR and with article 15 of

Regulation (EU) No. 1092/2010, with Articles 31, 35 and 36 of Regulation (EU) No.

1093/2010 and with Articles 31 and 36 of Regulation (EU) No. 1095/2010;

(2) Authorities entrusted with the public duty of supervising other financial

sector entities and the authorities responsible for the supervision of financial

(3) Authorities or bodies charged with responsibility for maintaining the

stability of the financial system in Member States through the use of macro

(4) Reorganisation bodies or authorities aiming at protecting the stability of the

financial system;

(5)

Contractual or institutional protection schemes as referred to in Article

113(7) of the CRR;

(6) Bodies involved in the liquidation and bankruptcy of institutions and in

other similar procedures;

(7) Persons responsible for carrying out statutory audits of the accounts of

institutions, insurance undertakings and financial institutions;

(8) Bodies which administer deposit-guarantee schemes and investor

compensation schemes of information necessary for the exercise of their functions;

(9)

Authorities responsible for overseeing

(a) the bodies involved in the liquidation and bankruptcy of institutions and

in other similar procedures;

(b) contractual or institutional protection schemes as referred to in Article

113(7) of the CRR;

(c) persons charged with carrying out statutory audits of the accounts of

institutions, insurance undertakings and financial institutions;

In the cases referred to sub-paragraphs (a) to (c) above, the exchange of

information shall be subject to the following conditions

(i)

that the information is exchanged for the purpose of performing

the tasks referred to;

(ii) where the information originates in another Member State, that it

is not disclosed without the express agreement of the authorities

which have disclosed it and, where appropriate, solely for the

purposes for which those authorities gave their agreement;

(10) (a) Authorities or bodies responsible under law for the detection and

investigation of breaches of company law subject to the following

conditions

(i)

that the information is exchanged for the purpose of detecting and

investigating breaches of company law;

(ii) where the information originates in another Member State, that it

is not disclosed without the express agreement of the authorities

which have disclosed it and, where appropriate, solely for the

purposes for which those authorities gave their agreement.

(b) Where the authorities or bodies referred to in paragraph (a) above

perform their task of detection or investigation with the aid, in view of

their specific competence, of persons appointed for that purpose and not

employed in the public sector, information may be exchanged with such

persons under the conditions specified in points (i) and (ii) of sub-

paragraph (a) of this paragraph. The competent authority shall

communicate to the EBA the names of the authorities or bodies which

may receive information pursuant to this Article;

(11) ESCB central banks and other bodies with a similar function in their

capacity as monetary authorities when the information is relevant for the exercise of

their respective statutory tasks, including the conduct of monetary policy and related

liquidity provisions, oversight of payments, clearing and settlement systems and the

safeguarding of stability of the financial system;

(12) Contractual or institutional protection schemes as referred to in Article

113(7) of the CRR;

(13) Other public authorities responsible for overseeing payment systems where

appropriate;

(14) The ESRB, EIOPA and ESMA, where that information is relevant for the

exercise of their tasks under Regulations (EU) No 1092/2010, (EU) No 1094/2010 or

(EU) No. 1095/2010;

(15) In an emergency situation as referred to in regulation 5 of the Supervisory

Consolidation Regulations, the competent authority shall communicate, without

delay, information to the ESCB central banks where that information is relevant for

the exercise of their statutory tasks, including the conduct of monetary policy and

related liquidity provision, the oversight of payments, clearing and settlement

systems, and the safeguarding of the stability of the financial system, and to the

ESRB where such information is relevant for the exercise of its statutory tasks;

(16) (1) Other departments of Member States central government

administrations responsible for law on the supervision of institutions, financial

institutions and insurance undertakings and to inspectors acting on behalf of those

departments provided that

(a) such disclosures may be made only where necessary for reasons of

prudential supervision, and prevention and resolution of failing

institutions.

(b) persons having access to such information shall be subject to

professional secrecy.

(2) In an emergency situation as referred to in Article 114(1) of the CRD, to

disclose information which is relevant to the departments referred to in the first sub-

paragraph of this article in all Member States concerned;

(17) (1) Parliamentary enquiry committees, courts of auditors and other entities

in charge of enquiries relating to the prudential supervision of institutions in Malta,

subject to the following conditions

(a) that the entities have a precise mandate under national law to investigate

or scrutinise the actions of authorities responsible for the supervision of

institutions or for laws on such supervision;

(b) that the information is strictly necessary for fulfilling the mandate

referred to in sub-paragraph (a);

(c) the persons with access to the information are subject to professional

secrecy requirements under national law;

(d) where the information originates in another Member State that it is not

disclosed without the express agreement of the authorities which have

disclosed it and, solely for the purposes for which those authorities gave

their agreement.

(2) Information received pursuant to paragraphs (1) to (8) inclusive of this

Schedule, and information obtained by means of an on-the-spot check or inspection

referred to in regulation 7 of these regulations, shall not be disclosed to the bodies

referred to in paragraphs 16 and 17(1) of this Schedule save with the express consent

of the authorities which disclosed the information or of the authorities of the

Member State in which such an on-the-spot check or inspection was carried out.

(18) (1) Recognised clearing houses or other similar bodies responsible for the

provision of clearing or settlement services in order to ensure the proper functioning

of those bodies in relation to defaults or potential defaults by market participants of

the information referred to in paragraph (1) of this Schedule and articles 17(7) and

17F of the Act.

(2) The information received under paragraph (1) of this Schedule shall not be

disclosed in the circumstances referred to in sub-paragraph (1) of this paragraph

without the express consent of the competent authorities, which have disclosed it.

(19) Authorities responsible for supervising the obliged entities listed in points

(1) and (2) of Article 2(1) of Directive (EU) 2015/849 on the prevention of the use of

the financial system for the purposes of money laundering or terrorist financing of

the European Parliament and of the Council for compliance with the said Directive.

(20) (1) Notwithstanding Articles 26(1) and 17(7) of the Investment Services

Act, the competent authority may, subject to the conditions set out in sub-paragraphs

2, 3 and 4 of this paragraph, transmit or share certain information with the following

(a) the International Monetary Fund and the World Bank, for the purposes

of assessments for the Financial Sector Assessment Program;

(b) the Bank for International Settlements, for the purposes of quantitative

impact studies;

(c) the Financial Stability Board, for the purposes of its surveillance

function.

(2)

The competent authority may only share confidential information

following an explicit request by the relevant body, where at least the following

conditions are met

(a) the request is duly justified in light of the specific tasks performed by

the requesting body in accordance with its statutory mandate;

(b) the request is sufficiently precise as to the nature, scope and format of

the required information, and the means of its disclosure or

transmission;

(c) the requested information is strictly necessary for the performance of

the specific tasks of the requesting body and does not go beyond the

statutory tasks conferred on the requesting body;

(d) the information is transmitted or disclosed exclusively to the persons

directly involved in the performance of the specific task;

(e) the persons having access to the information are subject to professional

secrecy requirements at least equivalent to those referred to in Article

26(1) of the Investment Services Act.

(3) Where the request is made by any of the entities referred to in sub-paragraph

1, the competent authority may only transmit aggregate or anonymised information

and may only share other information at the premises of the competent authority.

(4) To the extent that the disclosure of information involves processing of personal

data, any processing of personal data by the requesting body shall comply with the

requirements laid down in Regulation (EU) 2016/679 of the European Parliament and of

the Council.

(1) The competent authority shall collaborate closely with

European regulatory authorities in order to supervise the activities

of investment firms and operating in particular through a branch, in

one or more Member States other than Malta. The competent

authority shall supply all information concerning the management

and ownership of such investment firms to the relevant European

regulatory authorities in the Member States concerned, that is

likely to facilitate their supervision and the examination of the

conditions for their licensing, and all information likely to facilitate

the monitoring of investment firms, in particular with regard to

liquidity, solvency, the limiting of large exposures, other factors

that may influence the systemic risk posed by the investment firm,

administrative and accounting procedures and internal control

mechanisms.

(2) The competent authority shall provide the European

regulatory authorities of the host Member State immediately with

any information and findings pertaining to liquidity supervision in

accordance with Part Six of the CRR and the Supervisory

Consolidation Regulations, of the activities performed by an

investment firm through its branches, to the extent that such

information and findings are relevant to the protection of investors

in the host Member State.

(3) The competent authority shall inform the European

regulatory authorities of all the investment firms’ host Member

States immediately where liquidity stress occurs or can reasonably

be expected to occur. That information shall also include details

about the planning and implementation of a recovery plan and

about any prudential supervisory measures taken in that context.

(4)

(a) Where Malta is the home member state of the

investment firm, the competent authority shall

communicate and explain upon request to the European

regulatory authorities of the host Member State of that

investment firms’ branch, how information and

findings provided by the latter have been taken into

account.

(b) Where the competent authority disagrees with the

measures to be taken by the European regulatory

authority of the host Member State in relation to the

information and findings referred to in paragraph (a),

the competent authority may refer the matter to the

EBA and request its assistance in accordance with

Article 19 of Regulation (EU) No. 1093/2010.

(c) Where Malta is the host member state of a branch

belonging to a European investment firm and the

competent authority, following communication by the

European regulatory authority of the said European

investment firm, of information and findings relating

to the said European investment firm, maintains that

no appropriate measures have been taken by the said

European regulatory authority, the competent authority

may, after informing the European regulatory authority

concerned and the EBA, take appropriate measures to

prevent further breaches in order to protect the

interests of investors and others to whom services are

provided or to protect the stability of the financial

system.

(5) The competent authority may refer to the EBA situations

where a request for collaboration to a European regulatory

authority, in particular to exchange information, has been rejected

or has not been acted upon within a reasonable time.

(6) The competent authority may exchange information with

the bodies listed and in the manner specified in Schedule V for the

better carrying out of its supervisory functions in accordance with

the CRD and the CRR

Provided that the information received or exchanged by the

competent authority or by its officers, employees or agents as well

as inspectors, auditors and experts engaged by the competent

authority, from the bodies listed in the said Schedule, shall be

treated as confidential and protected by the duty of professional

secrecy.

(1) Where a European investment firm carries out its

activities through a branch in Malta, the competent authority may

permit the European regulatory authority of the home Member

State concerned, after it has notified the competent authority, to

carry out, itself or through an intermediary appointed for that

purpose, on-the-spot checks of the information referred to in

regulation 6 and inspections of such branches.

(2) For the purposes of sub-regulation (1), the European

regulatory authority may request the competent authority to carry

out the on-the-spot checks referred to in the said sub-regulation on

its behalf, in accordance with the procedures set out in regulation

12 of the Supervisory Consolidation Regulations.

(3) The competent authority may carry out, on a case-by-case

basis, on-the-spot checks and inspections of the activities carried

out by branches of European investment firms in Malta and require

information from a branch about its activities and for supervisory

purposes, where it considers it relevant for reasons of stability of

the financial system in Malta. Before carrying out such checks and

inspections, the competent authority shall consult the European

regulatory authority of the home Member State concerned.

(4) On-the-spot checks and inspections of branches when

carried out in Malta shall be conducted in accordance with the laws

of Malta.

(5) After the checks and inspections referred to in sub-

regulation (4), the competent authority shall communicate to the

European regulatory authority of the home Member State, the

information obtained and findings that are relevant for the risk

assessment of the investment firm or the stability of the financial

system in Malta.

(6) When determining the supervisory examination programme

referred to in regulation 13, the competent authority shall duly take

into account the information and findings provided by the European

regulatory authority of a host Member State pursuant to its on-the-

spot checks and inspections of the activities carried out by branches

of investment firms, and shall also have regard to the stability of

the financial system in the host Member State concerned

Provided that the European regulatory authority may also,

for the purposes of the inspection of branches, have recourse to one

of the other procedures set out in regulation 12 of the Supervisory

Consolidation Regulations.

(Deleted by Legal Notice 299 of 2015).

(1) The competent authority shall collect the information

disclosed publicly by investment firms in relation to points (g), (h)

and (i) of Article 450(1) of the CRR as well as the information

provided by investment firms on the gender pay gap and shall use

that information to benchmark remuneration trends and practices.

The competent authority shall provide this information to the EBA.

(2) The competent authority shall collect information on the

number of natural persons per investment firm that are remunerated

EUR 1 million or more per financial year, in pay brackets of €1

million, including data on their work responsibilities, the business

area involved and the main elements of their salary, including

bonuses, long-service awards and pension contributions, and shall

forward this information to the EBA.

(1) Where the competent authority chooses to develop

specific portfolios of internal approaches permitted to be used by

investment firms, it shall do so in consultation with the EBA and

shall en sure that in vestm ent f irm s report the result s o f the

calculations for these specific portfolios separately from the results

of the calculations for the benchmark portfolios required under

Article 78 of the CRD.

(2) The competent authority shall, on the basis of the

information submitted by investment firms, monitor the range of

risk weighted exposure amounts or own funds requirements, as

applicable, except for operational risk, for the exposures or

transactions in the benchmark portfolio resulting from the internal

approaches of those investment firms. The competent authority

shall make an assessment at least annually of the quality of those

approaches paying particular attention to

(a) those approaches that exhibit significant differences in

own fund requirements for the same exposure;

(b) approaches where there is particularly high or low

diversity, and also where there is a significant and

systematic

under-estimation

of

own

funds

requirements.

(3) Where particular investment firms diverge significantly

from the majority of their peers or where there is little commonality

in approach leading to a wide variance of results, the competent

authority shall investigate the reasons therefor and, if it can be

clearly identified that an investment firm’s approach leads to an

underestimation of own funds requirements which is not

attributable to differences in the underlying risks of the exposures

or positions, the competent authority shall take corrective action.

(4) The competent authority shall ensure that its decisions on

the appropriateness of corrective actions as referred to in sub-

regulation (3) comply with the principle that such actions must

maintain the objectives of an internal approach and therefore do

not

(a) lead to standardisation or preferred methods;

(b) create wrong incentives; or

(c) cause herd behaviour.

(1)

The competent authority shall, taking into account

the technical criteria set out in Schedule I, review the arrangements,

strategies, processes and mechanisms implemented by investment

firms to comply with the CRR, the Act, regulations or Investment

Services Rules issued thereunder and evaluate

(a) risks to which investment firms are or might be

exposed;

(b) risks revealed by stress testing taking into account the

nature, scale and complexity of an investment firm’s

activities; and

(c) risks revealed by digital operational resilience testing in

accordance with Chapter IV of the DORA Regulation.

(2) The scope of the review and evaluation referred to in sub-

regulation (1) shall cover all requirements of the CRR, the Act,

regulations or Investment Services Rules issued thereunder.

(3) On the basis of the review and evaluation referred to in sub-

regulation (1), the competent authority shall determine whether the

arrangements, strategies, processes and mechanisms implemented

by investment firms and the own funds and liquidity held by them

ensure a sound management and coverage of their risks.

(4) The competent authority shall establish the frequency and

intensity of the review and evaluation referred to in sub-regulation

(1) having regard to the size, systemic importance, nature, scale

and complexity of the activities of the investment firm concerned

and taking into account the principle of proportionality. The review

and evaluation shall be updated at least on an annual basis for

investment firms covered by the supervisory examination

programme referred to in regulation 13

Provided that when conducting the review and evaluation

referred to in sub-regulation (1), the competent authority shall apply

the principle of proportionality in accordance with the criteria

disclosed pursuant to Regulation 21(1)(c).

(4A) The competent authority may tailor the methodologies for

the application of the review and evaluation referred to in sub-

regulation (1) to take into account investment firms with a similar

risk profile, such as similar business models or geographical

location of exposures. Such tailored methodologies may include

risk-oriented benchmarks and quantitative indicators, shall allow

for due consideration of the specific risks that each investment firm

may be exposed to, and shall not affect the institution-specific

nature of measures imposed in accordance with paragraph 1 of

Schedule III

Provided that where the competent authority uses tailored

methodologies pursuant to this paragraph, it shall notify the EBA.

(5) Where a review shows that an investment firm may pose

systemic risk in accordance with the EBA’s technical criteria for

the identification and measurement of systemic risk established in

terms of Article 23 of Regulation (EU) No. 1093/2010, the

competent authority shall inform the EBA without delay about the

results of the review.

(6) Where a review, in particular the evaluation of governance

arrangements, the business model, or the activities of an investment

firm, gives the competent authority reasonable grounds to suspect

that, in connection with that investment firm, money laundering or

terrorist financing is being or has been committed or attempted, or

there is increased risk thereof, the competent authority shall

immediately notify the EBA and the authority or body that

supervises the investment firm in accordance with Directive (EU)

2015/849 and is competent for ensuring compliance with the said

Directive. In the event of potential increased risk of money

laundering or terrorist financing, the competent authority and the

authority or body that supervises the investment firm in accordance

with Directive (EU) 2015/849 and is competent for ensuring

compliance with the said Directive shall liaise and notify their

common assessment immediately to the EBA. The competent

authority shall take the necessary measures, as it deems

appropriate, in accordance with the CRD as transposed in Maltese

Law.

In carrying out its supervisory review and evaluation the

competent authority shall apply the technical and other criteria set

out in Schedule I.

The competent authority shall adopt an annual supervisory

examination programme for the investment firms it supervises.

Such programme shall take into account the supervisory review and

evaluation process referred to in regulation 11, and shall contain

the elements set out in Schedule II.

The competent authority shall carry out as appropriate but

at least annually, supervisory stress tests on investment firms it

supervises, to facilitate the review and evaluation process under

regulation 11.

(1) The competent authority shall review on a regular

basis, and at least every three years, investment firms’ compliance

with the requirements regarding approaches that require permission

by the competent authority for the calculation of own funds

requirements in accordance with Part Three of the CRR. In this

regard it shall take cognizance of changes in an investment firm’s

business and to the implementation of those approaches to new

products. Where material deficiencies are identified in risk capture

by an investment firm’s internal approach, the competent authority

shall ensure they are rectified or take appropriate steps to mitigate

their consequences, including by imposing higher multiplication

factors, or imposing capital add-ons, or taking other appropriate

and effective measures.

(2) The competent authority shall in particular review and

assess whether the investment firm uses well developed and up-to-

date techniques and practices for those approaches.

(3) If for an internal market risk model numerous

overshootings as referred to in Article 366 of the CRR indicate that

the model is not or is no longer sufficiently accurate, the competent

authority shall revoke the permission for using the internal model

or impose appropriate measures to ensure that the model is

improved promptly.

(4) If an investment firm has received permission from the

competent authority to apply an approach for the calculation of

own funds requirements in accordance with Part Three of the CRR

but no longer meets the requirements for applying that approach,

the competent authority shall require the investment firm to either

demonstrate to the satisfaction of the competent authority that the

effect of non-compliance is immaterial, where applicable in

accordance with the requirements of the CRR, or present a plan for

the timely restoration of compliance with the requirements and set

a deadline for its implementation. The competent authority shall

require improvements to that plan if it is unlikely to result in full

compliance or if the deadline is inappropriate. If the investment

firm is unlikely to be able to restore compliance within an

appropriate deadline and, where applicable, has not satisfactorily

demonstrated that the effect of non-compliance is immaterial, the

permission to use the approach shall be revoked or limited to

compliant areas or those where compliance can be achieved within

an appropriate deadline.

(5) The competent authority shall take into account the analysis

carried out by the EBA in terms of Article 101(5) of the CRD and

the guidelines containing benchmarks on the basis of that analysis

issued by the EBA, for the review of the permissions it grants to

investment firms to use internal approaches for the calculations of

own funds requirements.

(1) The competent authority shall require an investment

firm to take the necessary measures at an early stage to address

relevant problems in circumstances where

(a) the investment firm does not meet the requirements of

the Act, regulations or Investment Services Rules

issued thereunder, transposing the requirements of the

CRD or of the CRR;

(b) the competent authority has evidence that the

investment firm is likely to breach the Act, regulations

or Investment Services Rules issued thereunder, or the

provisions of the CRR, within the following twelve

months.

(2) For the purposes of sub-regulation (1), the powers of the

competent authority shall include those contained in Schedule III.

17. (Deleted by: L.N. 30 of 2022).

(1) For the purposes of determining the appropriate level

of liquidity requirements on the basis of the review and evaluation

carried out in accordance with these regulations, the competent

authority shall assess whether any imposition of a specific liquidity

requirement is necessary to capture liquidity risks to which an

investment firm is or might be exposed, taking into account the

following

(a) the particular business model of the investment firm;

(b) the investment firm’s arrangements, processes and

mechanisms in relation to liquidity risk as referred to

in the Investment services Rules and these regulations;

(c) the outcome of the review and evaluation carried out

in accordance with regulation 11;

(d) (Deleted by L.N. 30 of 2022).

(2) In particular, without prejudice to the provisions of the Act,

the regulations and the Investment Services Rules transposing the

requirements of Article 67 of the CRD, the competent authority

will consider the need to apply administrative penalties or other

administrative measures, including prudential charges,

proportionate to the disparity between the actual liquidity position

of an investment firm and any liquidity and stable f unding

requirements established by the competent authority or at European

Union level.

(3) The competent authority shall monitor developments in

relation to liquidity risk profiles, for example, product design and

volumes, risk management, funding policies and funding

concentrations.

(4) The competent authority shall take effective action where

developments referred to in sub-regulation (2) may lead to systemic

instability or instability of the investment firm itself.

(5) The competent authority shall inform the EBA about any

actions carried out pursuant to sub-regulation (3).

The competent authority shall inform the EBA of

(a) the functioning of its review and evaluation process

referred to in regulation 11;

(b) the methodology used to reach decisions in relation to

the technical criteria for supervisory review contained

in Schedule I, the supervisory stress testing in

regulation 14, the review of internal approaches in

regulation 15, the supervisory measures in regulation

16, the supervisory powers contained in Schedule III

and the specific liquidity requirements in regulation

18, when engaging in this process.

(1) The competent authority shall apply the review and

evaluation process and the supervisory measures referred to in

these regulations in accordance with the level of application of the

requirements of Part One, Title II of the CRR.

(2)

Repealed by Legal Notice 71 of 2023.

(1) The competent authority shall publish the following

information in accordance with the Commission technical

standards adopted

(a) the texts of laws, regulations, administrative rules and

general guidance adopted in Malta in the field of

prudential regulation;

(b) the general criteria and methodologies it uses in the

review and evaluation pursuant to regulation 11,

including the criteria for applying the principle of

proportionality as referred to in regulation 11(4);

(c) the manner of exercise of the options and discretions

available in European Union law;

(d) without prejudice to the confidentiality provisions of

the Act, aggregate statistical data on key aspects of the

implementation of the prudential framework in Malta,

including the number and nature of supervisory

measures taken and of administrative penalties

imposed in terms of the Act.

(2) The information published in accordance with sub-

regulation (1) shall be sufficient to enable a meaningful comparison

of the approaches adopted by the European regulatory authorities.

The disclosures shall be published following a common format and

updated regularly. The disclosures shall be accessible at a single

electronic location.

For the purpose of Part Five of the CRR relating to

exposures to transferred credit risks, the competent authority shall

publish the information set out in Schedule IV.

In encouraging certain investment firms to develop internal

credit risk assessment capacity and to increase use of internal

ratings based approach for calculating own funds requirements, the

competent authority shall monitor, taking into account the nature,

scale and complexity of the investment firms’ activities, that such

investment firms do not solely or mechanistically rely on external

credit ratings for assessing the creditworthiness of an entity or

financial instrument.

The competent authority shall inform the EBA of any

authorisations it issues to the members of an investment firm’s

management body to hold one additional non-executive

directorship in terms of Article 91 of the CRD.

The competent authority shall collect the information

disclosed in accordance with Article 435(2)(c) of the CRR and

shall use it to benchmark diversity practices. The competent

authority shall provide that information to the EBA.

The competent authority, when processing personal data

for the purposes of the CRD, shall do so in accordance with

Directive 95/46/EC and, where relevant, with Regulation (EC) No.

45/2001.

The provisions of regulation 6, shall not apply until the

date on which th e li qui dit y co verag e requi rem ent becom es

applicable in accordance with a delegated act adopted by the

European Commission pursuant to Article 460 of the CRR in

accordance with Article 151 of the CRD

Provided that until the date referred to in this regulation,

the provisions of regulation 6 shall be substituted with the

following

"The competent authority shall collaborate closely in order

to supervise the activities of investment firms and

operating, in particular through a branch, in one or

more Member States other than Malta. The competent

authority shall supply all information concerning the

management and ownership of such investment firms

to the relevant European Regulatory authorities in the

Member states concerned, that is likely to facilitate

their supervision and the examination of the conditions

for their licensing, and all information likely to

facilitate the monitoring of such investment firms, in

particular with regard to liquidity, solvency, the

limiting of large exposures, administrative and

accounting

procedures

and

internal

control

mechanisms.

The provisions of regulation 7 shall not apply until the date

on which the liquidity coverage requirement becomes applicable in

accordance with a delegated act adopted by the European

Commission pursuant to Article 460 of the CRR in accordance with

Article 151 of the CRD

Provided that until the date referred to in this regulation,

the provisions of regulation 7 shall be substituted with the

following

"(1) Where a European investment firm carries out its

activities through a branch in Malta, the competent

authority may permit the European regulatory

authority of the home Member State concerned, after it

has notified the competent authority, to carry out, itself

or through an intermediary, on-the-spot checks of the

information referred to in regulation 6 of these

regulations.

(2) The European regulatory authority of the European

investment firm referred to in sub-regulation (1) may

also, for the purposes of the inspection of branches

have recourse to one of the other procedures set out in

regulation 12 of the Supervisory Consolidation

Regulations.

(3)

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

affect the right of the competent authority to carry out

in the discharge of its responsibilities under the CRD,

on-the-spot checks of branches established in Malta.

(1) Parent financial holding companies and parent mixed

financial holding companies already existing on 27 June 2019 shall

apply for approval in accordance with Article 10CA of the

Investment Services Act by 28 June 2021. If a financial holding

company or mixed financial holding company fails to apply for

approval by 28 June 2021, appropriate measures shall be taken

pursuant to Article 10CA(6) of the Investment Services Act.

(2) During the transitional period referred to in the previous sub-

regulation, the competent authority shall have all the necessary

supervisory powers conferred on it by the CRD as transposed in

Maltese Law with regard to financial holding companies or mixed

financial holding companies subject to approval in accordance with

Article 10CA of the Investment Services Act for the purposes of

consolidated supervision.