INVESTMENT SERVIVES ACT (ACCESS TO EMISSIONS ALLOWANCE AUCTION) REGULATIONS

INVESTMENT SERVICES ACT (ACCESS TO

EMISSIONS ALLOWANCE AUCTION)

SUBSIDIARY LEGISLATION 370.28

INVESTMENT SERVIVES ACT (ACCESS TO

EMISSIONS ALLOWANCE AUCTION)

REGULATIONS

2nd May, 2014

LEGAL NOTICE 146 of 2014.

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

Act (Access to Emissions Allowance Auction) Regulations.

(2) The purpose of these regulations is to implement Articles

18(2), 18(3) and 59 of Commission Regulation (EU) No 1031/2010

of 12 November 2010 on the timing, administration and other

aspects of auctioning of greenhouse gas emission allowances

pursuant to Directive 2003/87/EC of the European Parliament and

of the Council establishing a scheme for greenhouse gas emission

allowances trading within the Community, as may be amended

from time to time.

(1) In these regulations, unless the context otherwise

requires -

"the Act" means the Investment Services Act;

"Auctioning Regulation" means Commission Regulation (EU)

No 1031/2010 of 12 November 2010 on the timing, administration

and other aspects of auctioning of greenhouse gas emission

allowances pursuant to Directive 2003/87/EC of the European

Parliament and of the Council establishing a scheme for greenhouse

gas emission allowances trading within the Community, as may be

amended from time to time;

"auctions" means the auctioning of emission allowances held in

accordance with the Auctioning Regulation;

"exempt person" means a person dealing on own account in

financial instruments in terms of paragraph 3 of the First Schedule

to the Act or providing investment services in the commodity

derivatives or derivative contracts included in Schedule 2 of the

Act to the clients of its main business, where such activity is

ancillary to its main business, when considered on a group basis;

and

(a) that main business is not the provision of investment

services within the meaning of the Act or the provision

of banking services under the Banking Act, and

(b) the person is exempt from the requirement of an

investment services licence in terms of the Investment

Services Act (Exemption) Regulations.

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

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

Act.

INVESTMENT SERVICES ACT (ACCESS TO

EMISSIONS ALLOWANCE AUCTION)

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

r e l e v a n t p ro v is i on s of th e A uct i on in g R e g ul a t io n , an d a n y

reference in these regulations to the competent authority shall be

read and construed accordingly.

(1) The competent authority shall exercise all the

f u n c t i o n s , o b l i ga t i o ns an d po w e r s an d s h a l l s a t i s f y al l t he

requirements imposed on competent authorities by the Auctioning

Regulation.

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

authority may, for the better implementation of the Auctioning

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

in relation to persons engaged in bidding in emission allowance

auctions.

For the better carrying out of the provisions of the

Auctioning Regulation and of these regulations, the competent

authority may, from time to time, issue and publish Investment

Services Rules wh ich shall be bindin g on all holders of an

investment services licence and exempt persons authorised

pursuant to these regulations, which are engaged in bidding in

auctions. Such rules may lay down additional requirements and

conditions, and any other matters as the competent authority may

consider appropriate including

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

regulations;

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

powers of the competent authority under the

Auctioning Regulation; and

(c) any other matter arising in connection with the

Auctioning Regulation or these regulations.

A holder of an investment services licence shall be eligible

to apply for admission to bid directly in emission allowance

auctions on behalf of its clients when such bidding is for products

that are not financial instruments, on the condition that it is

authorised by the competent authority in terms of these regulations.

An exempt person shall be eligible to apply for admission

to bid directly in emission allowance auctions either on its own

account or on behalf of clients when such bidding is both for

products that are financial instruments within the meaning of the

Second Schedule to the Act and for products that are not financial

instruments, on the condition that it is authorised by the competent

authority.

An application for authorisation in terms of regulations 6

and 7 shall be made to the competent authority in writing and shall

be accompanied by such documents as the competent authority may

specify.

The competent authority shall not grant authorisation in

terms of these regulations unless the applicant

INVESTMENT SERVICES ACT (ACCESS TO

EMISSIONS ALLOWANCE AUCTION)

(a) is of sufficient good repute and sufficiently

experienced as to ensure proper respect of the conduct

rules provided for in the Investment Services Rules

issued by the competent authority for this purpose;

(b) has in place the necessary processes and checks to

manage conflicts of interest and serve the best

interests of its clients;

(c) complies with the requirements of the Prevention of

Money Laundering and Funding of Terrorism

Regulations, and any regulations and guidance notes

issued thereunder; and

(d) complies with any other measures deemed necessary,

having regard to the nature of the bidding services

being offered and the level of sophistication of the

clients in terms of its investor or trading profile as well

as any risk-based assessment of the likelihood of

money laundering, terrorist financing or criminal

activity.

The competent authority may withdraw an authorisation

granted in terms of these regulations where

(a) the holder thereof no longer fulfils the conditions of

authorisation or has contravened any of the conditions

of authorisation;

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

furnished the competent authority with information

which is false, inaccurate or misleading;

(c) authorisation has been obtained through

false

statements or by other irregular means; or

(d) the holder thereof has seriously and systematically

infringed any Investment Services Rules issued in

terms of regulation 5.

Where a person contravenes any of the provisions of these

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

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

administrative penalty not exceeding one hundred and fifty

thousand euro (€150,000).

A right of appeal to the Financial Services Tribunal shall

lie from a decision of the competent authority to

(a) reject an application for authorisation made in terms of

these regulations;

(b) withdraw an authorisation in terms of regulation 10; or

(c) impose a penalty in terms of regulation 11.