INVESTMENT SERVICES ACT AND BANKING ACT (MiFID AND MiFIR ADMINISTRATIVE PENALTIES, MEASURES AND INVESTIGATORY

MEASURES AND INVESTIGATORY POWERS)

SUBSIDIARY LEGISLATION 370.40

INVESTMENT SERVICES ACT AND BANKING ACT

(MiFID AND MiFIR ADMINISTRATIVE

PENALTIES, MEASURES AND INVESTIGATORY

POWERS) REGULATIONS

3rd January, 2018

LEGAL NOTICE 401 of 2017, as amended by Legal Notices 135 of 2022 and

216 of 2025.

(1)

The title of these regulations is the Investment

Services Act and Banking Act (MiFID and MiFIR Administrative

Penalties, Measures and Investigatory Powers) Regulations.

(2)

The purpose of these regulations is to transpose and

implement Article 70(1), Article 70(3) to (6) and Article (71)(1) to (5)

of MiFID, as herein defined and shall be interpreted and applied

accordingly.

(3)

These regulations shall apply to

(a)

Maltese investment firms;

(b)

European investment firms which have

established a branch in Malta in terms of the European Passport

Rights for Investment Firms Regulations with respect to the

matters to for which the competent authority is responsible in

terms of Article 35(8) of MIFID;

(c)

Maltese credit institutions licensed under the

Banking Act insofar as these offer structured deposits as

defined in regulation 2(1); and

(d)

persons to whom the provisions of MiFIR apply.

(1)

In these regulations, unless the context otherwise

requires

"approved publication arrangement" or "APA" means a

person authorised under MiFIR to provide the service of

publishing trade reports on behalf of investment firms pursuant

to Articles 20 and 21 of MiFIR;

"approved reporting mechanism" or "ARM" means a

person authorised under MiFIR to provide the service of

reporting details of transactions to competent authorities or to

ESMA on behalf of investment firms;

"competent authority" means the Malta Financial

Services Authority established by the Malta Financial Services

Authority Act;

MEASURES AND INVESTIGATORY POWERS)

"consolidated tape provider" or "CTP" means a person

authorised under MiFIR to provide the service of collecting

trade reports for financial instruments listed in Articles 6, 7, 10,

12, 13, 20 and 21 of MiFIR from regulated markets, MTFs,

OTFs and APAs and consolidating them into a continuous

electronic live data stream providing price and volume data per

financial instrument;

"deposit" means a credit balance which results from

funds left in an account or from temporary situations deriving

from normal banking transactions and which a credit institution

is required to repay under the legal and contractual conditions

applicable, including a fixed-term deposit and a savings

deposit, but excluding a credit balance where

(a)

its existence can only be proven by a

financial instrument as defined herein unless it is a

savings product which is evidenced by a certificate of

deposit made out to a named person and which exists in a

Member State on 2 July 2014;

(b)

its principal is not repayable at par;

(c)

its principal is only repayable at par under

a particular guarantee or agreement provided by the

credit institution or a third party;

"ETF" means an ‘exchange-traded fund’ being a fund of

which at least one unit or share class is traded throughout the day

on at least one trading venue and with at least one market maker

which takes action to ensure that the price of its units or shares on

the trading venue does not vary significantly from its net asset

value and, where applicable, from its indicative net asset value;

"European investment firm" means an investment firm as

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

regulatory authority within the meaning of Article 5 of MiFID

or authorised by a European regulatory authority in an EEA

State";

"financial instrument" means an instrument included in

the Second Schedule to the Investment Services Act;

MEASURES AND INVESTIGATORY POWERS)

"Maltese credit institution" means a credit institution as

defined in point (1) of Article 4(1) of 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 (EU) No 648/2012,

as amended from time which is licensed in terms of the Banking

Act, whose head office is in Malta and who is entitled to carry

on an activity in a Member State other than Malta in exercise of

a European passport right as defined in the European Passport

Rights for Credit Institutions Regulations;

"Maltese investment firm" means a person licensed in

terms of the Investment Services Act, whose head office is in

Malta and who is entitled to carry on an activity in a Member

State or EEA State other than Malta in exercise of a European

Right;

"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 State or EEA State; and

(b)

subject to the requirements of MIFID and

subject to any regulations made under the Act; and, or

Investment Services Rules and, or Conduct of Business

Rules issued by the competent authority in terms of

article 6 of the Act; implementing such requirements as

may be applicable;

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

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

financial instruments, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder;

"MiFIR" means Regulation (EU) No 600/2014 of the

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

markets in financial instruments and amending Regulation (EU)

No 648/2012, as may be amended from time to time, and

includes any implementing measures, implementing technical

standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued thereunder;

"structured deposit" means a deposit as defined in

paragraph (c) of the definition "deposit", and which is fully

repayable at maturity on terms under which interest or a

premium will be paid or is at risk, according to a formula

involving factors such as

(a)

an index or combination of indices,

excluding variable rate deposits whose return is directly

MEASURES AND INVESTIGATORY POWERS)

linked to an interest rate index such as Euribor or Libor;

(b)

a financial instrument or combination of

financial instruments;

(c)

a commodity or combination of

commodities or other physical or non-physical non-

fungible assets; or

(d)

a foreign exchange rate or combination of

foreign exchange rates;

(2)

Words and expressions which are also used in the

Investment Services Act or in the Banking Act shall have the same

meaning as in the respective Acts.

The competent authority shall exercise its supervisory

powers and its powers to impose penalties, in such a way as to ensure

full and complete adherence to the requirements and obligations

arising out of the Investment Services Act or the Banking Act and any

regulations, Investment Services Rules and Conduct of Business Rules

issued by the competent authority and MiFIR, either directly or in

collaboration with European regulatory authorities and with overseas

regulatory authorities, in terms of law as warranted by the relevant

circumstances and shall take all measures necessary to ensure that

such administrative penalties are implemented.

(1)

Without prejudice to article 16A of the Investment

Services Act, to any regulations made under article 6(2) of the

Investment Services Act and to article 35A of the Banking Act and to

the supervisory powers of the competent authority referred in

regulation 3, the competent authority shall impose administrative

penalties and other administrative measures in respect of breaches of

(a)

the provisions of the Investment Services Act and,

or of regulations and, or Investment Services Rules and

Conduct of Business Rules issued by the competent authority

transposing the provisions of MiFID;

(b)

the provisions of MiFIR.

(2)

The administrative penalties and other measures taken

pursuant to sub-regulation (1) shall be effective, proportionate and

dissuasive.

(1)

The competent authority shall exercise its

supervisory powers and its powers to take and impose at least the

following administrative penalties and measures

(a)

a public statement which indicates the natural or

legal person and the nature of the infringement;

MEASURES AND INVESTIGATORY POWERS)

(b)

an order requiring the natural or legal person to

cease the conduct and to desist from a repetition of that

conduct;

(c)

in the case of a Maltese investment firm

authorized in Malta, withdrawal or suspension of the relative

licence or authorisation in accordance with the provisions of the

Investment Services Act and the regulations issued thereunder;

(d)

a temporary ban on any Maltese investment firm

being a member of or participant in regulated markets or MTFs

or any client of OTFs;

(e)

in the case of a legal person, maximum

administrative fines of up to five million euro (€5,000,000), or

10% of the total annual turnover of the legal person according

to the last available accounts approved by the management

body

Provided that where the legal person is a parent

undertaking or a subsidiary of the parent undertaking which has

to prepare consolidated financial accounts in accordance with

Directive 2013/34/EU of the European Parliament and of the

Council, the relevant total annual turnover shall be the total

annual turnover or the corresponding type of income in

accordance with the relevant Union law in the area of

accounting, according to the last available consolidated

accounts approved by the management body of the ultimate

parent undertaking;

(f)

in the case of a natural person, maximum

administrative fines of up to five million euro (€5,000,000);

(g)

maximum administrative fines of up to twice the

amount of the benefit derived from the infringement where that

benefit can be determined, even if that exceeds the maximum

amounts specified in paragraphs (e) and (f) above.

(h)

in the case of an APA or ARM which has a

derogation in accordance with Article 2(3) of MiFIR,

withdrawal and suspension of the authorisation in accordance

with Article 27e of MiFIR.

(1)

The competent authority shall publish any

decision imposing an administrative penalty or measure which it shall

take under these regulations on its official website, without undue

delay after the person on whom the penalty or measure was imposed

has been informed of that decision. The publication shall include at

least information on the type and nature of the infringement and the

identity of the persons responsible

Provided that this obligation shall not apply to decisions

imposing measures that are of an investigatory nature.

MEASURES AND INVESTIGATORY POWERS)

(2)

Notwithstanding sub-regulation (1), where the

publication of the identity of the legal persons or of the personal data

of the natural persons is considered by the competent authority to be

disproportionate following a case-by-case assessment conducted on

the proportionality of the publication of such data, or where

publication jeopardises the stability of financial markets or an on-

going investigation, the competent authority shall either

(a)

defer the publication of the decision to impose the

administrative penalty or measure until the moment where the

reasons for non- publication cease to exist;

(b)

publish the decision to impose the administrative

penalty or measure on an anonymous basis in a manner which

complies with Maltese law, if such anonymous publication

ensures an effective protection of the personal data concerned;

or

(c)

not publish the decision to impose an

administrative penalty or measure at all in the event that the

options set out in points (a) and (b) are considered to be

insufficient to ensure

(i)

that the stability of financial markets would

not be put in jeopardy;

(ii)

the proportionality of the publication of

such decisions with regard to administrative penalties or

measures which are deemed to be of a minor nature.

(3)

In the case of a decision to publish an administrative

penalty or measure on an anonymous basis in accordance with sub-

regulation (2), the publication of the relevant data may be postponed

for a reasonable period of time if it is envisaged that within that period

the reasons for anonymous publication shall cease to exist.

(4)

Where the decision to impose an administrative penalty

or measure is subject to appeal in terms of regulation 8, the competent

authority shall also publish, immediately, on its official website such

information and any subsequent information on the outcome of such

appeal. Moreover, any decision annulling a previous decision to

impose an administrative penalty or a measure shall also be published.

(5)

The competent authority shall ensure that any publication

in accordance with this regulation shall remain on its official website

for a period of at least five years after its publication

Provided that personal data contained in the publication

shall only be kept on the official website of the competent authority for

the period which is necessary in accordance with the applicable data

MEASURES AND INVESTIGATORY POWERS)

protection laws.

(6)

This regulation shall be without prejudice to article 16(8)

of the Malta Financial Services Authority Act.

(7)

The competent authority shall inform ESMA of all

administrative penalties imposed but not published in accordance with

point (c) of sub-regulation (2) including any appeal in relation thereto

and the outcome thereof.

(8)

The competent authority shall provide ESMA annually

with aggregated information regarding all sanctions and measures

imposed in accordance with sub-regulations (1) to (4)

Provided that this obligation does not apply to measures

of an investigatory nature.

(9)

Where the competent authority has disclosed an

administrative measure, penalty or criminal sanction to the public, it

shall, at the same time, report that fact to ESMA.

(1)

These regulations shall apply at least in the case

of breach of one or more of any of the following by a Maltese

investment firm or a European investment firm which has established a

branch in Malta in terms of the European Passport Rights for

Investment Firms Regulations insofar as the enforcement of the

provisions indicated hereunder fall within the responsibility of the

competent authority in terms of Article 35(8) of MIFID, or by a

Maltese credit institution offering structured deposits, insofar as the

provisions indicated hereunder apply to the latter in terms of Article

1(4) of MIFID

(a)

the provisions of article 6(1)(a),(d) and (e) 7(2)(b)

and (c), 10(1), (2) and (4) of the Investment Services Act;

(b)

the provisions of the Investment Services Rules

transposing the provisions of Article 9 (1),(2), the second sub-

paragraph of sub article (3), (5) and (6) 11(1) and (3) and 16 (2),

(4), (5), (6), (7) and (10) of MiFID;

(c)

the Conduct of Business Rules transposing the

provisions of the first and second sub-paragraphs of 9(3), 16(3),

23(1), (2) and (3), 24(1) to (5) and (7) to (10) and the first and

second sub-paragraphs of Article 24(11), Articles 25(1) to (6),

the second sentence of Article 26(1), Articles 26 (2) and (3), 27

(1) to (8), 28(1) and (2), the second sub-paragraph of Article

30(1), the first sentence of the second sub-paragraph of Article

30(3) of MiFID;

(d)

the provisions of the Investment Services Act

(Control of Assets) Regulations transposing Article 16 (8), (9)

and second sub-paragraph of Article 16(11) of MiFID;

MEASURES AND INVESTIGATORY POWERS)

(e)

the provisions of regulations 3 to 8 of the

Algorithmic Trading Regulations, 2017 transposing Article 17

of MiFID;

(f)

the provisions of regulations 3(1) to (6), 4, 5, 6(1)

to (3) and (5), 7(1),(3) and (4) of the Multilateral Trading

Facilities and Organised Trading Facilities Regulations, 2017;

(g)

the provisions of regulations 3(2) and 4(2) of the

European Passport Rights for Persons Operating Multilateral

Trading Facilities Regulations or the Multilateral Trading

Facilities and Organised Trading Facilities Regulations, 2017;

(h)

the provisions of regulations 3(2)(a), (4) and (5),

4(2) and (5), 8(2), (8), (10) and (11), 10(2), (5) to (7) of the

European Passport Right for Investment Firms Regulations as

well as those provisions in the latter regulations, transposing

Article 16(11) of MiFID;

(i)

the provisions of regulation 3(1), (2) and (4) of the

Central Counterparties Access Regulations, 2017;

(j)

the provisions of regulations 3(1) to (3), (5), (15)

and (17) and regulation 4(1) to (7) of the Position Limits and

Position Management Controls in Commodity Derivatives and

Reporting Regulations, 2017; and

(k)

Deleted by Legal Notice 135 of 2022.

(l)

the provisions of the Investment Services Act

(Tied Agents) Regulations, 2017 transposing the first sub-

paragraph of Article 29(2), the third sub-paragraph of Article

29(2), the first sentence of Article 29(3), the first sub-paragraph

of Article 29(4) and Article 29(5) of MiFID.

(2) These regulations shall apply at least in the case of a breach of

any of the following provisions of MiFIR

(a)

Articles 3(1) and (3) relating to pre-trade

transparency requirements for trading venues in

respect of shares, depositary receipts, ETFs,

certificates and other similar financial instruments;

(b)

the first sub-paragraph of Article 4(3) relating to

waivers for equity instruments;

(c)

Article 5 relating to volume cap;

(d)

Article 6 relating to post-trade transparency

requirements for trading venues in respect of

MEASURES AND INVESTIGATORY POWERS)

shares, depositary receipts, ETFs, certificates and

other similar financial instruments;

(e)

the first sentence of third sub-paragraph of Article

7(1) relating to authorisation of deferred

publication;

(f)

Article 8(1) relating to pre-trade transparency

requirements for trading venues in respect of

bonds, structured finance products and emission

allowances;

(g)

Article 8a(1) and (2) relating to pre-trade

transparency requirements for trading venues in

respect of derivatives;

(h)

Article 8b relating to pre-trade transparency

requirements for trading venues in respect of

package orders;

(i)

Article 10 relating to post-trade transparency

requirements for trading venues in respect of

bonds, structured finance products, emission

allowances and derivatives;

(j)

the first sentence of the second sub-paragraph of

Article 11(1), the second sub-paragraph of Article

11(1a), Article 11(1b) and the fourth sub-paragraph

of Article 11(3) relating to deferred publication in

respect of bonds, structured finance products or

emission allowances;

(k)

the first sentence of the second sub-paragraph and

the fourth sub-paragraph of Article 11a(1) relating

to deferred publication in respect of derivatives;

(l)

Article 12(1) relating to the obligation to make pre-

trade and post-trade data available separately;

(m)

Article 13(1) and (2) relating to the obligation to

make pre-trade and post-trade data available on a

reasonable commercial basis;

(n)

Article 14(1), (2) and (3) relating to the obligation

for systematic internalisers to make public firm

quotes in respect of shares, depositary receipts,

ETFs, certificates and other similar financial

instruments;

(o)

Article 15(1) and (2) and the second sentence of

Article 15(4) relating to the execution of client

orders;

MEASURES AND INVESTIGATORY POWERS)

(p)

the second sentence of article 17(1) relating to

access to quotes;

(q)

Article 20(1), Article 20(1a) and the first sentence

of Article 20(2) relating to post-trade disclosure by

investment

firms,

including

systematic

internalisers, in respect of shares, depositary

receipts, ETFs, certificates and other similar

financial instruments;

(r)

Article 21(1), (2) and (3) relating to post-trade

disclosure by investment firms in respect of bonds,

structured finance products, emission allowances

and derivatives;

(s)

Article 22(2) relating to the provision of

information for the purposes of transparency and

other calculations;

(t)

Article 22a(1) and (5) to (8) relating to the

transmission of data to the CTP;

(u)

Article 22b(1) relating to data quality;

(v)

Article 22c(1) relating to the synchronisation of

business clocks;

(w)

Article 23(1) and (2) relating to the trading

obligation for investment firms;

(x)

Article 25(1) and (2) relating to the obligation to

maintain records;

(y)

the first sub-paragraph of Article 26(1), Article

26(2) to (5), the first sub-paragraph of Article 26(6)

and the first to fifth and eighth sub-paragraph of

Article 26(7) relating to the obligation to report

transactions;

(z)

Article 27(1) relating to the obligation to supply

financial instrument reference data;

(aa)

Article 27f(1), (2) and (3) relating to the

requirements for the management body of a data

reporting services provider, Article 27g(1) to (5)

relating to the conditions for APAs, CTPs and

ARMs;

(ab)

Article 27g(1) to (5) relating to the organisational

requirements for APAs;

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(ac)

and Article 27i(1) to (4) relating

to

the

organisational requirements for ARMs;

(ad)

Article 28(1) relating to the obligation to trade on

regulated markets, MTFs or OTFs;

(ae)

Article 29(1) and (2) relating to the clearing

obligation for derivatives traded on regulated

markets and timing of acceptance for clearing;

(af)

Article 30(1)

relating

to

indirect

clearing

arrangements;

(ag)

Article 31(3) relating to post-trade risk reductions

services;

(ah)

Article 35(1), (2) and (3) relating to non-

discriminatory access to a CCP;

(ai)

Article 36(1), (2) and (3) relating to non-

discriminatory access to a trading venue;

(aj)

Article 37 (1) and (3) relating to non-

discriminatory access to and obligation to licence

benchmarks;

(ak)

Article 39a relating to the prohibition of receiving

payment for order flow; and

(al)

Article 40 relating

to

ESMA

temporary

intervention powers;

(am) Article 41 relating to EBA temporary intervention

powers;

(an)

42 relating to product intervention by the

competent authority.

(3)

Deleted by Legal Notice 216 of 2025.

(4)

The provision of investment services, in or from Malta,

without the required authorisation or approval in accordance with

(a)

the provisions of the Investment Services Act

transposing Article 5 of MiFID;

(b)

the provisions of the Investment Services Rules

transposing Article 6(2) of MiFID;

(c)

the provisions of the European Passport Right for

Investment Firms Regulations transposing Articles 34 and 35 of

MiFID;

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(d)

the provisions of the European Passport Rights for

Persons Operating Multilateral Trading Facilities Regulations

or the Multilateral Trading Facilities and Organised Trading

Facilities Regulations, 2017 transposing Article 34 of MiFID;

(e)

the provisions of the Investment Services Act

(Provision of Investment Services and Activities by Third

Country Firms) Regulations, 2017 transposing Article 39 of

MiFID;

(f)

Deleted by Legal Notice 135 of 2022.

shall also be considered as an infringement of the MiFID and

therefore subject to the applicability of these regulations.

(5)

The provision of investment services, in or from Malta,

without the required authorisation or approval contrary to the

requirements prescribed in

(a)

the provisions of Article 7(1) of MiFIR on the

requirement of market operators and investment firms operating

a trading venue to obtain the competent authority’s prior

approval of the proposed arrangement for deferred trade

publication and to disclose these arrangements to the market

participants and to the public;

(b)

the provisions of Article 11(1) of MiFIR on the

requirement applicable to market operators and investment

firms operating a trading venue to obtain authorisation from the

competent authority for deferred publication of the details of

transactions based on the size and type of the transaction; and

(c)

the provisions of Article 27b of MiFIR on the

requirements for authorisation to operate an APA or ARM,

where an APA or ARM has a derogation in accordance with

Article 2(3) of MiFIR.

shall also be considered as an infringement of the MiFIR and

thereafter subject to the applicability of these regulations.

(6)

Failure to cooperate or comply in an investigation or

with an inspection or request covered by Article 69 of MiFID shall

also be considered an infringement and subject to the applicability of

these regulations.

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 21 of the Malta

Financial Services Authority Act shall apply mutatis mutandis.

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