INVESTMENT SERVICES ACT (TIED AGENTS) REGULATIONS

INVESTMENT SERVICES ACT (TIED AGENTS)

SUBSIDIARY LEGISLATION 370.42

INVESTMENT SERVICES ACT (TIED AGENTS)

REGULATIONS

3rd January, 2018

LEGAL NOTICE 403 of 2017.

(1)

The title of these regulations is the Investment

Services Act (Tied Agents) Regulations.

(2)

The objective of these regulations is to implement Article

29 of MiFID, as herein defined, and they shall be interpreted and

applied accordingly.

(1)

In these regulations, unless the context otherwise

requires

"Act" means the Investment Services Act;

"ancillary services" means any of the services listed

within the Third Schedule to the Act;

"the competent authority" means the Malta Financial

Services Authority defined under article 2 of the Act;

"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;

"European right" means the entitlement of a person to

establish a branch, or provide services in a Member State or

EEA State other than that in which it has its head office -

(a)

in accordance with the Treaty as applied in

the Member States or EEA States; and

(b)

subject to the requirements of 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;

"Maltese investment firm" means a person licensed in

terms of the 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;

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

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

financial instruments and amending Directive 2002/92/EC and

Directive 2011/61/EU, as amended from time to time, and

INVESTMENT SERVICES ACT (TIED AGENTS)

includes any implementing measures that have been or may be

issued thereunder;

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

the full and unconditional responsibility of only one Maltese

investment firm or European investment firm and on whose

behalf it acts, promotes investment and, or ancillary services to

clients or prospective clients, receives and transmits

instructions or orders from the client in respect of investment

services or instruments, places instruments and, or provides

investment advice to clients or prospective clients in respect of

those instruments or services.

(2)

Words and expressions which are also used in the Act

shall have the same meaning as in the Act.

(1)

Maltese investment firms and European

investment firms exercising a European right may appoint tied agents

for the purposes of promoting their services, soliciting business or

receiving orders from clients or potential clients and transmitting

them, placing instruments and providing investment advice in respect

of such instruments and services offered by the Maltese investment

firm or the European investment firm.

(2)

Tied agents may, subject to these regulations and the

European Passport Rights for Investment Firms Regulations, where

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

(1)

A Maltese investment firm or a European

investment firm exercising a European right, wishing to appoint a tied

agent established in Malta to carry out business in Malta or elsewhere

shall apply to the competent authority for the registration of such tied

agent.

(2)

A Maltese investment firm or a European investment

firm, exercising a European right, may appoint a tied agent established

in Malta in terms of sub-regulation (1) only if such tied agent has been

registered by the competent authority in the public register kept in

terms of regulation 8.

(3)

Tied agents established in Malta and registered in terms

of regulation 8 shall be exempt from the provisions of article 3 of the

Act.

A Maltese investment firm exercising a European right

may appoint a tied agent in a Member State or EEA State only if such

tied agent is registered in the public register which the Member or

EEA State concerned has established for this purpose.

(1)

Tied agents shall not hold or control clients’

money and, or assets.

INVESTMENT SERVICES ACT (TIED AGENTS)

(2)

Tied agents shall only act for a Maltese investment firm

or a European Investment Firm, exercising a European right in Malta,

at any one time.

(1)

Where a Maltese investment firm decides to

appoint a tied agent, it remains fully and unconditionally responsible

for any act or omission on the part of the tied agent when the latter is

acting on behalf of the Maltese investment firm.

(2)

The Maltese investment firm shall ensure that its tied

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

name of the Maltese investment firm which such tied agent is

representing when contacting or before dealing with any client or

potential client.

(3)

The Maltese investment firm that appoints tied agents

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

continue to comply with the requirements of these regulations, the

Investment Services Rules and, or Conduct of Business Rules that may

be issued by the competent authority in terms of article 6 of the Act,

when acting through tied agents.

(4)

The Maltese investment firm that appoints tied agents

shall take adequate measures in order to avoid any negative impact

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

scope of MiFID, could have on the activities carried out by the tied

agents on behalf of the Maltese investment firm.

(1)

The competent authority shall keep a register of

all tied agents which are established in Malta and appointed by a

Maltese investment firm or by a European investment firm exercising

a European Right in Malta. Such register shall be updated on a regular

basis and shall be accessible to the public.

(2)

The competent authority shall only admit a tied agent to

the register established in sub-regulation (1) if the Maltese investment

firm or the European investment firm exercising a European Right,

appointing the tied agent has established and has confirmed to the

competent authority that the tied agent is of sufficiently good repute

and possesses appropriate general, commercial and professional

knowledge and competence so as to be able to deliver the investment

service or ancillary service and to communicate accurately all relevant

information regarding the proposed service to the potential clients

Provided that where the tied agent will provide

investment advice, the competent authority shall itself establish

whether the tied agent possesses the level of competence required by

the competent authority for this purpose.

(3)

The competent authority shall not register, or shall

withdraw registration of a tied agent where

(a)

the activities actually carried on clearly indicate

that a tied agent has opted for registration in Malta for the

purpose of evading the stricter standards in force in another

INVESTMENT SERVICES ACT (TIED AGENTS)

Member State or EEA State within the territory of which it

intends to carry out or carries out the greater part of its

activities; or

(b)

it is no longer satisfied that the tied agent fulfils

the requirements of this sub-regulation.

For the better carrying out of the requirements set out in

these regulations the competent authority may from time to time, issue

and publish Investment Services Rules and, or Conduct of Business

Rules in terms of article 6 of the Act, applicable to Maltese investment

firms appointing tied agents.

Where the competent authority has refused to register a

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

terms of regulation 8(3), it shall notify the person to whom such

registration was refused or the tied agent whose registration was

withdrawn of its decision, in writing and such person or tied agent,

shall have a right of appeal from such decision of the competent

authority to the Financial Services Tribunal and the provisions of

article 19 of the Act shall apply mutatis mutandis.

The provisions of these regulations shall apply mutatis

mutandis to a European credit institution as defined in regulation 2 of

the European Passport Rights for Credit Institutions Regulations,

authorised under MiFID to provide investment services and seeking to

appoint a tied agent in terms of MiFID. Reference to the term

"European investment firm" shall be deemed to be a reference to the

term "European credit institution".

(1)

Where a person falling within the scope of these

regulations fails to comply with any provisions of such regulations or

any rules issued thereunder further implementing such regulations, the

competent authority may, by notice in writing and without recourse to

a court hearing, impose on such person an administrative penalty and

other administrative measures in accordance with the provisions of the

Investment Services Act and Banking Act (MiFID and MiFIR

Administrative Penalties, Measures and Investigatory Powers)

Regulations, 2017.

(2)

A right of appeal to the Financial Services Tribunal shall

lie from the decisions which the competent authority shall take under

these regulations and the provisions of article 19 of the Act shall apply

mutatis mutandis.

The provisions of the Investment Services Act (Tied

Agents) Regulations are hereby being repealed.