INVESTMENT SERVICES ACT (SUPERVISORY CONSOLIDATION) (CAPITAL REQUIREMENTS DIRECTIVE) REGULATIONS

(SUPERVISORY CONSOLIDATION)

(CAPITAL REQUIREMENTS DIRECTIVE)

SUBSIDIARY LEGISLATION 370.46

INVESTMENT SERVICES ACT

(SUPERVISORY CONSOLIDATION) (CAPITAL

REQUIREMENTS DIRECTIVE) REGULATIONS

1st February, 2022 *

LEGAL NOTICE 495 of 2021, as amended by Legal Notices 29 of

2022, 73 of 2023, 45 and 154 of 2025.

(1)

The title of these regulations is the Investment

Services Act (Supervisory Consolidation) (Capital Requirements

Directive) Regulations.

(2)

The scope of these regulations is to transpose Articles

2(6), 3 (partly), 20(3), 48(1), 49, 51, 111, 112, 113, 114, 115, 116, 117,

118, 119, 120, 122, 123(1), 124, 127, 151, 155, 156 and 158 of

Directive 2013/36/EU.

(1)

In these regulations, unless the context otherwise

requires -

"the Act" means the Investment Services Act;

"ancillary services undertaking" shall have the same meaning as

that assigned to it in point (18) of Article 4(1) of the CRR;

"branch" shall have the same meaning as that assigned to it in

point (17) of Article 4(1) of the CRR;

"consolidated basis" shall have the same meaning as that

assigned to it in point (48) of Article 4(1) of the CRR;

"consolidated situation" shall have the same meaning as that

assigned to it in point (47) of Article 4(1) of the CRR;

"the competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act;

"consolidating supervisor" shall have the same meaning as that

assigned to it in point (41) of Article 4(1) of the CRR;

"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;

*See Legal Notice 37 of 2022.

(SUPERVISORY CONSOLIDATION)

(CAPITAL REQUIREMENTS DIRECTIVE)

"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 amending Regulation (EU)

No 648/2012;

"EBA" means the European Banking Authority as established by

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

the Council of 24th November 2010 establishing a European

Supervisory Authority;

"EEA" means a State which is a contracting party to the

Agreement on the European Economic Area signed at Oporto on the

2nd May, 1992 as amended by the protocol signed at Brussels on

17th March, 1993 and as amended by any subsequent Act;

"EIOPA" means the European Insurance and Occupational

Pensions Authority as established by Regulation (EU) No. 1093/2010

of the European Parliament and of the Council of 24th 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;

"ESRB" means the European Systemic Risk Board established

by Regulation (EU) No 1092/2010;

"EU 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;

"EU parent financial holding company" shall have the same

meaning as that assigned to it in point (31) of Article 4(1) of the

CRR;

"EU parent institution" shall have the same meaning as that

assigned to it in point (29) of Article 4(1) of the CRR;

"EU parent mixed financial holding company" shall have the

same meaning as that assigned to it in point (33) of Article 4(1) of

Article 4(1) of the CRR;

"European regulatory authority" means an authority which is

situated in a country or territory outside Malta that is a Member State

and is empowered by law or regulation to supervise investment

firms;

"financial holding company" shall have the same meaning as that

assigned to it in point (20) of Article 4(1) of the CRR;

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(CAPITAL REQUIREMENTS DIRECTIVE)

"financial institution" shall have the same meaning as that

assigned to it in point (26) of Article 4(1) of the CRR

Provided that the entities referred to in point (1) and in

points (3) to (24) of Article 2(5) of the CRD shall be treated as

financial institutions;

"home Member State" shall have the same meaning as that

assigned to it in point (43) of Article 4(1) of the CRR;

"host Member State" shall have the same meaning as that

assigned to it in point (44) of Article 4(1) of the CRR;

"insurance undertaking" shall have the same meaning as that

assigned to it in point (5) of Article 4(1) of the CRR;

"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 and CRR; "Member

State" includes an EU and EEA State;

"mixed activity holding company" shall have the same meaning

as that assigned to it in point (22) of Article 4(1) of the CRR;

"mixed financial holding company" shall have the same meaning

as that assigned to it in point (21) of Article 4(1) of the CRR;

"parent financial holding company in a Member State" shall

have the same meaning as that assigned to it in point (30) of Article

4(1) of the CRR;

''parent institution in Malta" means an institution in Malta which

has an institution or a financial institution as a subsidiary or which

holds a participation in such an institution or financial institution,

and which is not itself a subsidiary of another institution authorised

in Malta, or of a financial holding company or mixed financial

holding company set up in Malta;

"parent mixed financial holding company in a Member State"

shall have the same meaning as that assigned to it in point (32) of

Article 4(1) of the CRR;

"parent undertaking" shall have the same meaning as that

assigned to it in point (15) of Article 4(1) of the CRR;

"participation" shall have the same meaning as that assigned to it

in point (35) of Article 4(1) of the CRR;

"Rules" means Rules for investment firms issued by the

competent authority in terms of the Act;

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"sub-consolidation basis" shall have the same meaning as that

assigned to it in point (49) of Article 4(1) of the CRR;

"subsidiary" shall have the same meaning as that assigned to it in

point (16) of Article 4(1) of the CRR;

"third country" means a country that is not a Member State;

"third country regulatory authority" means an authority which is

in a country or territory that is not a Member State and is empowered

by law or regulation to supervise investment firms.

(2)

Words and expressions which are also used in the Act

shall have the same meaning as that assigned to it in the Act.

Part I - Consolidated Supervision

(1)

The competent

authority

shall

exercise

supervision on a consolidated basis

(a)

where the parent undertaking is a parent credit

institution established in Malta or in another

Member State or an EU parent credit institution

supervised by the competent authority on an

individual basis;

(aa)

where the parent undertaking is a parent investment

firm established in Malta or in another Member

State or an EU parent investment firm and none of

its subsidiaries is a credit institution, if the

competent authority supervises that parent

investment firm or that EU parent investment firm

on an individual basis;

(b)

where a parent undertaking is a parent investment

firm established in Malta or in another Member

State or an EU parent investment firm and at least

one of its subsidiaries is a credit institution

supervised by the competent authority

Provided that, where there are several credit

institutions, the competent authority shall exercise

supervision on a consolidated basis where it

supervises the credit institution with the largest

balance sheet total;

(c)

where the parent of an investment firm is a parent

financial holding company established in Malta or

in another Member State, a parent mixed financial

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holding company in Malta or in another Member

State, an EU parent financial holding company or

an EU parent mixed financial holding company,

where the competent authority supervises the

investment firm on an individual basis.

(d)

where two or more institutions authorised in the

European Union, one of which is a credit institution

supervised by the competent authority, have the

same parent financial holding company established

in Malta or in another Member State, parent mixed

financial holding company established in Malta or

in another Member State, EU parent financial

holding company or EU parent mixed financial

holding company, and

(i)

the competent authority supervises the credit

institution, which is the only credit

institution within the group; or

(ii)

the competent authority supervises the credit

institution with the largest balance sheet

total, where there are several credit

institutions within the group

Provided that, for the purposes of this

paragraph, the term "institution" shall

include credit institutions and investment

firms;

(iii)

the competent authority supervises the

investment firm with the largest balance

sheet total, where the group does not include

any credit institution;

(e)

where consolidation is required pursuant to Article

18(3) or (6) of the CRR and the competent

authority supervises the credit institution with the

largest balance sheet total or, where the group does

not include any credit institution, by the competent

authority of the investment firm with the largest

balance sheet total.

(2)

By way of derogation from sub-regulation (1)(b), (d)(ii),

d(iii) and (e), the competent authority shall be the consolidating

supervisor where it supervises on an individual basis one or more

investment firms within a group, and the sum of the balance sheet

totals of those supervised investment firms is higher than that of the

investment firms supervised on an individual basis by any other

European regulatory authority, and there are no credit institutions in

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(CAPITAL REQUIREMENTS DIRECTIVE)

the group.

(3)

In particular cases, the criteria referred to in sub-

regulation (1)(a), (b), (d) and (e) may be waived by common

agreement of the competent authority with the other relevant European

regulatory authorities and a European regulatory authority may be

appointed to exercise supervision on a consolidated basis where the

application of the criteria referred to in the said sub-regulation (1)(a),

(b), (d) and (e) would be inappropriate, taking into account the credit

institutions or investment firms concerned and the relative importance

of their activities in the relevant Member States, or the need to ensure

the continuity of supervision on a consolidated basis by the same

European regulatory authority. In these cases, before such decision is

taken the EU parent institution, the EU parent financial holding

company, the EU parent mixed financial holding company or the

institution with the largest balance sheet total, as applicable, shall have

the right to be heard.

(4)

The competent authority shall notify the Commission

and the EBA without delay of any agreement falling within sub-

regulation (3).

(1)

In addition to the obligations imposed by the

provisions of the Act and any regulations or Rules made thereunder

transposing the requirements of the CRD, and by the CRR, the

competent authority acting as consolidating supervisor, shall carry out

the following tasks

(a)

co-ordination of the gathering and dissemination

of relevant or essential information in going concern and

emergency situations;

(b)

planning and co-ordination of supervisory

activities in going concern situations, including in relation to

the activities relating to supervision on a consolidated basis in

co-operation with the European regulatory authorities; and

(c)

planning and co-ordination of supervisory

activities in co-operation with the European regulatory

authorities involved, and if necessary with ESCB central banks,

in preparation for and during emergency situations, including

adverse developments in investment firms or in financial

markets using, where possible, existing channels of

communication for facilitating crisis management. These

include exceptional measures referred to in regulation 9(3)(e),

the preparation of joint assessments, the implementation of

contingency plans and communication to the public.

(2)

Where European regulatory authorities do not co-operate

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(CAPITAL REQUIREMENTS DIRECTIVE)

with the competent authority, to the extent required in carrying out the

tasks in this regulation, the competent authority may refer the matter to

the EBA and request its assistance under Article 19 of Regulation

(EU) No 1093/2010.

(3)

Where the competent authority does not act as

consolidating supervisor and either the consolidating supervisor fails

to carry out the tasks referred to in Article 112(1) of the CRD or any

European regulatory authority does not co-operate with the

consolidating supervisor to the extent required in carrying out the tasks

in Article 112(1) of the CRD, it may refer the matter to the EBA and

request its assistance under Article 19 of Regulation (EU) No 1093/

2010.

(1)

Where an emergency situation, including a

situation as described in Article 18 of Regulation (EU) No 1093/2010

or a situation of adverse developments in markets arises, which

potentially jeopardises the market liquidity and the stability of the

financial system in any of the Member States where entities of a group

have been authorised or where significant branches as referred to in

regulation 14 are established and where the competent authority is the

consolidating supervisor, it shall, subject to confidentiality

requirements in the Malta Financial Services Authority Act and any

other applicable law, alert as soon as is practicable the EBA and the

authorities referred to in Articles 58(4) and 59 of the CRD and it shall

communicate to the said authorities all the information that is essential

for the pursuance of their tasks.

(2)

To the extent possible, the competent authority shall use

existing channels of communication with ESCB central banks.

(3)

Where the competent authority is the consolidating

supervisor, it shall, when it needs information which has already been

given to a European regulatory authority, contact this authority,

whenever possible, in order to prevent duplication of reporting to the

various authorities involved in supervision.

(1)

Where the competent authority is the

consolidating supervisor, it shall have written co-ordination and co-

operation arrangements in place with European regulatory authorities

responsible for supervising the other members of the group.

(2)

Under the arrangements made pursuant to sub-regulation

(1), additional tasks may be entrusted to the competent authority as

consolidating supervisor and procedures for the decision-making

process and for co-operation with other European regulatory

authorities may be specified.

(3)

Where the competent authority is responsible for the

licensing of the subsidiary of a parent undertaking which is an

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investment firm, it may, by bilateral agreement in accordance with

Article 28 of Regulation (EU) No 1093/2010, delegate its

responsibility for supervision of such subsidiary to the European

regulatory authority which authorised and supervises the parent

undertaking so that the latter assume responsibility for supervising the

subsidiary in accordance with the CRD. The competent authority shall

forward the content of such agreements to the EBA.

(4)

Where the competent authority is the consolidating

supervisor, and a financial holding company or a mixed financial

holding company that has been granted approval in accordance with

Article 21a of the CRD is established in a Member State other than

Malta, the co-ordination and co-operation arrangements referred to in

sub-regulations (1) and (2) shall also be concluded with the European

regulatory authority where the parent undertaking is established.

(5)

Where the competent authority is not the consolidating

supervisor, but a financial holding company or a mixed financial

holding company has been granted approval in accordance with

Article 21a of the CRD and is established in Malta, the co-ordination

and co-operation arrangements referred to sub-regulations (1) and (2)

shall be concluded with the European regulatory authority acting as

the consolidating supervisor.

(1)

Where the competent authority is the

consolidating supervisor, it shall establish colleges of supervisors to

facilitate the exercise of the tasks referred to in regulation 4, regulation

5(1) and (2) and regulation 8, and it shall also, subject to the

confidentiality requirements of sub-regulation (3) and compatibility

with European Union law, ensure appropriate co-ordination and co-

operation with third country regulatory authorities where appropriate.

(2)

When forming part of a college of supervisors, the

competent authority shall contribute towards the provision of a

framework for the consolidating supervisor, EBA and other European

regulatory authorities or third country regulatory authorities forming

part of that college, to carry out the following tasks

(a)

exchange information with European regulatory

authorities and third country regulatory authorities forming part

of that college and with EBA in accordance with Article 21 of

Regulation (EU) No 1093/2010;

(b)

agreeing on voluntary entrustment of tasks and

voluntary delegation of responsibilities where appropriate;

(c)

determining supervisory examination programmes

referred to in Article 99 of the CRD based on a risk assessment

of the group in accordance with Article 97 of the CRD;

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(CAPITAL REQUIREMENTS DIRECTIVE)

(d)

increasing the efficiency of supervision by

removing unnecessary duplication of supervisory requirements,

including in relation to the information requests referred to in

Article 114 and Article 117(3) of the CRD;

(e)

consistently applying the prudential requirements

under the CRD and the CRR across all entities within a group

of investment firms, without prejudice to the options and

discretions available in European Union law; and

(f)

applying Article 112(1)(c) of the CRD taking into

account the work of other fora that may be established in that

area.

(2A) In order to facilitate the tasks referred to in sub-regulation

(1) and regulations 4(1), 5(1), 6(1), and 6(2), where the competent

authority is the consolidating supervisor, it shall also establish

colleges of supervisors where all the cross-border subsidiaries of an

EU parent institution, an EU parent financial holding company or an

EU parent mixed financial holding company have their head offices

in third countries

Provided that the third countries’ regulatory authorities

are subject to confidentiality requirements that are equivalent to the

requirements laid down in the Malta Financial Services Authority

Act and any other applicable law.

(3)

The competent authority, when forming part of a college

of supervisors, shall co-operate closely with EBA and all the European

regulatory authorities and third country regulatory authorities forming

part of the relevant college of supervisors. The confidentiality

requirements under the Malta Financial Services Authority Act and the

Act shall not prevent the competent authority from exchanging

confidential information within colleges of supervisors. The

establishment and functioning of colleges of supervisors shall not

affect the rights and responsibilities of the competent authority under

the provisions of the Act, and any regulations or Rules made

thereunder transposing the requirements of the CRD, and under the

CRR.

(4)

Where the competent authority is the consolidating

supervisor of these regulations, it shall establish and manage the

colleges of supervisors based on written arrangements referred to in

regulation 6, determined after consultation with European regulatory

authorities and third country regulatory authorities concerned.

(5)

The competent authority may form part of a college of

supervisors when

(a)

it is responsible for the supervision of subsidiaries

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of an EU parent institution, an EU parent financial holding

company or an EU parent mixed financial holding company;

(b)

Malta is the host Member State where significant

branches as referred to in regulation 14 are established;

(c)

Malta is the Member State where a financial

holding company or a mixed financial holding company that

has been granted approval in accordance with Article 10CA of

the Act is established.

(6)

Where the competent authority is the consolidating

supervisor, it shall chair the meetings of the college and shall decide

which European regulatory authorities and third country regulatory

authorities, where relevant, participate in a meeting or in an activity of

the college. The decision shall take into account the relevance of the

supervisory activity to be planned or co-ordinated for those

authorities, and in particular, the potential impact on the stability of the

financial system in the Member States concerned and, in particular, in

emergency situations, based on the information available at the

relevant time and the obligations referred to in regulation 14(6) and

(7).

(7)

The competent authority, as consolidating supervisor,

shall keep all members of the college fully informed, in advance, of

the organisation of the meetings of the college, about the main issues

to be discussed and the activities to be considered and shall also keep

all the members of the college fully informed, in a timely manner, of

the actions taken in those meetings or the measures carried out.

(8)

The competent authority as consolidating supervisor

shall, subject to the confidentiality requirements of the Malta Financial

Services Authority Act and the Act, inform the EBA of the activities of

the college of supervisors, including in emergency situations, and

communicate to the EBA all the information that is of particular

relevance for the purposes of supervisory convergence.

(9)

In the case of disagreement between the competent

authorities on the functioning of the supervisory colleges, 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. (10) Without prejudice to the provisions of sub-regulation (6),

when the competent authority is the consolidating supervisor it may

invite the following entities to participate in the college which it shall

chair

(a)

the European regulatory authorities responsible

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for the supervision of subsidiaries of an EU parent institution,

an EU parent financial holding company or an EU parent mixed

financial holding company;

(b)

the European regulatory authorities of a host

member state where significant branches, as referred to in

Article 51 of the CRD, are established;

(c)

ECSB central banks, where appropriate; and

(d)

third-country regulatory authorities where

appropriate, subject to confidentiality requirements that are

equivalent, in the opinion of the competent authority and all the

European regulatory authorities concerned, to the requirements

under Chapter 1, Section II of the CRD, and where applicable,

Chapter 1, Section 2 of Title IV of the IFD.

(1)

The competent authority, whether it is the

consolidating supervisor or the competent authority responsible for the

supervision of subsidiaries of an EU parent institution, an EU parent

financial holding company or an EU parent mixed financial holding

company which are investment firms, shall do everything within its

power to reach a joint decision with the other European regulatory

authorities

(a)

on the application of Articles 73 and 97 of the

CRD as transposed in the Investment Services Rules and in

Investment Services Act (Supervisory Review) Regulations to

determine the adequacy of the consolidated level of own funds

held by the group of institutions with respect to its financial

situation and risk profile and the required level of own funds for

the application of point (a) of Article 104(1) of the CRD as

transposed in the Investment Services Act (Supervisory

Review) Regulations, each entity within the group of

institutions and on a consolidated basis;

(b)

on measures to address any significant matters

and material findings relating to liquidity supervision, including

relating to the adequacy of the organisation and the treatment of

risks as required pursuant to Article 86 of the CRD as

transposed in the Investment Services Rules and relating to the

need for institution-specific liquidity requirements in

accordance with Article 105 of the CRD as transposed in the

Investment Services Act (Supervisory Review) Regulations.

(c)

on any guidance on additional own funds referred

to in Article 104b(3) of the CRD as transposed in the

Investment Services Act (Supervisory Review) Regulations.

(2)

Where it is the consolidating supervisor, the

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competent authority shall submit –

(a)

for the purpose of sub-regulation (1)(a), a report

containing the risk assessment of the group of institutions in

accordance with Article 104a of the CRD as transposed in the

Investment Services Act (Supervisory Review) Regulations to

the other relevant European regulatory authorities;

(b)

for the purpose of sub-regulation (1)(b), a report

containing the assessment of the liquidity risk profile of the

group of institutions in accordance with Articles 86 and 105 of

the CRD as transposed in the Investment Services Rules and in

the Investment Services Act (Supervisory Review) Regulations,

to the other relevant European regulatory authorities;

(c)

for the purpose of sub-regulation (1)(c), a report

containing the risk assessment of the group of institutions in

accordance with Article 104b of the CRD as transposed in the

Investment Services Act (Supervisory Review) Regulations, to

the other relevant European regulatory authorities.

(3)

The joint decisions referred to in sub-regulation

(1) shall be reached within four (4) months from submission of

the reports referred to in sub-regulation (2)

Provided that the joint decisions referred to in

sub-regulation (1) shall also duly consider the risk assessment

of subsidiaries performed by the competent authority and, or

relevant European regulatory authorities in accordance with

Articles 73, 97, 104a and 104b of the CRD as transposed in the

Investment Services Rules and in the Investment Services Act

(Supervisory Review) Regulations.

(4)

Where the competent authority is the

consolidating supervisor, it shall provide the EU parent

institution concerned with the joint decisions referred to in sub-

regulation (1), which shall be set out in a document containing

the full reasons for the decisions. In the event of disagreement,

the competent authority shall, at the request of any of the other

European regulatory authorities concerned, consult the EBA

Provided that the competent authority, when it is

the consolidating supervisor, may consult the EBA on its own

initiative.

(5)

In the absence of such a joint decision within the time

period referred to in sub-regulation (3) and, or regulation 8, a decision

on the application of Articles 73, 86, 97, 104(1)(a), 104b and 105 of

the CRD as transposed in the Investment Services Rules and in the

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Investment Services Act (Supervisory Review) Regulations shall be

taken by the competent authority, where it is acting as the

consolidating supervisor, on a consolidated basis, after duly

considering the risk assessment of subsidiaries performed by the

relevant European regulatory authorities

Provided that

(a)

if, at the end of the time period referred to in sub-

regulation (3), any of the European regulatory

authorities concerned have referred the matter to

the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010, the competent

authority shall defer its decision and await any

decision the EBA may take in accordance with

Article 19(3) of the said Regulation. The competent

authority shall take its decision in conformity with

the decision of the EBA. The time period referred

to in sub-regulation (3) shall be deemed to be the

conciliation period within the meaning of

Regulation (EU) No 1093/2010;

(b)

where the competent authority is not acting as

consolidated supervisor but is responsible for the

supervision of subsidiaries of an EU parent

institution or an EU parent financial holding

company or an EU parent mixed financial holding

company, it may refer the matter to the EBA in

accordance with Article 19 of Regulation (EU) No

1093/2010. The matter shall not be referred to the

EBA after the end of the time period referred to

above in sub-regulation (3) or after a joint decision

has been reached.

(6)

Where the competent authority is not the consolidating

supervisor but is responsible for the supervision of a subsidiary of an

EU parent credit institution or an EU parent financial holding

company or an EU parent mixed financial holding company, which is a

credit institution, and in the absence of a joint decision in terms of this

regulation within the time period referred to in regulation 8, the

competent authority shall decide on the application of Articles 73, 86,

97, 104(1)(a), 104b and 105 of the CRD as transposed in the

Investment Services Rules and in the Investment Services Act

(Supervisory Review) Regulations on an individual or sub-

consolidated basis, after duly considering the views and reservations

expressed by the consolidating supervisor

Provided that if at the end of the time period referred to

in regulation 8 and as transposed in the Investment Services Act

(Supervisory Review) Regulations, any of the European regulatory

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authorities concerned have referred the matter to the EBA in

accordance with Article 19 of Regulation (EU) No 1093/2010, the

competent authority shall defer its decision and await any decision that

the EBA shall take in accordance with Article 19(3) of the said

Regulation. The competent authority shall take its decision in

conformity with the decision of the EBA. The time period referred to

above shall be deemed to be the conciliation period within the

meaning of the said Regulation

(7)

Where the competent authority is not acting as

consolidated supervisor but is responsible for the supervision of

subsidiaries of an EU parent institution or an EU parent financial

holding company or an EU parent mixed financial holding company, it

may, in the event of any disagreement, refer a dispute to the EBA on

its own initiative but prior to a joint decision being made, provided

that no referral shall be made once the time period specified in

regulation 8 has expired.

(8)

(a)

The decisions taken by the competent authority

referred to in this regulation shall be set out in a document containing

fully reasoned decisions and shall take into account the risk

assessment, views and reservations of the competent authority or the

other European regulatory authorities, as applicable, expressed during

the time period referred to in sub-regulation (3).

(b)

The competent authority shall provide the

document referred to above to the European regulatory authorities

concerned and to the EU parent institution. Where the EBA has been

consulted, the competent authority shall consider its advice and

explain any significant deviation therefrom.

(c)

The joint decisions referred to in sub-regulation

(1) and the decisions taken by the competent authority or European

regulatory authorities in terms of regulation 8 shall be recognised as

determinative and shall be applied by the competent authority, where

applicable.

(9)

The decisions referred to in sub-regulation (1) and any

decision taken in terms of sub-regulations (5) and (6) shall be updated

on an annual basis or, in exceptional circumstances, where the

competent authority is responsible for the supervision of subsidiaries

of an EU parent institution or an EU parent financial holding company

or an EU parent mixed financial holding company which are

investment firms, it may make a written and fully reasoned request to

the consolidating supervisor to update the decision on the application

of Article 104(1)(a), Article 104b and Article 105 of the CRD as

transposed in the Investment Services Act (Supervisory Review)

Regulations. In those exceptional circumstances, such update may be

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addressed on a bilateral basis between the competent authority and the

consolidating supervisor

Provided that, where the competent authority is the

consolidating supervisor, it shall update the decisions at the request of

the European regulatory authorities responsible for the supervision of

subsidiaries of an EU parent institution, or an EU parent financial

company, or an EU parent mixed financial holding company. The

competent authority may address the update to the European

regulatory authority making the request, on a bilateral basis.

(1)

The competent authority shall co-operate closely

with European regulatory authorities. Such co-operation shall include

the provision to such authorities of any information which is essential

or relevant for the exercise of their respective supervisory tasks under

the CRD, and the CRR. The competent authority shall communicate

on request all relevant information and shall communicate on its own

initiative all essential information.

(2)

The competent authority shall co-operate with the EBA

for the purposes of the CRD and the CRR in accordance with

Regulation (EU) No 1093/2010. Such co-operation shall include the

provision to the EBA of all information necessary to carry out its

duties under the CRD and the CRR and under Regulation (EU) No

1093/2010, in accordance with Article 35 of Regulation (EU) No

1093/2010.

(3)

For the purpose of sub-regulation (1) information shall

be regarded as essential if it could materially influence the assessment

of the financial soundness of an investment firm or a financial

institution in another Member State and shall include, in particular, the

following items

(a)

identification of the group’s legal structure and

the governance structure including organisational structure,

covering all regulated entities, non-regulated entities, non-

regulated subsidiaries and significant branches belonging to the

group, and the parent undertakings, in accordance with the

relevant provisions of the Act and any regulations or Rules

made thereunder transposing the requirements of Article 14(3),

74(1) and 109(2) of the CRD;

(b)

identification of the European regulatory

authorities of the regulated entities in the group, as the case

may be;

(c)

procedures for the collection of information from

the investment firms in a group and the verification of that

information;

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(d)

adverse developments in investment firms or in

other entities of a group, which could seriously affect the

investment firms; and

(e)

significant penalties and exceptional measures

taken by the competent authority in accordance with the CRD,

including the imposition of a specific own fund requirement

under Article 104 of the CRD and the imposition of any

limitation on the use of Advanced Measurement Approach for

the calculation of the own funds requirements under Article

312(2) of the CRR.

(4)

Where the competent authority is acting as consolidating

supervisor, it shall provide European regulatory authorities who

supervise subsidiaries of parent undertakings with all relevant

information. In determining the extent of relevant information, the

importance of those subsidiaries within the financial system in those

Member States shall be taken into account.

(5)

Where the competent authority is responsible for the

supervision of an investment firm controlled by an EU parent

institution, it shall whenever possible contact the consolidating

supervisor when it needs information regarding the implementation of

approaches and methodologies set out in the CRD and the CRR that

may already be available to that consolidating supervisor.

(6)

Where the competent authority intends to decide on

significant penalties or exceptional measures to be imposed by it,

including the imposition of a specific own funds requirement under the

Investment Services Act (Supervisory Review) Regulations, and the

imposition of any limitation on the use of the advanced measurement

approaches for the calculation of the own funds requirements under

Article 312(2) of the CRR, and where any such decision is of

importance for the supervisory tasks of the European regulatory

authorities concerned, the competent authority shall consult with the

said European regulatory authorities before taking any such decision

Provided that where the competent authority intends to

decide on such significant penalties or exceptional measures, it shall

always consult the consolidating supervisor and may decide not to

consult European regulatory authorities in cases of urgency or where

such consultation could jeopardise the effectiveness of its decision. In

such cases, the competent authority shall, without delay, inform the

European regulatory authorities after taking its decision.

(6A) The competent authority shall cooperate closely with the

financial intelligence units and authorities entrusted with the public

duty of supervising the obliged entities listed in points (1) and (2) of

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Article 2(1) of Directive (EU) 2015/849 for compliance with the said

Directive within their respective competences and shall provide them

with information relevant for their respective tasks under the CRD as

transposed in Maltese Law, the CRR and under Directive (EU) 2015/

849, provided that such co-operation and information exchange do not

impinge on an on-going inquiry, investigation or proceedings in

accordance with the criminal or administrative law of the Member

State where the competent authority, financial intelligence unit or

authority entrusted with the public duty of supervising the obliged

entities listed in points (1) and (2) of Article 2(1) of Directive (EU)

2015/849 is located.

(7)

The competent authority may refer to the EBA any of the

following situations

(a)

where a European regulatory authority has not

communicated essential information;

(b)

where a request for co-operation, in particular to

exchange relevant information, has been rejected or has not

been acted upon within a reasonable time.

(1)

The competent authority shall ensure that there

are no legal impediments preventing the exchange, between

undertakings included within the scope of supervision on a

consolidated basis, mixed-activity holding companies and their

subsidiaries, or subsidiaries of an investment firm, a financial holding

company or mixed financial holding company, which are not included

within the scope of supervision on a consolidated basis, of any

information which would be relevant for the purposes of supervision

in accordance with the relevant provisions of the Act, and any

regulations or Rules made thereunder transposing the requirements of

Article 110 and Chapter 3 of the CRD.

(2)

Where a subsidiary that is an investment firm licensed in

terms of the Act is not included in supervision on a consolidated basis

under one of the cases provided for in Article 19 of the CRR, the

competent authority may ask the parent undertaking of such

investment firm for information which may facilitate supervision of

that subsidiary.

(3)

The competent authority, as consolidating supervisor,

may ask the subsidiaries of an investment firm, a financial holding

company or mixed financial holding company which are not included

within the scope of supervision on a consolidated basis for information

which would be relevant for the purpose of supervising those

subsidiaries. In such a case, the procedures for transmitting and

verifying the information set out in regulation 16 shall apply.

(4)

Where a parent undertaking and any of its subsidiaries

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that are investment firms are situated in different Member States, the

competent authority shall communicate to the European regulatory

authorities concerned all relevant information which may allow or aid

the exercise of supervision on a consolidated basis.

(5)

The competent authority, as consolidating supervisor,

may invite the European regulatory authorities of the parent

undertaking to ask the parent undertaking to provide any information

which would be relevant for the purposes of supervision on a

consolidated basis. Such information shall be transmitted to the

competent authority by the European regulatory authority concerned.

(6)

Where a parent undertaking is situated in Malta and the

competent authority does not itself exercise supervision on a

consolidated basis in terms of regulation 3, it shall, upon request by the

European regulatory authority responsible for exercising such

supervision, require the parent undertaking to provide any information

relevant for the purposes of supervision on a consolidated basis and

the competent authority shall transmit such information to the

European regulatory authority making the request.

(7)

The competent authority shall exchange the information

referred to in sub-regulation (4) with other European regulatory

authorities, on the understanding that, in the case of financial holding

companies, mixed financial holding companies, financial institutions

or ancillary services undertakings, the collection or possession of

information shall not imply that the competent authority is required to

play a supervisory role in relation to those investment firms or

undertakings standing alone.

(8)

The competent authority shall exchange the information

referred to in regulation 19 with the European regulatory authorities

concerned, on the understanding that the collection or possession of

information does not imply that the competent authority plays a

supervisory role in relation to the mixed-activity holding company and

those of its subsidiaries which are not subsidiaries of an investment

firm, a financial holding company or mixed financial holding

company, which are not included within the scope of supervision on a

consolidated basis.

(1)

Where an investment firm, financial holding

company, mixed financial holding company or mixed-activity holding

company is situated in Malta and controls one or more subsidiaries

authorised in another Member State which are insurance undertakings

or other undertakings providing investment services, the competent

authority shall co-operate closely with European regulatory authorities

and with other authorities entrusted with the public task of supervising

insurance undertakings in other Member States. Without prejudice to

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its responsibilities, the competent authority shall provide the

authorities referred to in this sub-regulation with any information

likely to simplify their task and to allow supervision of the activity and

overall financial situation of the undertakings they supervise.

(1A)

Where, pursuant to regulation 3, the consolidating

supervisor of a group with a parent mixed financial holding company

is different from the coordinator determined in accordance with Article

12 of Directive 2002/87/EC, the consolidating supervisor and the co-

ordinator shall co-operate for the purpose of applying the provisions of

the Act, and any regulations or Rules made thereunder transposing the

requirements of the CRD, and under the CRR, on a consolidated basis.

In order to facilitate and establish effective co-operation, the

consolidating supervisor and the co-ordinator shall have written co-

ordination and co-operation agreements in place.

(2)

Information received, within the framework of

supervision on a consolidated basis, and in particular any exchange of

information between the competent authority and European regulatory

authorities which is provided for in the CRD, shall be subject to

professional secrecy requirements at least equivalent to those pursuant

to the Malta Financial Services Authority Act and the Act.

(3)

The competent authority as consolidating supervisor

shall establish a list of the financial holding companies or mixed

financial holding companies referred to in Article 11 of the CRR. Such

a list shall be communicated to the European regulatory authorities, to

the EBA and to the Commission.

(1)

The competent authority, in applying the

provisions of the Act, and of any regulations or Rules made thereunder

transposing the requirements of the CRD, and the CRR, may, in

specific cases, request a European regulatory authority to verify

information concerning an investment firm, a financial holding

company, a mixed financial holding company, a financial institution,

an ancillary services undertaking, a mixed-activity holding company, a

subsidiary which is an insurance company or other undertaking

providing investment services which is subject to authorisation, or a

subsidiary of an investment firm, a financial holding company or

mixed financial holding company which is not included within the

scope of supervision on a consolidated basis, situated in another

Member State. The competent authority may carry out the verification

itself, or if it so wishes participate in the verification.

(2)

Where the competent authority receives a request from a

European regulatory authority to verify information referred to in sub-

regulation (1), it shall, within the framework of its competence, act

upon it by either carrying out the verification itself, by allowing the

European regulatory authority making the request to carry out such

verification or by allowing an auditor or expert to carry out such

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(CAPITAL REQUIREMENTS DIRECTIVE)

verification. The European regulatory authority making the request

may participate in the verification where it does not carry out the

verification itself.

(1)

Where an investment firm licensed in terms of the

Act, the parent undertaking of which is an investment firm or a

financial holding company or mixed financial holding company, the

head office of which is established in a third country, is not subject to

consolidated supervision, the competent authority shall assess whether

the investment firm is subject to consolidated supervision by a third

country regulatory authority which is equivalent to that governed by

the principles laid down in this regulation and the requirements of Part

One, Title II, Chapter 2 of the CRR.

(2)

The competent authority as consolidating supervisor, if

sub-regulation (4) were to apply, shall carry out the assessment at the

request of the parent undertaking or of any of the regulated entities

authorised in the Union or on its own initiative. The competent

authority shall consult the other European regulatory authorities.

(3)

In carrying out the assessment referred to in sub-

regulation (1), the competent authority shall take into account any

guidance issued by the European Banking Committee as to whether

the consolidated supervision arrangements of third country regulatory

authorities are likely to achieve the objectives of consolidated

supervision as defined in this regulation, in relation to investment

firms licensed in terms of the Act, the parent undertaking of which has

its head office in a third country. For this purpose, the competent

authority shall consult the EBA before making a decision.

(4)

In the absence of such equivalent supervision, the

competent authority shall apply the provisions of the Act, and of any

regulations or Rules made thereunder transposing the requirements of

the CRD, and the CRR to the investment firm mutatis mutandis or

apply other appropriate supervisory techniques which achieve the

objectives of supervision on a consolidated basis of investment firms.

Such supervisory techniques shall be agreed upon by the competent

authority, as consolidating supervisor, after consultation with other

European regulatory authorities involved. The supervisory techniques

shall be designed to achieve the objectives of consolidated supervision

as set out in this regulation and shall be notified to other European

regulatory authorities involved, the EBA and the Commission.

(5)

The competent authority may in particular require the

establishment of a financial holding company or mixed financial

holding company with its head office in the European Union, and

apply the provisions on consolidated supervision to the consolidated

position of that financial holding company or the consolidated position

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(CAPITAL REQUIREMENTS DIRECTIVE)

of the investment firms of that mixed financial holding company.

(6)

The competent authority may, in terms of Article 48 of

the CRD, request the Commission to submit proposals to the Council

to negotiate agreements with one or more third countries regarding the

means of exercising supervision on a consolidated basis over the

following

(a)

investment firms the parent undertakings of which

have their head offices in a third country;

(b)

investment firms situated in third countries the

parent undertakings of which, whether investment firms,

financial holding companies or mixed financial holding

companies, have their head offices in the Union.

Part II - Establishment of Significant Branches

(1)

Where an investment firm, other than a EU

investment firm subject to Article 95 of the CRR, authorised in another

Member State has established a branch in Malta, the competent

authority may make a request to the European regulatory authority

which is the consolidating supervisor, where Article 112(1) applies, or

to the European regulatory authority of the home Member State of

such investment firms, for that branch to be considered as significant.

(2)

The request referred to in sub-regulation (1) shall

provide reasons for considering the branch to be significant with

particular regard to the following

(a)

whether the market share of the branch in terms of

deposits exceeds 2% in Malta;

(b)

the likely impact of a suspension or closure of the

operations of the investment firm on systemic liquidity and the

payment, clearing and settlement systems in Malta; and

(c)

the size and the importance of the branch in terms

of number of clients within the context of the banking or

financial system of Malta.

(3)

The competent authority shall do everything within its

power to reach a joint decision with the European regulatory authority

of the home Member State and, where Article 112(1) applies, with the

European regulatory authority which is the consolidating supervisor,

on the designation of a branch as being significant.

(4)

If no joint decision is reached within two months of

receipt of a request under sub-regulation (1), the competent authority

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shall take its own decision within a further period of two months on

whether the branch is significant. In taking its decision, the competent

authority shall take into account any views and reservations of the

European regulatory authority which is the consolidating supervisor or

the European regulatory authority of the home Member State.

(5)

The decisions referred to in sub-regulations (3) and (4)

shall be set out in a document containing full reasons and shall be

transmitted to the European regulatory authorities concerned. It shall

be recognised as determinative and applied by the European regulatory

authorities in the Member States concerned.

(6)

Where the European regulatory authority of the home

Member State does not consult the competent authority, or where,

following such consultation, the competent authority maintains that

operational steps required by the Act and any regulations or Rules

made thereunder transposing the requirements of Article 86(11) of the

CRD, are not adequate, 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.

(1)

Where the competent authority is responsible for

the supervision of an investment firm licensed in terms of the Act or,

other than an investment firm subject to Article 95 of the CRR, which

has established a branch in another Member State or is the

consolidating supervisor, it may receive a request from the European

regulatory authority of the host Member State where the branch is

established, for such branch to be considered as significant. This

request shall provide reasons for considering the branch to be

significant with particular regard to the following

(a)

whether the market share of the branch in terms of

deposit exceeds 2% in the host Member State;

(b)

the likely impact of a suspension or closure of the

operations of the investment firm on systemic liquidity and the

payment and clearing and settlement systems in the host

Member State; and

(c)

the size and the importance of the branch in terms

of number of clients within the context of the banking or

financial system of the host Member State.

(2)

The competent authority shall do everything within its

power to reach a joint decision on the designation of a branch as

significant, with the European regulatory authority of the host Member

State where the branch is established and, where Article 112(1) of the

CRD applies, the European regulatory authority which is the

consolidating supervisor.

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(3)

The competent authority shall communicate to the

European regulatory authority of the host Member State, where a

significant branch is established, the following information referred to

in regulation 9(3)(d) and (e) and carry out the tasks referred to in

regulation 4(1)(c) in co-operation with the European regulatory

authority of the host Member State.

(4)

Where the competent authority becomes aware of an

emergency situation as referred to in regulation 5(1), it shall alert as

soon as practicable

(a)

ESCB central banks, when this 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

safeguarding the stability of the financial system, and it shall

communicate all information that is essential for the pursuance

of their tasks;

(b)

the ESRB where such information is relevant for

the exercise of its statutory tasks; and

(c)

departments of government administrations in

other Member States responsible for law on the supervision of

investment firms, financial institutions and insurance

undertakings and to inspectors acting on behalf of those

departments.

(5)

The competent authority shall communicate to the

European regulatory authority of the host Member State where the

significant branch is established, the results of the risk assessment

carried out in terms of the Investment Services Act (Supervisory

Review) Regulations with respect to the investment firm licensed in

Malta with such a branch and, where applicable, joint decisions on

investment firm specific prudential requirements taken pursuant to the

provisions of the Act and any regulations or Rules made thereunder

transposing the requirements of Article 113(2) of the CRD. The

competent authority shall also communicate decisions required by the

Act and any regulations or Rules made thereunder transposing the

requirements of Articles 104 and 105 of the CRD in so far as those

assessments and decisions are relevant to the branch.

(6)

The competent authority shall consult the European

regulatory authority of the host Member State where the significant

branch is established about operational steps required by the Act and

any regulations or Rules made thereunder transposing the

requirements of Article 86(11) of the CRD, where relevant for

liquidity risks in the host Member State’s currency.

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(CAPITAL REQUIREMENTS DIRECTIVE)

The designation of a branch as being significant shall not

affect the rights and responsibilities of the competent authority under

the Act, and any regulations or Rules made thereunder transposing the

requirements of the CRD.

(1)

Where regulation 7 does not apply and the

competent authority supervises an investment firm licensed in Malta

with significant branches in other Member States, it shall establish and

chair a college of supervisors to facilitate the co-operation in terms of

regulation 15(3) to (6) and in terms of the Act and any regulations or

Rules made thereunder transposing the requirements of Article 50 of

the CRD. The establishment and functioning of the college shall be

based on written arrangements determined after consulting the

European regulatory authorities concerned by the competent authority.

The competent authority shall decide which European regulatory

authorities participate in a meeting or in an activity of the college.

(2)

In its decision the competent authority shall take account

of the relevance of the supervisory activity to be planned or co-

ordinated for those European regulatory authorities, in particular, the

potential impact on the stability of the financial system in the Member

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

the information available at the relevant time and the obligations

referred to in regulation 15(3) to (5).

(3)

The competent authority shall keep all members of the

college fully informed, in advance, of the organisation of such

meetings, the main issues to be discussed and the activities to be

considered. The competent authority shall also keep all the members

of the college fully informed, in a timely manner, of the actions taken

in those meetings or the measures carried out.

(1)

The prudential supervision of an investment firm,

including that of the activities it carries out in accordance the

European Passport Rights for Investment Firms Regulations shall be

the responsibility of the competent authority when such an investment

firm is licensed in Malta, without prejudice to those provisions of the

CRD and MiFID which give responsibility to the European regulatory

authorities of the host Member State.

(2)

Sub-regulation (1) shall not prevent supervision on a

consolidated basis in terms of regulation 3.

(3)

Where the branch of an investment firm authorised in a

Member State other than Malta, is established in Malta, any measures

taken by the competent authority with respect to such branch shall not

allow discriminatory or restrictive treatment on the basis that the

investment firm to which the branch belongs is authorised in another

Member State.

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Part III - Supervision of Mixed Activity Holding Companies and

their subsidiaries and of Mixed Financial Holding Companies

(1)

Where the parent undertaking of one or more

investment firms licensed in terms of the Act is a mixed-activity

holding company, the competent authority shall, by approaching the

mixed-activity holding company and its subsidiaries either directly or

via subsidiaries that are investment firms, require them to supply any

information which would be relevant for the purpose of supervising

those subsidiaries.

(2)

The competent authority may carry out on-the-spot

inspections, or have on-the-spot inspections carried out by external

inspectors, to verify information received from mixed-activity holding

companies and their subsidiaries. If the mixed-activity holding

company or one of its subsidiaries is an insurance undertaking, the

procedure set out in regulation 11 may also be used. If a mixed-activity

holding company or one of its subsidiaries is situated in a Member

State other than Malta but is the parent undertaking of an investment

firm licensed in terms of the Act, on-the-spot verifications of

information shall be carried out in accordance with the procedure set

out in regulation 12.

(3)

Without prejudice to Part Four of the CRR, where the

parent undertaking of one or more investment firms licensed in terms

of the Act is a mixed-activity holding company, the competent

authority shall exercise general supervision over transactions between

the investment firms and the mixed-activity holding company and its

subsidiaries.

(1)

Where a mixed financial holding company is

subject to equivalent provisions under the Act and any regulations or

Rules made thereunder transposing the requirements of the CRD, and

under Directive 2002/87/EC of the European Parliament and of the

Council of 16 December 2002 on the supplementary supervision of

credit institutions, insurance undertakings and investment firms in a

financial conglomerates, in particular in terms of risk-based

supervision, the competent authority may, as consolidating supervisor,

after consulting the other European regulatory authorities responsible

for the supervision of subsidiaries, apply only the latter Directive to

that mixed financial holding company.

(2)

Where a mixed financial holding company is subject to

equivalent provisions under the Act and any regulations or Rules made

thereunder transposing the requirements of the CRD, and under

Directive 2002/87/EC, in particular in terms of risk-based supervision,

the competent authority may, as consolidating supervisor, after

consulting the other European regulatory authorities responsible for

the supervision of subsidiaries, apply only the latter Directive to that

mixed financial holding company.

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(CAPITAL REQUIREMENTS DIRECTIVE)

(3)

The competent authority, as consolidating supervisor,

shall inform the EBA and the EIOPA of the decisions taken under sub-

regulations (1) and (2).