MALTA TREASURY BILLS REGULATIONS

SUBSIDIARY LEGISLATION 575.02

MALTA TREASURY BILLS REGULATIONS

10th October, 2017

LEGAL NOTICE 273 of 2017. 

(1)

The title of these regulations is the Malta

Treasury Bills Regulations.

(2) These regulations shall be deemed to have come into

force on 1st September 2017.

In these regulations, unless the context otherwise

requires

"Accountant General" means the Accountant General of the

Government of Malta who heads the Treasury Department;

"the Act" means the Government Borrowing and Management

of Public Debt Act;

"ad hoc tenders" means an invitation by the Accountant

General for selected institutional investors to participate in restrictive

competitive tender process;

"auctions" means a public invitation for submission of bids for

Treasury Bills in such manner as the Minister may direct;

"business day" means a day other than a Saturday, a national or

public holiday listed in articles 2 and 5(1) of the National Holidays

and other Public Holidays Act, a bank holiday as declared under

article 3(2)(b) of the Banking Act, or a day when the Trans-European

Automated Real-time Gross Settlement Express Transfer System

(TARGET), owned and operated by the Eurosystem, is closed for

business as may be published on the European Central Bank’s

website (www.ecb.europa.eu);

"bye-laws" has the same meaning as is assigned to it by article

2 of the Financial Markets Act;

"competent authority" means the person or body appointed by

the Minister to carry out the functions of competent authority under

the Financial Markets Act;

"cut-off rate" means the maximum rate set by the Accountant

General at which bids are accepted;

"institutional investors" includes credit institutions licensed by

the Malta Financial Services Authority in terms of the Banking Act as

well as financial institutions that are licensed by the Malta Financial

Services Authority in terms of the Financial Institutions Act;

"Malta" has the same meaning as is assigned to it by article

124 of the Constitution;

"Minister" means the Minister responsible for finance;

"publication" has the same meaning as assigned to it by article

2 of the Act;

"recognised investment exchange", means a person in regard

to whom the competent authority has issued a recognition order in

accordance with the Financial Markets Act. For the purposes of these

regulations, recognised investment exchange means the Malta Stock

Exchange;

"Register" has the same meaning as assigned to it by article 2

of the Act;

"Registrar" means the Treasury Department or the Treasury

Department’s designated Registrar. For the purposes of these

regulations, the registrar of Malta Treasury Bills is the Central

Securities Depository (CSD) of the Malta Stock Exchange;

"standard tenders" means a public invitation for submission of

offers for Treasury Bills which are normally held regularly on a

weekly basis and announced in advance by the Accountant General in

any media available to disseminate the information to the market

including but not limited to the Gazette;

"Treasury Bills" means a short-term debt security with a

maturity of one year or less from the date of issuance issued typically

at a discount from face value.

The purpose of these regulations, together with the

General Prospectus of Treasury Bills, is to set out the operational

arrangements for the issuance and redemption of Treasury Bills

undertaken by the Accountant General.

(1)

Treasury Bills are fixed term zero-coupon debt

security denominated in euro and shall have a maturity of not more

than twelve months from the date of issue. Typically, the Accountant

General holds regular weekly auctions for one or any combination of

maturities consisting of 1 month (typically 28 days), 3 months

(typically 91 days), six months (typically 182 days), 9 months

(typically 273 days) and one year (typically 364 days).

(2) In addition to the weekly auctions, if the circumstances

so warrant, the Accountant General may also on occasion issue

Treasury Bills with maturity dates from 1 to 364 days on an ad hoc

basis through ad hoc tenders. Tenders shall be identical to those

issued for Treasury Bills via weekly tenders.

(1)

The Accountant General may, at his discretion,

list on a recognised investment exchange such Treasury Bills issued

under these regulations.

(2) Treasury Bills shall be registered and maintained

electronically in an uncertified form by the appropriate entry in the

register of the Treasury Department or its appointed registrar, by

entering therein the name and address of the holders, the nominal

value, maturity date of the bills, all transfers of and all dealings and

such other particulars as may, from time to time, be considered

necessary by the Treasury Department and such other particulars as

may from time to time, be considered necessary by the Registrar.

(3) The Register of Malta Treasury Bills is currently held

and maintained by the Central Securities Depository (CSD) of the

Malta Stock Exchange. The Minster may however, by regulation

under the Act, designate any recognised electronic central securities

depository to provide the services and functions of a registrar in

terms of sub-regulation (2).

(1)

Treasury Bill tranches are identified by the

issue date and the respective maturity date.

(2) The Central Securities Depository shall assign an

International Security Identification (ISIN) Code to each Treasury

Bill tranche.

(1)

The Accountant General shall publish on a

monthly basis an indicative issuance calendar of Treasury Bills.

(2) The calendar shall list the maturities of the Treasury Bill

tranches to be issued during the following month, the date of the

auction and any such other information as may be determined by the

Accountant General.

The Accountant General shall determine the nominal

amount of Treasury Bills to be issued in the periodic auctions, as well

as the term and mode of issue of such Treasury Bills, in accordance

with such authorisation as may be issued from time to time by the

Minister.

(1)

In terms of article 25(2) of the Act the

Accountant General shall publish a general prospectus for Treasury

Bills which, together with the Act and these regulations, shall govern

the issuance of Malta Treasury Bills.

(2) The general prospectus of Malta Treasury Bills shall

contain the terms and conditions of issuance, including

(a)

general information on Malta Treasury Bills

including the issue date, terms and redemption dates;

(b)

key features of the tendering process;

(c)

minimum bid size and multiple units thereon;

(d)

allotment

procedure

and

settlement

arrangements;

(e)

registration;

(f)

notification of auction results;

(g)

payment of interest (discount) and taxation;

(h)

redemption of Treasury Bills;

(i)

buy-back arrangement; and

(j)

jurisdiction and governing law.

(1)

Treasury Bills may be issued

(a)

on a money market fixed yield basis (rate of

discount), and

(b)

by a competitive auction after a public

invitation for bidding; or

(c)

by a restrictive competitive tender process

limited to a number of selected institutional investors.

(2) Treasury Bill competitive auctions shall be held on a

weekly basis through a standardised tendering process or as may

otherwise be determined by the Accountant General.

(3) When Treasury Bills are issued at a fixed rate of

discount (yield), such rate shall be fixed by the Accountant General.

(1)

Save as provided in regulation 12, the

Accountant General shall invite applications or tenders for Treasury

Bills by giving notice in the Gazette not less than three business days

prior to the final date on which applications or tenders will be

received by the Accountant General. Such notice shall specify the

date of the auction, the deadline for submission of bids, the period for

which the bills are to be issued, the settlement date and the mode of

payment of bills.

(2) If the Treasury Bills are due to be auctioned and issued

(settled) in weeks including national or public holidays or bank

holidays, the typical auction and settlement date (issue date) may be

adjusted. Such adjustments will be notified in advance in the

Treasury Bill issuance calendar.

(3) Where for the reasons mentioned in sub-regulation (2)

or due to any other reason it is necessary to adjust the settlement date

(issue date) from the standard issuance date as established by the

Accountant General, the typical maturity term of the bills may be

adjusted.

Notwithstanding the provisions of regulation 11, the

Accountant General reserves the right to invite a number of selected

institutional investors to participate in ad hoc tenders whereby such

investors will be requested to submit their bids within such limited

number of hours as may be stipulated in the invitation. These ad hoc

tenders shall be settled on the day of the tender or on such other day

as may be set by the Accountant General in the invitation to bid. Bills

issued through ad hoc tenders shall be identical to those issued

weekly under regulation 11.

(1)

Treasury Bills are zero coupon securities and

are usually issued at a discount to their nominal (principal) value,

with the discount (interest) being deducted from their nominal value.

The interest is equal to the face value minus the purchase price.

(2) The computation of discount (interest) shall be in

accordance with such methodology as shall be notified to the market

by the Accountant General from time to time.

(1)

Bids shall be made on the prescribed

application form, and are to be sent electronically by fax on a number

registered with and recognised by the Treasury, by e-mail on the e-

mail addresses prescribed on the application form or by such other

means as may be determined by the Accountant General.

(2) There is no limit to the number of bids (applications) by

any one participant.

(3) All bids must be received at the Treasury by the pre-

announced deadline notified on the general prospectus and on the

prescribed tender form (application). Any bids received by the

Accountant General after the prescribed deadline shall not be

accepted.

(4)

Only offers with a definite rate shall be considered.

(5)

All offers shall be irrevocable after closing time.

(6) The Accountant General shall not be bound to accept

any offer unless payment in respect of the offer is made as may be

specified on the form of application.

(1)

In the case of a competitive auction held under

the standard tendering procedure or by ad hoc tenders, at the close of

the bidding, the Accountant General shall rank the bids received for

each maturity on offer in ascending order of rates.

(2) The Accountant General reserves the right to determine

a cut-off rate on the basis of the bids received. Treasury Bills shall be

allotted to those bids that are at, or below, the cut-off rate established

by the Accountant General to be the highest accepted rate (the cut-off

point). The bids equal or lower than such cut-off rate shall be

satisfied in full, unless the total amount of such bids exceeds the

amount which the Treasury has decided to issue. In the latter case,

bids at the highest accepted rate (cut-off rate) shall be allotted on a

pro-rata basis calculated in accordance with the amount of each bid.

All accepted bidders shall pay the price as calculated from each

respective rate as specified in their bids in accordance with the

following price/yield formula

N

P =

(y% x n)

1 +

Where

P =

settlement proceeds in euro

N =

nominal value in euro

Y% =

yield quoted as percentage per annum

n =

number of calendar days from the

settlement (issue) date up to the last

day which immediately precedes the

maturity date (both days inclusive)

[term].

(3)

The Accountant General reserves the right

(a)

not to allot any Treasury Bills on offer without

assigning any reason therefor; or

(b)

to reject applications if the bidder has failed to

comply with the terms and conditions in the general

prospectus.

Upon acceptance, the successful and unsuccessful

bidders shall be notified of their allotment or rejections on the same

day on which the auction is held.

(1)

Settlement of the amount allotted to each

successful bidder shall take place on the second business day

following the auction date (T+2) at the time indicated on the tender

form as may be determined by the Accountant General.

(2)

The Accountant General reserves the right to claim

compensation from any successful bidder in the event that payment is

not received on the due settlement date and time for any reason

whatsoever.

Treasury Bills are redeemed at nominal value upon

maturity.

The repayment of capital in respect of matured Treasury

Bills shall be made to the registered holder as appearing in the

Central Securities Depository on the maturity date specified in the

bills by crediting directly a bank account as may be specified by the

holder.

The Accountant General may, at his discretion, redeem

bills on a date prior to maturity through buy-back arrangements on

such terms and conditions as may be negotiated on a voluntary basis

between the Treasury and the respective Treasury Bill holders. The

Accountant General reserves the right to determine whether such

terms and conditions are to be offered to all Treasury Bill holders

through a public announcement or selectively on a bilateral basis.

(1)

Transactions in Treasury Bills in the secondary

market shall be subject to the rules of the recognised investment

exchange where they are admitted to listing and trading.

(2) Settlement of secondary market transactions in Treasury

Bills shall be effected in accordance with the prevailing clearing and

settlement rules of the recognised investment exchange where the

Treasury Bills are admitted to listing and trading.