LIETUVOS RESPUBLIKOS

LIETUVOS RESPUBLIKOS OFFICIAL TRANSLATION Republic of Lithuania LAW ON MARKETS IN FINANCIAL INSTRUMENTS 18 January 2007 No X-1024 Vilnius CHAPTER I GENERAL PROVISIONS Article

1. Purpose of the Law
2. The purpose of this Law is to regulate public relations with a view to ensuring a fair, open and efficient functioning of markets in financial instruments, protection of investor interests and prudential treatment of systemic risk.
3. This Law has the objective of harmonising regulation of markets in financial instruments with the EU legal acts listed in the Annex to this Law. Article
4. Scope of the Law
5. This Law shall set forth the requirements which financial brokerage firms and regulated markets must comply with.
6. Some requirements of this Law shall, in the cases specified by this Law, mutatis mutandis apply to licensed credit institutions providing investment services and/or performing investment activities.
7. Chapter IV of this Law shall apply to all natural and legal persons.
8. The requirements set forth in Chapter II and III of this Law shall not apply to: 1) insurance undertakings, also the undertakings performing reinsurance or retrocession activities; 2) the persons who provide investment services solely for their parent undertakings, for their subsidiaries, or for other subsidiaries of their parent undertakings; 3) the persons who provide investment services on an accidental basis in the course of professional activity as regulated by legal acts or codes of ethics which do not prohibit the provision of investment services; 4) the persons who enter into transactions solely on own account and do not provide other investment services. The exception shall not apply to market makers and the persons who enter into transactions on own account outside a regulated market or a multilateral trading facility on an organised, regular and systematic basis simultaneously providing technical possibilities for third parties to enter into transactions therewith; 5) the persons who provide investment services consisting exclusively in the administration of employee-participation investment schemes; 6) the persons who provide investment services consisting exclusively in the administration of employee-participation investment schemes and provision of investment services for the parent undertakings of that person, for subsidiaries of that person, or for other subsidiaries of the parent undertakings of the person; 7) members of the European System of Central Banks, other national bodies performing similar functions and other public bodies charged with or intervening in the management of the public debt; 8) collective investment undertakings and pension funds whether coordinated at Community level or not, also their depositaries and managers; 9) persons dealing on own account in financial instruments, or providing investment services in commodity derivatives or derivative contracts indicated in subparagraph 10 of paragraph 4 of Article 3 of this Law to the clients of their main business, provided this is an ancillary activity to their main business, when considered on a group basis, and that main business is not the provision of investment services or banking services; 10) persons providing investment advice in the course of providing another professional activity not covered by this Law provided that the provision of such advice is not specifically remunerated; 11) persons whose main business consists of dealing on own account in commodities and/or commodity derivatives. This exception shall not apply where the persons that deal on own account in commodities and/or commodity derivatives are part of a group of persons the main business of which is the provision of other investment services or banking services; 12) firms which provide investment services and/or perform investment activities consisting exclusively in dealing on own account on markets in financial futures, options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, also firms which deal for the accounts of other market participants indicated in this subparagraph or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets; 13) associations set up by Danish and Finnish pension funds with the sole aim of managing the assets of pension funds that are members of those associations; 14) “agenti di cambio”, whose activities are governed by Article 201 of Italian Legislative Decree No 58 of 24 February
10. The rights conferred by this Law shall not extend to the provision of investment services as counterparty in transactions carried out by public legal persons performing the functions of public debt management, also members of the European System of Central Banks performing the functions as provided for by the Treaty of the European Economic Community and the Statute of the European System of Central Banks and of the European Central Bank or performing equivalent functions under national provisions.
11. Provisions of paragraph 5 of this Article shall apply mutatis mutandis to licensed credit institutions. Article
12. Definitions
13. Home Member State: 1) in the case of a financial brokerage firm, the Member State in which the registered office of the firm is registered. Where a financial brokerage firm established in another Member State has, under the law of that Member State, no registered office or a natural person acts in the capacity of a financial brokerage firm, the Member State in which the registered office of the firm or the natural person is situated; 2) in the case of a regulated market, the Member State in which the registered office of the regulated market is registered. Where under the law of that Member State, a regulated market in another Member State has no registered office, the Member State in which the registered office of the regulated market is situated.
14. Multilateral trading facility – a multilateral system, operated by a financial brokerage firm or a market operator, which brings together third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in financial instruments.
15. Subsidiary – as defined in the Law on Consolidated Accounts of Entities.
16. Financial instrument – any of the instruments listed below: 1) transferable securities; 2) money-market instruments; 3) securities of collective investment undertakings; 4) options, futures, swaps, forward rate agreements and other derivative contracts relating to securities, currencies, interest rates or yields, also other derivatives instruments, financial indices and the measures which may be settled in cash or physically; 5) options, futures, swaps, forward rate agreements and other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of insolvency and termination events); 6) options, futures, swaps, and other derivate contracts relating to commodities and admitted to trading on a regulated market and/or a multilateral trading facility, which can be physically settled; 7) options, futures, swaps, forwards and other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in subparagraph 6 of this paragraph and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through a recognised clearing house or are subject to regular margin calls. Definition of the financial instruments as provided for in this subparagraph is specified in Commission Regulation (EC) No 1287/2006 of 10 August 2006; 8) derivative instruments for the transfer of credit risk; 9) financial contracts for differences; 10) options, futures, swaps, forward rate agreements and other derivative contracts relating to climatic variables, freight rates, emission allowances, inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of insolvency and termination events), as well as other derivative contracts relating to assets, rights, obligations, indices and other measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are admitted to trading on a regulated market or a multilateral trading facility, are cleared and settled through recognised clearing houses or are subject to regular margin calls. Definition of the financial instruments as provided for in this subparagraph is specified in Commission Regulation (EC) No 1287/2006 of 10 August
18. Money-market instruments – the instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit, commercial papers and others, excluding instruments of payment.
19. Financial instrument portfolio – a set of the financial instruments held an investor.
20. Financial brokerage firm – a legal person whose regular business is the provision of one or more investment services to third parties and/or the performance of one or more types of investment activities on a professional basis. It shall be possible that the financial brokerage firms established in other Member States do not have the status of a legal person.
21. Qualifying holding of a financial brokerage firm – a proportion of the capital or voting rights of a financial brokerage firm which is managed directly or indirectly and represents at least 1/10 of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the financial brokerage firm.
22. Branch of a financial brokerage firm – a division of a financial brokerage firm other than the location of the registered office which has no legal personality and which provides only the investment services and/or performs the investment activities and may provide only the ancillary services whose provision is permitted by the licence of a financial brokerage firm. All the divisions which the financial brokerage firm has set up in the same host Member State shall be regarded as a single branch.
23. Head of a financial brokerage firm – as the head of a financial institution is defined in the Law on Financial Institutions.
24. Close links – a situation in which two or more natural or legal persons are linked by: 1) participation – at least 1/5 of the capital or voting rights of an undertaking is held directly or by way of control; 2) control – covers the relationships between a parent undertaking and a subsidiary arising on the basis of control, also other similar relationships between a natural or a legal person and an undertaking, a subsidiary undertaking of an undertaking’s subsidiary undertaking also being considered a subsidiary of the previous undertaking; 3) permanent control links with the same person – a situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship shall be regarded as constituting a close link between all of these persons.
25. Investment advice – a personal recommendation provided to a client at the initiative of a financial brokerage firm or the client, in respect of one or more transactions relating to financial instruments.
26. Investment services and investment activities (hereinafter referred to as “investment services”) – the following services and activities related to one or several financial instruments: 1) reception and transmission of orders; 2) execution of orders on behalf of clients; 3) dealing on own account; 4) management of a financial instrument portfolio; 5) provision of investment advice; 6) underwriting and/or placing of financial instruments on a firm commitment basis; 7) placing of financial instruments without a firm commitment basis; 8) operation of a multilateral trading facility.
27. Investor – a person holding financial instruments by the right of ownership or intending to acquire them.
28. Client – a natural or legal person to whom a financial brokerage firm provides investment services and/or ancillary services.
29. Management company of a collective investment undertaking (hereinafter referred to as “management company”) – as defined in the Law on Collective Investment Undertakings.
30. Control – as defined in the Law on Consolidated Accounts of Entities.
31. Credit institution – as defined in the Law on Financial Institutions.
32. Persons of sufficiently good repute: 1) the persons convicted of a grave or serious crime or a crime against the financial system, economy and business practice, against property, property rights and property interests; 2) the persons who have not been convicted in a crime or offence not provided for in subparagraph 1 of this paragraph or whose conviction has expired or has been annulled; 3) the persons not abusing alcohol, narcotic, toxic or psychotropic substances.
33. Non-professional client – a customer who is not attributed either to professional clients or to eligible counterparties.
34. Central counterparty – as defined in the Law on Settlement finality in Payment and Securities Settlement Systems.
35. Ancillary services: 1) safekeeping, accounting and administration of financial instruments for the account of clients, including custodianship and related services such as cash or collateral management; 2) granting a credit or a loan to an investor to allow him to carry out a transaction in one or more financial instruments, where the undertaking granting the credit or loan is involved in the transaction; 3) advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to reorganisation and the purchase of undertakings; 4) foreign exchange services where these are connected to the provision of investment services; 5) investment research, financial analysis or other forms of general recommendation relating to transactions in financial instruments; 6) services related to underwriting; 7) investment services, investment activities as well as ancillary services related to financial instruments, assets or other objects to which the derivatives indicated in subparagraphs 5, 6, 7 and 10 of paragraph 4 of this Article are related where the investment services or ancillary services provided or the investment activities performed are connected to these derivatives.
36. Parent undertaking – as defined in the Law on Consolidated Accounts of Entities.
37. Execution of orders on account of customers – acting to conclude agreements to buy and sell one or more financial instruments on behalf of a client.
38. Transferable securities – the securities which are negotiable on the capital market, with the exception of instruments of payment, including, but not limited to, the following securities: 1) shares in companies and other securities equivalent to shares in companies, the societies operating on the basis of partnership and other entities, and depositary receipts in respect of shares; 2) bonds and other forms of non-equity securities, including depositary receipts in respect of such non-equity securities; 3) other securities giving the right to acquire or transfer transferable securities or giving rise to cash settlements determined by reference to transferable securities, currencies, interest rates, yields, commodities or other indices or measures.
39. Management of a financial instrument portfolio – managing client portfolios including one or more financial instruments in accordance with mandates given by clients on a discretionary client-by-client basis.
40. Supervisory institution – the Securities Commission of the Republic of Lithuania, also the competent authorities of other Member States performing equivalent functions.
41. Host Member State – the Member State other than the home Member State, in which a financial brokerage firm has a branch or provides investment services and/or performs investment activities without establishing a branch or the Member State in which a regulated market provides appropriate arrangements so as to facilitate access to trading on its system by remote members or participants established in that same Member State.
42. Professional customer – a client who possesses the knowledge, expertise and experience to make its own justified investment decisions, can properly assess the risks that it incurs and complies with the criteria set forth for professional customers as indicated in Section Three of Chapter II of this Law.
43. Regulated market – a multilateral system managed and/or operated by a market operator, which is licensed and functions regularly and which brings together or facilitates the bringing together of third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in contracts, in respect of the financial instruments admitted to trading and/or traded in this system under its rules.
44. Operator of a regulated market (hereinafter referred to as the “market operator”) – a person or persons who manages and/or operates the business of a regulated market. The market operator may be the regulated market itself.
45. Limit order – an order to buy or sell a financial instrument indicated in the order at the price limit indicated in the order or better and for the size indicated in the order.
46. Market maker – a person who holds himself out on the financial markets on a continuous basis as being willing to deal on own account and at own expense by buying and selling financial instruments at prices defined by him.
47. Dealing on own account – conclusion of transactions in one or more financial instruments on own account.
48. Financial brokerage firm engaged in systematic trade – a financial brokerage firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or a multilateral trading facility.
49. Systemic risk – the likelihood of insolvency of a financial brokerage firm, a credit institution or an investor to prejudice the interests of the majority of financial brokerage firms, credit institutions or investors.
50. Foreign supervisory institution – a supervisory institution performing the functions of supervision of markets in financial instruments in a country other than a Member State.
51. Member State – a Member State of the European Union, as well as any state belonging to the European Economic Area (EEA).
52. Securities Commission – the Republic of Lithuania institution for regulation and supervision of markets in financial instruments.
53. Inside information – information of a precise nature relating, directly or indirectly, to one or more issuers or financial instruments about the major events planned or occurred and other information whose disclosure, if it were not made public, would be likely to have a significant effect on the price of these financial instruments or related derivatives. In relation to derivatives on commodities, inside information shall mean information of a precise nature which has not been made public, relating, directly or indirectly, to one or more such derivatives and which users of a market on which such instruments are traded would expect to receive in accordance with well-established market practices. For persons executing orders concerning financial instruments, inside information shall also mean information conveyed by a client and related to the client’s orders, which is of a precise nature, which relates directly or indirectly to one or more issuers or financial instruments, and which, if it were made public, would be likely to have a significant effect on the price of these financial instruments or related derivatives. CHAPTER II LICENSING OF FINANCIAL BROKERAGE FIRMS AND THE REQUIREMENTS SET FORTH FOR THEIR ACTIVITIES SECTION ONE LICENSING OF FINANCIAL BROKERAGE FIRMS. REQUIREMENTS FOR OBTAINING OF A LICENCE Article
54. Provision of Investment Services – Licensed Activities
55. Only the financial brokerage firms holding the licence of a financial brokerage firm as issued by the Securities Commission or the supervisory institution of another Member State, also the credit institutions licensed in the Republic of Lithuania or another Member State, where the licence of a credit institution grants the right to provide investment services, and the financial adviser undertakings holding the licence of a financial adviser undertaking as issued by the Securities Commission may provide investment services in the Republic of Lithuania as a regular occupation or business on a professional basis.
56. A company holding the licence of a financial brokerage firm shall be referred to as a financial brokerage firm. Only the undertakings which have the right to provide investment services may use the words “financial brokerage firm” or other combinations of these words or their derivatives in their name and advertising. The undertakings which specialise in the management of financial instrument portfolios of other persons may use in their name the words “investment management undertaking” or other combinations and derivatives of these words.
57. Paragraph 1 of this Article shall not apply to a market operator operating a multilateral trading facility and not proposing to provide other investment services. In such a case, the licence shall not be issued to the market operator, however it shall have the right to operate a multilateral trading facility only after the Securities Commission ascertains that the market operator meets the requirements specified in this section (with the exception of Article 11 of this Law) and inform the market operator thereof.
58. A financial brokerage firm established in the Republic of Lithuania and a financial adviser undertaking must have the registered office in the Republic of Lithuania.
59. The Securities Commission shall accumulate data and information about the entities indicated in paragraph 1 of this Article as well as investment and ancillary services which they have the right to provide in the Republic of Lithuania. This information shall be updated on a continuous basis and published on the Internet site of the Securities Commission.
60. Only the undertakings which have the right to perform the activities of a financial advisor company may use the words “financial advisor company” or other combinations of these words or their derivatives in their name or advertising.
61. A financial advisor company shall have the right to provide in the Republic of Lithuania the investment services provided for in subparagraphs 1 and 5 of paragraph 13 of Article 3 of this Law regarding transferable securities and securities of collective investment undertakings, provided the company does not store funds and financial instruments of clients and cannot become a debtor of the clients due to this, and may transmit orders of clients only to: 1) the financial brokerage firms licensed in a Member State; 2) the credit institutions licensed in a Member State; 3) branches of financial brokerage firms and credit institutions established in third countries, which are subject to the requirements not less stringent than set forth in legal acts of the European Union; 4) collective investment undertakings which, in compliance with the legal acts of the Member State of their registered office, have the right to distribute to the public securities of a collective investment undertaking, also managers thereof; 5) investment companies with fixed capital as defined in paragraph 4 of Article 15 of Council Directive 77/91/EEC, the securities of which are admitted to trading on a regulated market.
62. A financial advisory company shall mutatis mutandis be subject to the requirements specified in Chapter II of this Law as applied to financial brokerage firms, with the exception of the cases provided for in this Law and the legal acts adopted by the Securities Commission.
63. A financial advisor company shall not be subject to capital requirements, however it must insure its professional civil liability. The amount of insurance must be not less than LTL 100 000 per one insured event and LTL 500 000 for all insured events over a year. A financial advisor company must possess insurance coverage for the entire period of its activities.
64. A financial advisor company shall have the right to provide the investment services indicated in a licence and advertise them only in the Republic of Lithuania. A financial advisor company shall not be granted the rights as specified in Section Five of Chapter II of this Law. Article
65. Scope of the Licence of a Financial Brokerage Firm
66. The licence of a financial brokerage firm shall indicate the investment services which the financial brokerage firm has the right to provide. The licence may also indicate one or several ancillary services. The licence of a financial brokerage firm shall not be issued solely for the provision of ancillary services.
67. The Securities Commission shall issue the licence of a financial brokerage firm to: 1) the undertakings established in the Republic of Lithuania and intending to take up the activities of a financial brokerage firm; 2) the financial brokerage firms licensed in a country other than a Member State and intending to provide investment services in the Republic of Lithuania.
68. The credit institutions established in the Republic of Lithuania shall be granted the right to provide investment services by the licence of a credit institution, unless this activity is restricted therein. The Securities Commission shall submit to the Bank of Lithuania a conclusion about the preparedness of a credit institution to provide investment services upon establishing a specialised internal structural division.
69. A financial brokerage firm or a credit institution intending to provide investment services and/or ancillary services which have not been provided in the licence issued to it must apply to the supervisory institution which has issued the licence for supplementing the effective licence with the investment and/or ancillary services intended to be provided.
70. Peculiarities of the right of the credit institutions operating in the Republic of Lithuania to provide investment and ancillary services shall also be regulated by the laws regulating the activities of appropriate credit institutions. Article
71. Procedure for Issuing a Licence
72. An undertaking aiming to obtain the licence of a financial brokerage firm must file an application with the Securities Commission. Alongside with the application, a programme of the activities to be performed (business plan), which shall, inter alia, describe the spheres of activities to be performed and the organisational structure of an undertaking, also information about a legal person, members, heads thereof, activities, meeting of capital requirements and other information specified by the Securities Commission upon considering whereof the Securities Commission could state that the undertaking meets the requirements specified in this Section for obtaining of the licence of a financial brokerage firm, must be submitted Upon the request of the Securities Commission, state and municipal institutions must supply the entire information available to them on shareholders of a candidate, their financial position, activities, detected infringements of laws and other legal acts, conclusions of conducted inspections and other information required for the taking of a decision on the issuance of a licence.
73. The Securities Commission shall issue the licence of a financial brokerage firm only upon fully ascertaining that the firm meets the requirements for the obtaining of the licence as specified in this Section.
74. The Securities Commission shall give notice of a decision on the issuance of the licence to an undertaking which has filled an application not later than within 6 months from submission of all required documents and information.
75. The Securities Commission shall have the right to require submission of additional data or clarifications. In this case, a time period for the consideration of the application shall be calculated from the day of submission of the last documents or data.
76. The Securities Commission shall give notice of the issuance or revocation of a licence to the manager of the Legal Entities’ Register and publish it in the Internet site of the Securities Commission. Article
77. Grounds for a Refusal to Issue a Licence
78. The Securities Commission shall have the right to refuse to issue the licence of a financial brokerage firm where: 1) data (documents) do not meet specified requirements or the data submitted are not complete or are false; 2) heads of the firm are not of sufficiently good repute or sufficiently experienced; 3) proposed changes of heads of the firm pose a threat to the sound and transparent management of the undertaking; 4) the firm did not provide information about the firm’s shareholders, the qualifying holdings directly or indirectly managed by them and the size of these holdings; 5) there is a ground for believing that owners of the qualifying holding of the firm will not ensure the sound and transparent management of the undertaking; 6) the close links of the firm with other natural or legal persons may prevent the Securities Commission from efficiently exercising supervisory functions; 7) at least one employee of the firm is an employee of a regulated market operating in the Republic of Lithuania or the Central Securities Depository of Lithuania; 8) the owned or rented premises or equipment are not suitable for performance of the activities of provision of investment services; 9) the place of location of the standing management body of the firm established in the Republic of Lithuania is not in the territory of the Republic of Lithuania; 10) requirements of laws or other legal acts regulating the status of a third country’s natural or legal persons closely linked to the firm or implementation of these requirements may prevent the Securities Commission from efficiently exercising supervisory functions; 11) the firm does not comply with the capital requirements specified by the Securities Commission; 12) the firm has not entered into a commitment to become a member of an authorised investor compensation scheme; 13) the firm has not approved the arrangements and procedures ensuring compliance with the organisational requirements set for a financial brokerage firm.
79. The Securities Commission may refuse to issue a licence to a financial brokerage firm licensed in a country other than a Member State, where the Securities Commission has not concluded with the foreign supervisory institution the agreements which would ensure a proper supervision of activities and supply of information.
80. A refusal to issue a licence must be motivated in writing and may be appealed against in court. Article
81. Grounds for Revocation of a Licence The Securities Commission shall have the right to revoke the licence of a financial brokerage firm issued by it where the financial brokerage firm: 1) has applied for the revocation of the licence; 2) within 12 months from the issuance of the licence, has not commenced provision of the services specified in the licence; 3) for the preceding six months, had not provided investment services and has not performed investment activities; 4) has obtained the licence by submitting false data or information or by other irregular means; 5) no longer complies with the requirements set forth for the issuance of the licence of a financial brokerage firm; 6) has seriously and systematically infringed the operating requirements for a financial brokerage firm as set forth in this Law; 7) is incapable of discharging duties according to its obligations or there is evidence that it will not be able to do that in the future; 8) falls within other cases specified by laws. Article
82. Heads of a Financial Brokerage Firm
83. Heads of a financial brokerage firm must be of sufficiently good repute and sufficiently experienced so as to ensure the sound and transparent management of the financial brokerage firm.
84. Where the market operator that seeks authorisation to administer a multilateral trading facility and the persons that direct the business of the multilateral trading facility to be administered by it are the same as those that direct the business of the regulated market, these persons shall be deemed to comply with the requirements laid down in paragraph 1 of this Article.
85. A financial brokerage firm licensed in the Republic of Lithuania must give advance notice to the Securities Commission of all future changes to the heads of the firm, along with submitting to the Securities Commission the specified information needed to assess whether the new heads elected or planned to be elected comply with the requirements of sufficiently good repute and sufficient experience. A financial brokerage firm’s new heads elected may assume office only upon approval of their candidatures by the Securities Commission.
86. The Securities Commission shall have the right not to approve the candidatures of newly elected heads if the elected heads are not of sufficiently good repute, do not possess sufficient experience, or if there are other objective grounds for believing that the planned changes to the heads of the firm pose a threat to the sound and transparent management of the firm. The Securities Commission shall take a decision on the suitability of candidatures of the newly elected heads not later than within one month from the receipt of all required documents.
87. A financial brokerage firm must have in place a single-person management body – the head of a company and a collegial management body – the Board. Article
88. Shareholders of a Financial Brokerage Firm
89. A natural or legal person that proposes to acquire or increase, directly or indirectly, the qualifying holding of a financial brokerage firm already held by him, where in consequence of a proposed acquisition of the firm’s shares the proportion of the voting rights or of the capital that he holds would reach or exceed in the increasing order 20%, 33% or 50% or the firm would become a subsidiary of that legal person, must obtain a prior consent of the Securities Commission.
90. The person must give prior notice to the Securities Commission of a proposed acquisition of the qualifying holding of the firm and submit supporting documents as well as other information specified by the Securities Commission. The Securities Commission must be notified in accordance with the same procedure if a person proposes to transfer or reduce the qualifying holding of a financial brokerage firm belonging to him, where in consequence of the proposed disposal of the firm’s shares the proportion of the voting rights or capital that the person holds would reach or exceed in the decreasing order 20%, 33% or 50% or the firm would cease to be a subsidiary of that legal person.
91. Upon the receipt of a notification of a proposed acquisition or increase of the qualifying holding of a financial brokerage firm, the Securities Commission must, not later than within 3 months from the receipt of the notification, take a decision on the granting of consent to acquire or increase the qualifying holding of the financial brokerage firm. The Securities Commission shall refuse to grant the consent where there are justified doubts that the persons who propose to acquire or increase the qualifying holding of a firm already held by them will be capable of ensuring the sound and transparent management of the firm. The Securities Commission shall have the right to require submission of additional documents and information about the proposed acquisition or increase of the qualifying holding of a financial brokerage firm; in such a case, the time limit of 3 months shall be calculated from the submission of all required documents and information to the Securities Commission.
92. Where the Securities Commission grants consent to a person to acquire or increase the qualifying holding of a financial brokerage firm, it may lay down a time limit for implementation of the proposed acquisition or increase of the qualifying holding of the financial brokerage firm.
93. The Securities Commission shall not grant consent to acquire or increase the qualifying holding of a financial brokerage firm where: 1) a person (or, the heads and controllers of a legal person) is not of sufficiently good repute; 2) the person is an employee of the operator of a regulated market, the Securities Commission or the Central Securities Depository of Lithuania; 3) the person has not supplied any information about its activities and financial position; 4) the legal person has not supplied any information about its participants; 5) the person has not submitted the documents evidencing that the funds to pay for the shares have been obtained legitimately; 6) the person’s financial position is not sound and stable; 7) the granting of the consent would result in such a close link which would constitute a ground for the refusal to issue the licence of the financial brokerage firm; 8) there are other grounds raising justified doubts that the persons who propose to acquire or increase the qualifying holding of the financial brokerage firm will be capable of ensuring the sound and transparent management of the firm.
94. A refusal of the Securities Commission to allow the acquisition or increase of the qualifying holding of a financial brokerage firm must reasoned in writing and may be appealed against to court.
95. Where a person who proposes to acquire the qualifying holding of a financial brokerage firm is a financial brokerage firm, credit institution, insurance undertaking, management company of a collective investment undertaking or the parent undertaking or controlling person of any of these entities licensed in another Member State, and the financial brokerage firm would become the acquirer’s subsidiary or come under his control after acquisition of the qualifying holding, the Securities Commission shall, prior to taking a decision on the granting of the consent to acquire or increase the qualifying holding of the financial brokerage firm, consult with the supervisory institution of another Member State in accordance with the procedure laid down by Article 17 of this Law.
96. Where a financial brokerage firm becomes aware of the acquisition or disposal of its shares that cause the blocks of shares held by shareholders of the firm to exceed the thresholds specified in paragraph 1 of this Article in the increasing or decreasing order, it must give notice thereof to the Securities Commission without delay.
97. A financial brokerage firm must, at least once a year, inform the Securities Commission of the shareholders of the firm that have a qualifying holding in the firm and the amounts of the qualified holdings held by them. The information shall be submitted according to the data available on the day of the annual general meeting of shareholders, and where shares of the firm are admitted to trading on a regulated market – as a result of compliance with the requirements of legal acts applicable to companies whose securities are traded on a regulated market.
98. Where the influence exercised by the persons referred to in paragraph 1 of this Article poses a threat to the sound and transparent management of a financial brokerage firm, the Securities Commission must take measures to put an end to this situation. To this end, the Securities Commission shall have the right to issue compulsory instructions and impose the sanctions specified in this Law against the heads and other persons responsible for management of the firm.
99. All the shares held by a person who has acquired the qualifying holding of a financial brokerage firm or increased the qualifying holding exceeding the thresholds provided for in this Article without a prior consent of the Securities Commission or in breach of the time limit laid down on the basis of paragraph 3 of this Article shall be divested of the voting right at the general meeting of shareholders. The voting right shall be acquired anew upon receipt of the consent of the Securities Commission. Article
100. Membership of an Authorised Investor Compensation System
101. An undertaking seeking to obtain the licence of a financial brokerage firm must insure the undertaking’s liabilities to investors in accordance with the procedure laid down by the Law on Insurance of Deposits and Liabilities to Investors.
102. Provisions of paragraph 1 of this Article shall apply mutatis mutandis to licensed credit institutions. Article
103. Capital Requirements An undertaking seeking to obtain the licence of a financial brokerage firm must meet capital requirements. Capital requirements shall be set forth by the Securities Commission. Article
104. Organisational Requirements
105. A financial brokerage firm must establish adequate business organisation policies and procedures sufficient to ensure compliance of the financial brokerage firm, heads, employees and agents thereof with the requirements set forth by this Law and the rules governing personal transactions by the heads, employees and agents of the financial brokerage firm.
106. A financial brokerage firm must maintain and operate effective organisational and administrative arrangements designed to prevent conflicts of interest from adversely affecting the interests of its clients.
107. A financial brokerage firm must take appropriate steps to ensure continuity and regularity in the provision of investment services. To this end a financial brokerage firm must employ and use appropriate systems, resources and procedures.
108. A financial brokerage firm must, when relying on a third party for the performance of such functions of the firm which are critical for the continuous and satisfactory provision of investment services and the performance of investment activities on a continuous and satisfactory basis, take reasonable steps to avoid undue additional operational risk. Outsourcing of important functions of the firm may not undertaken where this could impair materially the quality of the internal control of the financial brokerage firm or the possibilities of the Securities Commission to exercise efficient supervision.
109. A financial brokerage firm must have sound administrative and accounting procedures, an internal control mechanism, effective procedures for risk assessment, effective control and safeguard arrangements for information processing systems.
110. A financial brokerage firm must ensure the storage of the documents of investment services and transactions undertaken to enable the Securities Commission to exercise efficient supervision, and in particular in the cases when it must be ascertained that the financial brokerage firm has complied with the duties as specified in this Law with respect to the firm’s clients and potential clients.
111. A financial brokerage firm must, when holding the financial instruments belonging to clients, make arrangements so as to safeguard clients’ ownership rights, especially in the event of the financial brokerage firm’s insolvency. A financial brokerage firm must keep separate accounts of its own and each client’s financial instruments. A financial brokerage firm shall not have the right to use a client’s financial instruments except with the client’s express consent.
112. A financial brokerage firm must, when holding funds belonging to clients, make arrangements so as to safeguard the clients’ ownership rights and prevent the unlawful use of client funds. The prohibition to use a client’s funds shall not apply to licensed credit institutions. A financial brokerage firm must hold clients’ funds in a credit institution on grounds of trust separately from own funds. The clients’ funds transferred to a financial brokerage firm for the buying of financial instruments and the clients’ funds upon selling of a client’s financial instruments shall be the property of the client against which no execution may be levied according to debts of the financial brokerage firm.
113. When investment services are provided by a branch of a financial brokerage firm established in another Member State, the Securities Commission shall, without prejudice to the right of the supervisory institution of the home Member State of the firm to have direct access to the documents indicated in paragraph 6 of this Article, supervise compliance of the branch with the duties specified in paragraph 6 of this Article.
114. The requirements set forth in paragraph 6 of this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
116. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
117. Brokers
118. A broker can be a natural person holding a licence issued by the Securities Commission and granting the right to effect one or more operations provided for brokers.
119. A person applying for the licence of a broker must pass the examinations organised by the Securities Commission or submit to this commission a qualification document recognised by it. The Securities Commission shall have the right to set forth education and professional requirements for the candidates. The broker’s licence may not be issued to a person who is not of good repute.
120. The Securities Commission shall have the right to revoke the broker’s licence where: 1) at his own request; 2) in the event of the broker’s decease; 3) where the broker did not commenced, during 12 months, the professional activities provided for in the rules for issuance of financial brokers’ licences as approved by the Securities Commission and related to the market in financial instruments or supervision thereof or where it no longer performs the activities for over 12 months; 4) if the facts that would have precluded the issuance of the licence transpire after the issuance of the licence; 5) where the conditions that preclude the broker from being considered as of good repute arise; 6) where the broker does not comply with this Law or the legal acts adopted by the Securities Commission.
121. Revocation of the broker’s licence shall allow to revoke the licence of a financial brokerage firm in which this broker works where the firm no longer satisfies the conditions according whereto the licence was issue to it.
122. The Securities Commission shall, on a periodical basis, but not more than once per year, have the right to organise re-evaluation of a broker where his clients’ complaints prove to be justified or verification data raise doubts regarding the appropriateness of his qualification. Based on the results of the re-evaluation, the number of the operations which may be effected by the broker may be reduced, and where it is established that the broker has completely lost his qualification or does not participate in the re-evaluation – his licence may be revoked.
123. The Securities Commission shall publish the fact of the issuance or revocation of the broker’s licence not later than within 3 working days. Article
124. Audit of Financial Brokerage Firms The procedure for performing the audit of financial brokerage firms, requirements for the auditor and audit firm, duties and responsibility of the auditor and audit firms shall be regulated by the Law on Audit, the Law on Financial Institutions and Article 83 of this Law. Article
125. Additional Requirements for Financial Brokerage Firms and Market Operators Operating a Multilateral Trading Facility
126. The financial brokerage firms and the market operators operating a multilateral trading facility must, in addition to the requirements set forth in Article 13 of this Law, approve transparent and non-discretionary rules for fair and orderly trading and establish objective criteria for the efficient execution of orders.
127. Financial brokerage firms and market operators operating a multilateral trading facility must approve the transparent rules regarding the criteria for determining the financial instruments that can be admitted to trading under that system.
128. Financial brokerage firms and market operators operating a multilateral trading facility must ensure publication of the information on the basis whereof members of the multilateral trading facility could make informed investment decisions, taking into account the position of the members of the multilateral trading facility on the market and the types of the financial instruments traded in that facility.
129. The requirements set forth in Articles 22, 24 and 25 of this Law shall not be applicable to the transactions concluded under the rules governing the operation of a multilateral trading facility where only members of or participants in that facility or only the facility itself and members of or participants in it participate in the conclusion of a transaction. However, the members of or participants in the multilateral trading facility must comply with the requirements set forth in Articles 22, 24 and 25 of this Law with respect to their clients when, acting on behalf of a client, they execute his orders through the multilateral trading facility.
130. Financial brokerage firms and market operators operating a multilateral trading facility must approve and maintain the rules based on objective criteria and setting forth requirements for the market participants seeking to become members of the facility. These rules must comply with the requirements set forth in paragraph 3 of Article 56 of this Law.
131. Financial brokerage firms and market operators operating a multilateral trading facility must supply to members of the facility the entire required information about their duties for the settlement of the transactions concluded under the facility. Financial brokerage firms and market operators operating a multilateral trading facility must put in place the effective arrangements or conclude the necessary agreements to facilitate the efficient settlement of the transactions concluded under the facility, including agreements with a central counterparty as well as a clearing and settlement system.
132. Where the transferable securities which have been admitted to trading on a regulated market are traded in a multilateral trading facility without the consent of the issuer, the issuer of these securities shall not be subject to requirements relating to initial, ongoing and ad hoc information disclosure with regard to that facility.
133. Financial brokerage firms and market operators operating a multilateral trading facility must comply immediately with instructions of the Securities Commission to suspend or remove financial instruments from trading.
134. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
135. Mutual Consultations of Supervisory Institutions prior to Issuance of the Licence of a Financial Brokerage Firm
136. Prior to issuing the licence of a financial brokerage firm, the Securities Commission shall request the opinion of the supervisory institution of another Member State where an undertaking seeking to obtain the licence of a financial brokerage firm is: 1) a subsidiary of the financial brokerage firm or credit institution licensed in another Member State; 2) a subsidiary of the parent undertaking of the financial brokerage firm or credit institution licensed in another Member State; 3) controlled by the same natural or legal persons that control the financial brokerage firm or credit institution licensed in another Member State.
137. Prior to issuing the licence of a financial brokerage firm, the Securities Commission shall request the opinion of the supervisory institution exercising supervision of the credit institutions or insurance undertakings of another Member State where a financial brokerage firm seeking to obtain the licence is: 1) a subsidiary of a credit institution or an insurance undertaking licensed in the European Community; 2) a subsidiary of the parent undertaking of a credit institution or an insurance undertaking licensed in the European Community; 3) controlled by the same natural or legal persons that control the credit institution or insurance undertaking licensed in the European Community.
138. The Securities Commission shall request the opinion of the supervisory institutions indicated in paragraphs 1 and 2 of this Article when assessing the suitability of holders of the qualifying holding in an undertaking seeking to obtain the licence and the repute as well as experience of heads of the undertakings belonging to the same group. The Securities Commission shall exchange the information required for assessment of the suitability of shareholders, also assessment of the repute and suitability of heads of the undertakings belonging to the same group of undertakings both prior to issuing the licence of a financial brokerage firm and later when exercising supervision of compliance with requirements for the operation of the financial brokerage firm. Article
139. Powers of the Securities Commission in Specifying a Procedure for Licensing Financial Brokerage Firms and Financial Advisor Companies and Requirements for Obtaining of the Licence In specifying provisions of this Section, the Securities Commission shall determine: 1) the procedure for issuing and revoking the licences of financial brokerage firms; 2) the procedure for issuing and revoking the licences of brokers; 3) the procedure for giving notices of the acquisition or disposal of the qualifying holding of a financial brokerage firm and notices of exceeding of the thresholds of the voting rights provided by the shares as specified in this Law; 4) capital requirements for financial brokerage firms; 5) the rules of organisation of activities of financial brokerage firms specifying the organisational requirements as set forth in Article 13 of this Law; 6) the rules of issuance of licences of financial advisor companies and revocation thereof as well as organisation and pursuit of business. SECTION TWO REQUIREMENTS FOR THE OPERATION OF FINANCIAL BROKERAGE FIRMS Article
140. Duty of a Financial Brokerage Firm to Comply at All Times with Requirements for Obtaining of a Licence
141. The financial brokerage firms licensed in the Republic of Lithuania must comply at all times with the requirements set forth by this Law for obtaining of the licence of a financial brokerage firm.
142. Compliance with the duty specified in paragraph 1 of this Article shall be supervised by the Securities Commission. A financial brokerage firm must notify the Securities Commission of all material changes to the circumstances present at the time of issuance of the licence.
143. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
144. Duty to Comply at All Times with Requirements for the Operation of a Financial Brokerage Firm and Supply Periodical Information
145. The financial brokerage firms licensed in the Republic of Lithuania and providing investment services in the Republic of Lithuania, also the branches of the financial brokerage firms licensed in another Member State and providing investment services in the Republic of Lithuania must comply at all times with the requirements as set forth in this Section for the operation of a financial brokerage firm.
146. Compliance with the duty specified in paragraph 1 of this Article shall be supervised by the Securities Commission. In performing the supervisory functions, the Securities Commission shall exercise the rights granted in Article 72 of this Law.
147. Financial brokerage firms must, in accordance with the procedure and in the cases specified by the Securities Commission, submit a report on calculation of capital adequacy, interim accounts, operation report and other documents specified by the Securities Commission.
148. Financial brokerage firms must, in the cases and in accordance with the procedure specified by the Securities Commission, disclose to the public information about their activities.
149. The duties established in paragraphs 3 and 4 of this Article shall be specified by the Securities Commission.
150. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
151. Duty to Avoid Conflicts of Interest
152. A financial brokerage firm must take all required steps to identify conflicts of interest between the firm, heads, employees, agents thereof, also other persons directly or indirectly linked to the firm by control and clients of the firm or only between the clients of the firm, when the conflicts of interest arise in the course of providing investment services, ancillary services, or a combination thereof.
153. Where measures made by a financial brokerage firm in accordance with paragraph 2 of Article 13 of this Law are not sufficient to ensure prevention of damage to client interests, the financial brokerage firm must clearly disclose the content and source of the conflict of interest to a client before commencing the provision of investment and/or ancillary services.
154. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
155. Duties of a Financial Brokerage Firm in Providing Investment Services to a Client
156. When providing investment services and/or ancillary services to a client, a financial brokerage firm must act honestly, fairly and professionally under the conditions best to the client and in interests thereof and comply with the requirements set forth in this Article.
157. All information which a financial brokerage firm supplies to clients and/or potential clients, including marketing communications about the activities of the firm and the services provided, must be fair, clear and not misleading. Marketing communications must be clearly identifiable as such.
158. A financial brokerage firm must clearly and comprehensible supply to clients and potential clients all the required information on the basis whereof they would be able to understand the essence of the investment services and financial instruments that are being offered as well as the risk typical thereof and to take investment decisions on an informed basis. Information may be provided in a standardised format.
159. When implementing the requirements set forth in paragraph 3 of this Article, a financial brokerage firm must supply information about: 1) the firm and the services provided by it; 2) financial instruments and proposed investment strategy, including guidance on and warning of the risk which is typical of certain investment strategies or investments in certain financial instruments; 3) venues of execution of client orders; 4) costs of execution of an order and other payments.
160. Prior to commencing the provision to a client of the investment services covering the provision of investment advice and/or management of a financial instrument portfolio, a financial brokerage firm must collect information regarding the client’s or potential client’s: 1) knowledge and experience in the investment field relevant to specific investment services or financial instruments; 2) financial situation; 3) investment objectives.
161. Upon collecting and assessing the information indicated in paragraph 5 of this Article, a financial brokerage firm must recommend to the client or potential client specific the investment services and financial instruments that would best meet the interests of the client.
162. Prior to commencing the provision of the investment services other than those referred to in paragraphs 5 and 10 of this Article, a financial brokerage firm must offer to a client or potential client to provide information regarding his knowledge and experience in the investment field relevant to specific investment services or financial instruments offered by the financial brokerage firm or demanded by the client or potential client himself. On the basis of the information received, the financial brokerage firm must assess whether specific investment services and financial instruments are appropriate for the client.
163. In the case a financial brokerage firm considers, upon assessing the information indicated in paragraph 7 of this Article, that an investment service or financial instrument is not appropriate to a specific client or potential client, it must warn the client or potential client. The warning may also be provided in a standardised format.
164. In cases where a client or potential client refuses to provide the information referred to in paragraph 7 of this Article or provides insufficient information regarding his knowledge and experience in the investment field, a financial brokerage firm must warn the client or potential client that the client’s refusal to provide the required information or provision of insufficient required information does not allow the financial brokerage firm to determine whether specific investment services and financial instruments are appropriate for the client. This warning may also be provided in a standardised format.
165. A financial brokerage firm providing investment services that only consist of execution of orders on account of clients and/or the reception and transmission of orders, irrespective of whether it provides ancillary services, may provide these services without collecting information regarding the client’s knowledge and experience in the investment field and without assessing whether specific investment services or financial instruments are appropriate for the client, provided that all the following conditions are met: 1) investment services relate to shares admitted to trading on a regulated market or in an equivalent third country market, also money market instruments, bonds or other forms of securitised debt, excluding these bonds and other forms of securitised debt that embed a derivative, the securities issued by collective investment undertakings and other non-complex financial instruments; 2) an investment service is provided at the initiative of the client or potential client; 3) the client or potential client has been warned that the financial brokerage firm providing investment services is under no duty to assess the suitability for the client of financial instruments and the investment services provided or offered, therefore the client is not under the protection of the interests of a client as specified in this Law and provided for in the provision of other investment services. Such a warning may be provided in a standardised format; 4) the financial brokerage firm complies with the requirements set forth in Article 21 of this Law to avoid conflicts of interest.
166. A financial brokerage firm must keep the documents establishing the contractual relations of the firm and a client and their mutual rights and duties as well as other terms and conditions of the provision of investment services. The mutual rights and duties of the parties may be specified by reference to other documents or legal acts.
167. A financial brokerage firm must provide to a client adequate reports on the services provided to him. These reports must supply information about the costs associated with the entering into transactions and provision of services to the client.
168. In cases where an investment service is provided as part of a financial product which is subject to the legal acts of the European Community governing risk assessment of clients or supply of information or common European standards related to credit institutions or consumer credits, the requirements as set forth by this Article shall not apply.
169. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
170. Provision of Investment Services through the Medium of Another Financial Brokerage Firm
171. A financial brokerage firm shall have the right, upon the receipt of an instruction of another financial brokerage firm (mediation undertaking) to provide investment and/or ancillary services to a client of the mediation undertaking, to rely on the information about the client transmitted by the mediation undertaking (including the information about the client’s knowledge and experience in the investment field, the client’s financial situation, the objectives which the client is aiming to attain by using investment services, etc.). The undertaking which mediates the instruction shall be responsible for the accuracy and completeness of the information transmitted.
172. A financial brokerage firm shall have the right, upon the receipt of an assignment to provide investment services to a client of a mediation undertaking, to act on the basis of recommendations regarding the financial instruments and investment services which the mediation undertaking has provided to the client. The undertaking which mediates the instruction shall be responsible for the appropriateness of the recommendations provided to the client.
173. The financial brokerage firm which has received an assignment of a mediation undertaking shall be responsible for the provision of an investment services and/or entering into a transaction in accordance with the procedure laid down by this Section, where the service is provided or the transaction is entered into on the basis of information or recommendations as specified in paragraphs 1 and 2 of this Article.
174. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
175. Duty to Execute Client Orders on Terms Most Favourable to the Client
176. A financial brokerage firm must, when executing a client’s order, act to obtain the best possible result for the client taking into account the price of financial instruments, the costs of execution of the order, likelihood of execution of the order and settlements, the size, nature of the order and other considerations relevant to the execution of the order. However, if the client submits to the financial brokerage firm a specific order, such an order of the client must be executed strictly and without deviations from the terms and conditions specified in the order.
177. In discharging the duty specified in paragraph 1 of this Article, a financial brokerage firm must approve and implement an order execution policy, according whereto a client’s order would be executed on the terms most favourable to the client, also have and use the effective arrangements intended for the implementation of the order execution policy.
178. The order execution policy must indicate information on the venues of execution of client orders (separately for each type of financial instruments) and the reasons determining the choice of the venues of execution of the orders. The order execution policy must at least indicate the venues of execution of the orders that enable a financial brokerage firm to obtain on a consistent basis the best result for a client.
179. A financial brokerage firm must thoroughly familiarise clients with the order execution policy approved by the firm. Prior to commencing the execution of client orders, a financial brokerage firm must obtain the prior consent of the client to the order execution policy.
180. Where the order execution policy stipulates that client orders may be executed outside a regulated market or a multilateral trading facility, a financial brokerage firm must additionally inform a client about this possibility. The financial brokerage firm must obtain the prior express consent of the client before proceeding to execute a client order outside the regulated market or the multilateral trading system. This consent may be either in the form of a general agreement or in respect of individual transactions.
181. A financial brokerage firm must monitor on a regular basis the effectiveness of its order execution policy and, in the event of identification of deficiencies therein, correct them without delay. The financial brokerage firm must monitor and analyse on a regular basis whether the venues of execution of orders provided for in the order execution policy enable to obtain the best result for a client and whether the order execution policy needs to be improved. The financial brokerage firm must notify clients of all material changes to its order execution policy.
182. A financial brokerage firm must prove to a client, at the request of the client, that his order has been executed in accordance with the order execution policy.
183. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
184. Other Requirements for Execution of Client Orders
185. Before proceeding to execute client orders on their behalf, a financial brokerage firm must approve and implement arrangements and procedures which ensure the prompt, fair and expeditious execution of the client orders, relative to the orders of other clients or the trading interests of the financial brokerage firm. These arrangements and procedures must ensure the execution of otherwise comparable client orders in accordance with the time of their reception by the financial brokerage firm.
186. Where a client submits a limit order in respect of shares admitted to trading on a regulated market which is not immediately executed under prevailing market conditions, a financial brokerage firm is, unless the client instructs otherwise, to take measures to facilitate the earliest possible execution of the order by making public immediately that this client limit order in a manner which is easily accessible to other market participants. This duty shall be considered to have been discharged where the client limit order is transmitted for execution to the regulated market and/or multilateral trading facility.
187. The duty provided for in paragraph 2 of this Article shall not apply where a client limit order is large in scale compared with normal market size as determined in paragraph 3 of Article 58 of this Law.
188. A spouse’s authorisation to enter into transactions in the financial instruments which belong by the right of joint ownership to the spouses and which are publicly offered and/or which are traded on a regulated market and/or multilateral trading facility may be issued in a simple written form.
189. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
191. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
192. Powers of the Securities Commission in Specifying the Requirements Set Forth for the Operation of Financial Brokerage Firms In specifying provisions of this Section, the Securities Commission shall approve: 1) rules for avoiding and managing conflicts of interest; 2) rules for providing investment services and receiving and executing client orders. SECTION THREE PROVISION OF INVESTMENT SERVICES TO PROFESSIONAL CLIENTS AND ELIGIBLE PARTIES TO A TRANSACTION Article
193. Professional Clients not Subject to a Separate Declaration
194. Professional clients not subject to a separate declaration shall be: 1) licensed and/or otherwise supervised entities operating in financial markets – credit institutions, financial brokerage firms, other licensed and/or supervised financial institutions, insurance undertakings, collective investment undertakings and their management companies, pension funds and their management companies, commodity and commodity derivatives dealers, the persons trading in futures on own account and other institutional investors. The professional clients indicated in this subparagraph shall include the entities licensed and/or supervised in the Member States of the European Union and third countries; 2) large undertakings meeting at least two of the following criteria: the balance sheet total – not less than EUR 20 000 000; net turnover – not less than EUR 40 000 000; own funds – not less than EUR 2 000 000; 3) governments and municipalities of countries, entities that manage public debt, Central Banks, the World Bank, the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international and interstate institutions; 4) other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or participate in other financing transactions.
195. Prior to provision of investment and/or ancillary services to any of the persons indicated in paragraph 1 of this Article, a financial brokerage firm must inform it that, on the basis of the information available to the financial brokerage firm, such a person is deemed to be a professional client, and it shall not be applied certain investor protection measures, with the exception of the cases when the financial brokerage firm and the client agree otherwise.
196. The professional clients indicated in paragraph 1 of this Article may be, at their choice, not applied all or a part of the investor protection measures indicated in Articles 22 and 24 as well as paragraphs 2 and 3 of Article 25 of this Law.
197. A financial brokerage firm must inform a professional client that it has the right to request a variation of the terms of an agreement on the provision of investment services in order to secure a higher degree of protection of the client’s interests.
198. The entities indicated in paragraph 1 of this Article shall have the right to apply to a financial brokerage firm and relinquish their status as a professional client. In such a case, the financial brokerage firm must apply to them all investor protection measures applicable to non-professional clients.
199. A client of a financial brokerage firm, considered to be a professional client, shall be responsible for the choice of the investor protection regime applicable to it when, in its opinion, it is unable to properly assess and manage the investment-related risk.
200. The higher level of investor protection shall be applied to a professional client from the signature and entry into force of a written agreement between a financial brokerage firm and a client stipulating that the client will not be treated as a professional in respect of the investor protection measures provided for by this Law. Such agreement should specify whether this applies to one or more services and transactions, also to one or more types of financial instruments or transactions.
201. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
202. Persons Who May be Treated as Professional Clients
203. The clients of a financial brokerage firm not indicated in Article 27 of this Law, also other public legal persons and private investors may, in accordance with the procedure laid down by this Article and at their choice, be not applied all or a part of the investor protections indicated in Articles 22 and 24 of this Law as well as paragraphs 2 and 3 of Article 25 where they are treated as professional clients provided the investors meet the criteria set out in paragraph 3 of this Article and the procedures laid down in this Article are complied with.
204. It shall be allowed not to apply any of investor protections to a person treated as a professional client only in the case when upon assessment of knowledge, expertise and experience of the client and in light of the nature of the services planned to be provided or the transactions planned to be entered into, a financial brokerage firm can be reasonably assured that the client is capable of making investment decisions and assess the risks involved in an independent and informed way. It shall be presumed that the clients treated as professional clients do not possess knowledge and experience comparable to that of the professional clients indicated in Article 27 of this Law. Knowledge and experience may be assessed by means of a fitness test, which shall be applied to heads of financial institutions. In the case of small undertakings, the person authorised to enter into transactions on behalf of an undertaking must also be subject to the assessment.
205. In order to treat a person as a professional client, as a minimum, two of the following criteria must be satisfied: 1) the client has entered into transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters of the year; 2) the size of the client’s financial instrument portfolio, including cash deposits, exceeds EUR 500 000; 3) the client works or has worked in the financial sector at least for one year in a professional position, which requires knowledge of the services to be provided to the client or the transactions to be entered into.
206. It shall be possible for the clients meeting the criteria indicated in paragraph 3 of this Article not to be applied some investor protections provided that: 1) the client has stated in writing to a financial brokerage firm that he wishes to be treated as a professional client, either for the reason of all the services provided and the transactions entered into or only for the reason of certain services and the transactions entered into, or types of transactions or financial instruments; 2) a financial brokerage firm has clearly stated in writing to the client the investor protections (including investor compensation arrangements) which shall not be applied to him; 3) the client has confirmed in writing, in a separate document, that he has familiarised himself with and is aware of the consequences of the waiver of certain investor protections.
207. Before starting to treat a person as a professional client and discontinuing application to him of some investor protections, a financial brokerage firm must ascertain that the client meets the requirements set forth in this Law.
208. A financial brokerage firm must approve internal policies and procedures to categorise the firm’s clients. A person treated as a professional client must inform a financial brokerage firm about changes in the information on the basis whereof the client has been attributed to a certain category of clients. Where a financial brokerage firm becomes aware that a client no longer fulfils the conditions according to which he has been treated as a professional client, the financial brokerage firm must take appropriate action and apply to the client all investor protections.
209. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
210. Transactions with Eligible Counterparties
211. A financial brokerage firm executing orders on behalf of clients and/or dealing on own account and/or receiving and transmitting client orders shall have the right to enter into transactions or mediate in the entering into the transaction with eligible counterparties without complying with the duties specified in Articles 22 and 24 as well as paragraphs 2 and 3 of Article 25 of this Law in respect of the transactions entered into and the ancillary services directly related to these transactions.
212. For the purposes of this Article, eligible counterparties shall be the financial brokerage firms, credit institutions, insurance undertakings, collective investment undertakings and their management companies, pension funds and their management companies, other financial institutions licensed or supervised in the European Community or individual Member States, the entities indicated in subparagraphs 11 and 12 of paragraph 4 of Article 2 of this Law which are not subject to Chapters II and III of this Law, governments of the Member States and the entities authorised by them that manage public debt, also central banks and interstate organisations.
213. Attribution of a person to the category of eligible counterparties shall not be without prejudice to the right of this person to request application to him of all non-professional investor protections, including those specified in Articles 22, 24 and 25 of this Law. Such a request may be on a general form or on a trade-by-trade basis.
214. Other entities meeting the criteria set out by the Securities Commission may also be recognised as eligible counterparties. Where the prospective counterparties are located in different jurisdictions, a financial brokerage firm shall defer to the status of the entities as determined by the legal acts of a Member State in which a counterparty is established.
215. Prior to entering into a transaction with an eligible counterparty or mediating in the entering into such a transaction, a financial brokerage firm must obtain the express confirmation from the counterparty that it agrees to be treated as an eligible counterparty. This consent may be in the form of a general agreement or in respect of each individual transaction.
216. Third country entities may also be recognised as eligible counterparties, provided they perform similar functions and/or activities similar to those indicated in paragraph 2 of this Article. Other third country entities may also be recognised as eligible counterparties, provided they meet the criteria set out in paragraph 4 of this Article.
217. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
218. Powers of the Securities Commission in Specifying the Procedure for Providing Investment Services to Separate Categories of Clients In specifying provisions of this Section, the Securities Commission shall lay down the rules regulating the peculiarities of provision of investment services to professional clients and eligible counterparties. SECTION FOUR MARKET TRANSPARENCY REQUIREMENTS FOR FINANCIAL BROKERAGE FIRMS Article
219. Duty of Financial Brokerage Firms to Uphold Integrity of Markets, Report the Transactions Entered into and Maintain Records
220. Financial brokerage firms must act honestly, fairly, professionally and in a manner so that their activities would provide conditions for ensuring of the integrity of markets in financial instruments.
221. A financial brokerage firm must keep, for at least 10 years, all the data and documents relating to the transactions in financial instruments which the firm has entered into on behalf of clients or on own account so that it could forthwith submit them to the Securities Commission where necessary. Where transactions are entered into on behalf of clients, the records must additionally contain data of a client’s identity and the documents evidencing it as well as the data and information required by the Law on Prevention of Money Laundering.
222. Having entered into a transaction in the financial instruments admitted to trading on a regulated market, a financial brokerage firm must forthwith, no later than the end of the following working day, give to the Securities Commission a notice of the transaction entered into in accordance with the procedure laid down by the Securities Commission. This duty shall apply whether or not the transaction has been entered into on a regulated market. The Securities Commission shall ensure that information about the transactions entered into is forwarded also to the supervisory institution of the most relevant market in terms of liquidity for the financial instrument.
223. The notice indicated in paragraph 3 of this Article must include information about the financial instrument which is the subject of the transaction, quantity thereof, date and time of the entering into the transaction, the transaction price, also data about the financial brokerage firm giving the notice.
224. A notice about a transaction entered into may be given by a financial brokerage firm, a third party acting on its behalf, a trade-matching or reporting system approved by the Securities Commission, also by a regulated market or a multilateral trading facility wherein the transaction has been entered into. In cases where the transactions entered into are reported directly by a regulated market, a multilateral trading facility or a trade-matching or reporting system approved by the Securities Commission, the duty specified in paragraph 3 of this Article shall be deemed to have been discharged.
225. Where a branch of a financial brokerage firm licensed in another Member State, which is established in the Republic of Lithuania, gives a notice to the Securities Commission of a transaction entered into, the Securities Commission shall transmit such a notice to the supervisory institution of that financial brokerage firm, unless it declares that it does not want to receive such notices.
226. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
228. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
229. Supervision of Compliance with the Rules of Activities of a Multilateral Trading Facility and with Other Specified Duties
230. Financial brokerage firms and market operators operating a multilateral trading facility must approve the arrangements and procedures for the supervision of the compliance by members of the multilateral trading facility with the rules of activities thereof and ensure an efficient application of such arrangements and procedures. Financial brokerage firms and the market operators operating a multilateral trading facility must monitor the transactions undertaken under their systems, identify and prevent breaches of the rules of a system, disorderly trading conditions and market abuse.
231. Financial brokerage firms and market operators operating a multilateral trading facility must report to the Securities Commission the detected significant breaches of the rules of a system, disorderly trading conditions and cases of market abuse. Financial brokerage firms and market operators operating a multilateral trading facility must supply to the Securities Commission without delay the information relating to possible breaches, also closely co-operate in investigating the cases of market abuse in that system.
232. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
233. Duty of the Financial Brokerage Firms Engaged in Systematic Trade to Make Public Quotes
234. The financial brokerage firms engaged in systematic trade in the shares which are admitted to trading on a regulated market and for which there is a liquid market must publish quotes committing to enter into a transaction. Where the stock market is not liquid, the financial brokerage firms engaged in systematic trade in these shares must disclose quotes only on the request of a client.
235. The requirements set forth in this Article shall apply to the financial brokerage firms engaged in system trading when dealing for sizes up to standard market size. The requirements set forth in this Article shall not apply to the financial brokerage firms engaged in systematic trading and only dealing in sizes above standard market size.
236. The financial brokerage firms engaged in systematic trade shall have the right to independently decide to the sizes at which they quote. A quote shall consist of a bid and/or offer price or prices for a size or sizes which could be up to standard market size for the class of shares at which a commitment is assumed to enter into a transaction. The price or prices must reflect the prevailing market conditions for that share.
237. A share shall be attributed to a certain class of shares on the basis of the arithmetic average value of the orders executed in the market for this share. The standard market size for each class of shares shall be the arithmetic average value of the orders executed in the market for the shares attributed to that class of shares.
238. The market for each share shall include all orders executed in the entire European Union in respect of that share excluding the orders which are large in scale compared to normal market size for that share.
239. Being the supervisory institution of the most relevant market in terms of liquidity (as indicated in Article 31 of this Law) and taking into account the arithmetic average value of the orders executed in the market in respect of a share, the Securities Commission shall determine at least annually the class of shares to which each share belongs. This information shall be made public to all market participants on the website of the Securities Commission.
240. A financial brokerage firm engaged in systematic trade must make public specified quotes on a regular and continuous basis during normal trading hours. Quotes may be changed or updated at any time. Under exceptional market conditions, specified quotes may be withdrawn.
241. Quotes must be made public in a manner which is easily accessible to other market participants on a reasonable commercial basis.
242. A financial brokerage firm engaged in systematic trade must, while complying with the requirements set forth in Article 24 of this Law, execute the orders submitted by non-professional clients in relation to the shares in whose systematic trade the firm is engaged at the quoted price at the time of reception of a client’s order.
243. A financial brokerage firm engaged in systematic trade must execute the orders submitted by professional clients in relation to the shares in whose systematic trade the firm is engaged at the quoted price at the time of reception of a client’s order. However, those orders may be executed at a better price for the client in justified cases provided that this price falls within a range close to market conditions and provided that an order is of a size bigger than the size of the orders customarily undertaken by non-professional investors.
244. A financial brokerage firm engaged in systematic trade shall have the right to execute orders of professional clients at prices different than quoted ones without complying with the requirements set forth in paragraph 10 of this Article, in respect of orders where execution in several securities is part of one transaction or in respect of orders that are subject to conditions other than the current market price.
245. Where a financial brokerage firm engaged in systematic trade which quotes only one quote or whose highest quote is lower than the standard market size receives an order from a client of a size bigger than the firm’s quotation size, but lower than the standard market size, the firm may execute that part of the order which exceeds the quotation size only at the quoted price, except where the cases specified in paragraphs 10 and 11 of this Article permit to deviate from the quoted price. Where a financial brokerage firm engaged in systematic trade is quoting in different sizes, but receives an order from a client between such sizes and decides to execute this order, the order must be executed at one of the quoted prices out of two in compliance with the requirements set forth in Article 25 of this Law, with the exception of the cases specified in paragraphs 10 and 11 of this Article.
246. The Securities Commission shall supervise that the financial brokerage firms engaged in systematic trade regularly update bid and/or offer prices published in accordance with the procedure laid down in paragraph 1 of this Article, so that the specified prices reflect the prevailing market conditions, and that firms comply with the requirements set forth in paragraph 10 of this Article for the entering into transactions at a better price that specified by the firm. In exercising supervision, the Securities Commission shall have the right to issue mandatory instructions and other rights specified in this Law and other legal acts.
247. A financial brokerage firm engaged in systematic trade shall have the right to decide, on the basis of its commercial policy and taking into account objective criteria, the investors who will be given access to the firm’s quotes. To this end the firm must approve the rules governing the giving of access to the firm’s quotes.
248. A financial brokerage firm engaged in systematic trade may decide not to enter into or discontinue business relationships with investors on the basis of commercial considerations such as the investor credit status, the counterparty risk and the final settlement risk upon entering into a transaction.
249. In order to limit the risk related to the number of transactions from the same client, a financial brokerage firm engaged in systematic trade shall have the right to limit in a non-discriminatory way the number of transactions from the same client which are undertaken to enter at the published conditions. Moreover, the firm shall have the right, in a non-discriminatory way and in compliance with the requirements set forth in Article 25 of this Law, to limit the total number of transactions from different clients at the same time provided that such a limitation is allowable only where the number and volume of orders sought by clients considerably exceed the usual trading volume.
250. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
252. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
253. Duty of Financial Brokerage Firms to Make Public Post-Trade Information
254. A financial brokerage firm which, either on behalf of a client or on own account, has concluded a transaction in shares admitted to trading on a regulated market outside a regulated market or multilateral trading facility must make public the volume and price of the transaction and the time at which the transaction was concluded. This information must be made public without delay on a reasonable commercial basis, and as close to real time as possible so as to be easily accessible to other market participants.
255. The information indicated in paragraph 1 of this Article and the time limit within which it is published may not violate the requirements set forth in Article 59 of this Law. Provisions of Article 59 of this Law permitting to defer disclosure of information for certain categories of transactions shall apply mutatis mutandis to those transactions when undertaken outside a regulated market or a multilateral trading facility.
256. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
258. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
259. Requirements for Making Public of Pre-Trade Information Applicable to Multilateral Trading Facilities
260. A financial brokerage firm and the market operator operating a multilateral trading facility must make public the offers made through the multilateral trading facility in respect of the entering into transactions in the shares admitted to trading on the regulated market. A financial brokerage firm and the market operator operating a multilateral trading facility must, on reasonable commercial terms and on a continuous basis throughout the trading hours, indicate the total number of orders and related shares according to each price level specifying five best bid and offer price levels.
261. Taking into account the market model and type and size of orders, the Securities Commission shall have the right to specify exceptions from the duty provided for in paragraph 1 of this Article. Exceptions may in particular apply to the orders that are large sized compared with normal market size for a specific share or type of shares.
262. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
264. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article
265. Requirements for Making Public of Post-Trade Information Applicable to Multilateral Trading Facilities
266. A financial brokerage firm and the market operator operating a multilateral trading facility must make public information about the transactions entered into within the facility operated by them in the shares admitted to trading on a regulated market indicating the price and quantity of the shares transferred by each transaction as well as the time of the entering into the transaction. This information must be made public without delay on a reasonable commercial basis and as close to real-time as possible.
267. The duty specified in paragraph 1 of this Article shall not apply to the transactions entered into within a multilateral trading facility where information about these transactions is made public under the information publication system of a regulated market.
268. Taking into account the type and size of the transactions entered into, the Securities Commission may allow to defer the publication of the information indicated in paragraph 1 of this Article. In particular, it may be allowed to defer the publication of information in respect of transactions that are large in scale compared with the normal market size for a specific share or class of shares. The operator operating a multilateral trading facility must obtain the Securities Commission’s prior approval to arrangements for deferred publication of information about transactions, and information about such arrangements must be clearly disclosed to market participants and investors.
269. The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August
271. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. SECTION FIVE RIGHTS OF FINANCIAL BROKERAGE FIRMS Article
272. Provision of Investment Services in Another Member State Without Establishing a Branch by the Financial Brokerage Firms Established in the Republic of Lithuania
273. A financial brokerage firm wishing to start to provide investment services in another Member State for the first time or to change the range of the investment services provided in another Member State must give a notice to the Securities Commission about a Member State in which it intends to provide investment services or in which it intends to change range thereof and present a programme of operations to be performed stating the investment and ancillary services planned to be provided.
274. Upon the receipt of the information indicated in paragraph 1 of this Article, the Securities Commission shall, within one month, forward it to the supervisory institution of the host Member State. A financial brokerage firm shall have the right to start to provide investment services and ancillary services in another Member State without establishing a branch after the lapse of one month from the submission of all required documents and information to the Securities Commission.
275. In the event of a change in the data and information indicated in paragraph 1 of this Article, a financial brokerage firm must give a notice of the changes to take place to the Securities Commission not later than one month in advance before the planned entry into force of the changes. The Securities Commission shall forward this information to the supervisory institution of the host Member State.
276. A financial brokerage firm licensed in the Republic of Lithuania and the market operator operating a multilateral trading facility which intend to provide in other Member States the arrangements aimed at facilitating access to or remote use of the multilateral trading facility by the persons established in those Member States must communicate to the Securities Commission the Member State in which they intend to provide such arrangements. The Securities Commission shall communicate, within one month, this information to the supervisory institution of the host Member State. The Securities Commission shall, on the request of the supervisory institution of the host Member State and within a reasonable delay, communicate the identity of the members of this multilateral trading facility.
277. The requirements set forth in paragraph 4 of this Article shall apply mutatis mutandis to licensed credit institutions. Article
278. Right of the Financial Brokerage Firms Established in Another Member State to Provide Investment Services in the Republic of Lithuania Without Establishing a Branch
279. A financial brokerage firm established in another Member State shall have the right to provide investment and ancillary services in the Republic of Lithuania without establishing a branch provided that the right to provide specific investment or ancillary services is granted by a licence issued by the supervisory institution of the firm. Ancillary services may only be provided where at least one investment service is provided.
280. A financial brokerage firm established in another Member State shall have the right to start to provide investment services in the Republic of Lithuania without establishing a branch or to change the volume of the investment services provided in the Republic of Lithuania after the Securities Commission receives a notice of the supervisory institution of the firm indicating that the financial brokerage firm intends to provide investment services in the Republic of Lithuania or change volume thereof and a programme of operations to be performed setting out the investment and ancillary services planned to be provided. The Securities Commission shall make public this information not later than within 3 working days.
281. In the event of a change in the data and information indicated in paragraph 2 of this Article, a financial brokerage firm must give a notice of the changes to take place to the supervisory institution of the Member State of its registered office. The Securities Commission shall have the right to obtain the documents substantiating the change of such information.
282. A financial brokerage firm licensed in another Member State and the market operator operating a multilateral trading facility shall have the right to provide in the Republic of Lithuania the required arrangements facilitating access to or remote use of the multilateral trading facility by the legal persons established in the Republic of Lithuania.
283. Provisions of this Article shall apply mutatis mutandis to licensed credit institutions. Article
284. Provision of Investment Services by the Financial Brokerage Firms Established in the Republic of Lithuania in Another Member State Through the Establishment of a Branch
285. A financial brokerage firm wishing to establish a branch in another Member State must give to the Securities Commission a notice indicating: 1) the Member State within the territory of which it plans to establish the branch; 2) a programme of operations setting out, inter alia, the investment and ancillary services to be offered, the organisational structure of the branch, also information as to whether the branch intends to use the tied agents; 3) the address in the host Member State from which documents of the branch may be obtained; 4) the names of heads of the branch.
286. In cases where a financial brokerage firm established in the Republic of Lithuania appoints a tied agent established in another Member State, such tied agent shall be assimilated to the firm’s branch and shall be subject to the provisions regulating activities of the branch of the financial brokerage firm.
287. Unless the Securities Commission has reason to doubt the adequacy of the administrative structure or the financial situation of a financial brokerage firm, taking into account the nature of the activities envisaged, the Securities Commission shall, not later than within 3 months of receiving the information indicated in paragraph 1 of this Article, communicate it to the supervisory institution of the host Member State and inform the firm which has given the notice. In addition, the Securities Commission shall communicate to the supervisory institution of the host Member State information about the accredited investor compensation scheme of which the financial brokerage firm establishing a branch is a member.
288. In the event of a change in the information as indicated in paragraph 1 of this Article, a financial brokerage firm must give written notice thereof to the Securities Commission not later than one month in advance before the planned implementation of the change. The Securities Commission shall communicate this information to the supervisory institution of the host Member State.
289. Where the Securities Commission establishes that the administrative structure or the financial situation of a financial brokerage firm, taking into account the nature of the activities envisaged, is inadequate, the Securities Commission shall refuse to communicate the information indicated in paragraph 1 of this Article to the supervisory institution of the host Member State and inform the firm which has given the notice within a time limit provided for in paragraph 3 of this Article giving reasons for the refusal to communicate the information.
290. A branch of a financial brokerage firm may be established and commence business on receipt by the firm of a communication from the supervisory institution of the host Member State confirming the receipt of the communicated information, or failing such communication within 2 months from the date of transmission of the communication by the Securities Commission.
291. Provisions of paragraph 2 of this Article shall apply mutatis mutandis to licensed credit institutions. Article
292. Right of the Financial Brokerage Firms Established in Other Member States to Provide Investment Services in the Republic of Lithuania Through the Establishment of a Branch
293. A financial brokerage firm established in another Member State shall have the right to provide investment and ancillary services in the Republic of Lithuania through the establishment of a branch provided that the right to provide such services is granted by a licence of the financial brokerage firm. Ancillary services may only be provided where at least one investment service is provided.
294. A branch of a financial brokerage firm may be established and commence activities in the Republic of Lithuania after the supervisory institution of the firm communicates to the Securities Commission the information indicated in paragraph 1 of Article 39 of this Law. On receipt of this information, the Securities Commission shall prepare for the exercise of supervision, indicate to the financial brokerage firm which operation requirements as set forth on grounds of public interest it will have to comply with, and inform thereof the financial brokerage firm not later than within 2 months. A branch may be established on receipt such a communication of the Securities Commission by the financial brokerage firm, and where no communication is received, after two months from the date of transmission of the information provided for in this paragraph by the firm’s supervisory institution to the Securities Commission.
295. Provisions of this Article shall apply mutatis mutandis to licensed credit institutions. Article
296. Right of a Financial Brokerage Firm of Membership of a Regulated Market Operating in Another Member State
297. A financial brokerage firm established in another Member State and licensed to execute client orders or to deal on own account shall have the right of membership of a regulated market operating in the Republic of Lithuania, both directly, by setting up a branch in the Republic of Lithuania, and indirectly, without establishing a branch, but operating by rights of a remote member using possibilities of remote access to the regulated market, unless the trading procedures and systems of the regulated market require a direct physical presence for conclusion of transactions on the market.
298. Provisions of paragraph 1 of this Article shall apply mutatis mutandis to any financial brokerage firm established in the Republic of Lithuania and wishing to become a member of a regulated market operating in another Member State. Article
299. Right of Financial Brokerage Firms of Membership of a Central Counterparty, a Clearing and Settlement System and Right to Designate Settlement System
300. A financial brokerage firm established in another Member State shall, for the purposes of finalising or arranging the finalisation of transactions in financial instruments, have the right of membership of central counterparty, clearing and settlement systems operating in the Republic of Lithuania. These rights shall be exercised in compliance with the same non-discriminatory, transparent and objective criteria as apply to the financial brokerage firms established in the Republic of Lithuania. Membership of these systems may not be restricted to the clearing and settlement of transactions in financial instruments undertaken on a regulated market or a multilateral trading facility operating in the Republic of Lithuania.
301. A regulated market operating in the Republic of Lithuania must ensure for its members the right to designate the settlement system for the settlement of transactions in financial instruments undertaken on that regulated market, subject to: 1) such links and arrangements between the designated settlement system and other necessary systems as ensure the efficient and economic settlement of the transactions undertaken and 2) agreement by the Securities Commission that technical conditions of the designated system for settlement of transactions concluded on that regulated market are such as to ensure the smooth and orderly functioning of the market.
302. The agreement of the Securities Commission as provided for in paragraph 2 of this Article shall be without prejudice to the competence of the Bank of Lithuania and the central banks of other Member States or other supervisory institutions on settlement systems. The Securities Commission shall, prior to declaring such agreement, take into account the results of supervision of central banks and other important aspects relating to supervision of settlement systems exercised by them in order to avoid undue duplication of supervision.
303. The rights of financial brokerage firms as stipulated in this Article shall be without prejudice to the right of operators of central counterparty, clearing or securities settlement systems not to satisfy a financial brokerage firm’s request to make the services provided by them available where the refusal is based on legitimate commercial grounds. Article
304. Right of Financial Brokerage Firms and Market Operators Operating a Multilateral Trading Facility to Select a Central Counterparty and a Clearing and Settlement System
305. A financial brokerage firm established in the Republic of Lithuania and the market operator operating a multilateral trading system shall have the right to conclude agreements with a central counterparty or clearing house and a settlement system established in another Member State which would ensure the clearing and/or settlements of all or some transactions concluded by market participants under the system operated by them.
306. The Securities Commission may not oppose the use, by a financial brokerage firm or market operator operating a multilateral trading facility established in the Republic of Lithuania, of central counterparty, clearing houses and/or settlement systems operating in another Member State except where this is demonstrably necessary in order to ensure the orderly functioning of the multilateral trading facility and taking into account provisions of paragraph 2 of Article 42 of this Law.
307. In order to avoid undue duplication of supervision, the Securities Commission shall take into account the supervision of clearing and settlement systems exercised by central banks of the Member States and by other supervisory institutions. CHAPTER III TRADING IN A REGULATED MARKET SECTION ONE LICENSING OF A REGULATED MARKET Article
308. Licensing and Applicable Law
309. The right to perform the activities of a market operator in the Republic of Lithuania shall be granted only the public limited liability companies whose trading systems hold a licence as a regulated market issued by the Securities Commission.
310. The licence as a regulated market shall be issued only where the Securities Commission is absolutely satisfied that the market operator and the trading and other systems of the regulated market comply with the requirements laid down in this Section.
311. A public limited liability company being established or operating and wishing to perform the activities of the operator of a regulated market must provide to the Securities Commission: 1) an application indicating the purpose of establishment of the operator of the regulated market, name, registered office, data about founders (shareholders) and heads thereof; 2) the memorandum of association; 3) a programme of operations setting out, inter alia, the types of business envisaged and the organisational structure of the market operator; 4) articles of association; 5) rules of the regulated market.
312. On receipt of all required documents, the Securities Commission must, within 3 months, issue a licence or provide a justified refusal in writing. The Securities Commission may require that a company supplies additional information or clarifies the data already submitted. In this case, a time period for the consideration of the application shall be calculated from the day of submission of the last documents or data.
313. The licence as a regulated market shall be issued only where the Securities Commission, upon considering all required documents, states that at the time of issuance of the licence, the initial requirements for operation of the regulated market as set forth in this Section are complied with.
314. The operator of a regulated market must comply with the organisational and operation requirements set forth for a market operator (including initial requirements for the issuance of the licence as a regulated market) and ensure that the regulated market operated by it complies with the requirements set forth in this Section.
315. Without prejudice to provisions of Article 62 and 63 of this Law, trading on a regulated market operating in the Republic of Lithuania shall be conducted in compliance with requirements of legal acts of the Republic of Lithuania. Article
316. Grounds for Refusal to Issue the Licence as a Regulated Market The Securities Commission shall have the right to refuse to issue the licence as a regulated market where: 1) the articles of association, memorandum of association of the regulated market, the rules of the regulated market or other submitted documents contravene laws of the Republic of Lithuania or other legal acts; 2) incorrect information has been supplied in the submitted documents; 3) the submitted programme of operations of the regulated market is not sufficient for the regulated market to properly perform its functions; 4) holders of the candidate’s qualifying holding do not fulfil the conditions set out in Article 50 of this Law; 5) members of the supervisory board of the operator of the regulated market, members of the board or the head are of insufficiently good repute, do not possess the qualification or work experience at financial or equivalent institutions as specified by the Securities Commission. Article
317. Grounds for Revocation of the Licence as a Regulated Market The Securities Commission shall have the right to revoke the licence as a regulated market issued by it where the operator of the regulated market: 1) fails to commence the exercise of the rights granted by the licence within 12 months from the issuance of the licence, voluntarily renounces the licence or has not exercised the rights granted by the licence for the preceding six months; 2) has obtained the licence after submitting false information or by other irregular ways or means; 3) no longer meets the conditions under which the licence was issued; 4) seriously and systematically infringes provisions of this Law; 5) on other grounds specified by laws. Article
318. Duties of the Operator of a Regulated Market
319. The operator of a regulated market must: 1) organise trading in financial instruments, admission thereof to trading on a regulated market, quoting, secure and effective entering into transactions and settlements; 2) promote a fair trade in financial instruments and seek to prevent market manipulation and other unfair actions; 3) disseminate the information allowing to ensure compliance with the pre- and post-trade transparency requirements as applied to a regulated market; 4) ensure the protection of confidential information and exercise internal control.
320. The operator of a regulated market shall have the right to perform only the activities directly relating to the activities indicated in the licence as a regulated market and duties thereof as provided for in this Law.
321. The code of management of the companies whose securities are traded on a regulated market shall be drawn up and approved by the operator of the regulated market. Prior to approving such a code, the operator of the regulated market must obtain agreement of the Securities Commission.
322. The operator of a regulated market must, in accordance with the procedure laid down by the Securities Commission, inform of: 1) admission of financial instruments to or removal thereof from trading on the regulated market; 2) acceptance and exclusion of members of the regulated market.
323. The Securities Commission shall determine the minimum size of the equity capital of the operator of a regulated market and restrictions on the investment of funds. Article
324. Management of the Operator of a Regulated Market
325. The operator of a regulated market must have a collegial management body – the Board.
326. A representative of the Securities Commission shall have the right to participate in meetings of the management bodies of the operator of a regulated market with the right of deliberative vote and to obtain the material presented to participants of a meeting. Article
327. Heads of the Operator of a Regulated Market
328. Heads of the operator of a regulated market must be of sufficiently good repute and sufficient experienced as to ensure the sound and transparent management of the regulated market. The operator of a regulated market must inform the Securities Commission of the identity and su