L.S. 345.17 Regolamenti dwar Financial Markets Act (OTC Derivatives, Central Counterparties and Trade Repositories)

(1)The title of these regulations is the Financial Markets A c t ( O T C D e r i v a t i v e s , C e n t r a l C o u n t e r p a r t i e s a n d Tr a d e Repositories) Regulations. Citation and scope.

(2)The purpose of these regulations is to create a registration framework for OTC Derivatives, central counterparties and trade repositories and, in part, to implement the relevant provisions of the EMIR Regulation on OTC derivatives, central counterparties and trade repositorie s a s herei n d e f i n e d , a nd t h e y sh a l l b e interpreted and applied accordingly. 2.

(1)requires: In these regulations, unless the context otherwise "the Act" means the Financial Markets Act; Definitions. Amended by: L.N. 431 of

1. Cap.
2. "C6 energy derivative contracts" means options, futures, swaps, and any other derivative contracts mentioned in Section C.6 of Annex I of MiFID relating to coal or oil that are traded on an OTF and must be physically settled; "central counterparty" means a legal person that interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer; "EMIR Regulation" means Regulation (EU) No 648/2012 of the European Parliament and of the Council of the 4th July, 2012 on OTC derivatives, central counterparties and trade repositories as amended from time to time; "Financial Services Tribunal" means the tribunal established in terms of article 21 of the Malta Financial Services Authority Act; "MiFID" means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "OTC derivative" means a derivative contract the execution of which does not take place on a regulated market or on a third country market considered as equivalent to a regulated market in *see regulation 1

(3)of these Regulations, as originally promulgated, and Legal Notice 316 of

1. Cap.
2. 2 [ S.L.345.17 FINANCIAL MARKETS ACT (OTC DERIVATIVES, CENTRAL COUNTERPARTIES AND TRADE REPOSITORIES accordance with article 19

(6)of Directive 2004/39/EC on markets in financial instruments, as amended; "proposed acquirer" means any natural or legal person or persons acting in concert, who have taken a decision either to acquire, directly or indirectly, a qualifying holding in a central counterparty or to further increase, directly or indirectly, such a qualifying holding in a central counterparty as a result of which the proportion of the voting rights or of the capital held would reach or exceed 10%, 20%, 30% or 50% or so that the central counterparty would become its subsidiary; "trade repository" means a legal person that centrally collects and maintains the records of derivatives.

(2)Words and expressions used in the Act shall, in these regulations, have the same meaning as is assigned to them in the Act. Competent authority. Cap.

2. The Malta Financial Services Authority established by the Malta Financial Services Authority Act shall be the designated competent authority in Malta for the purposes of implementing the relevant provisions of the EMIR Regulation, and any reference in these regulations to the competent authority shall be read and construed accordingly. Applicability of the EMIR Regulation to the competent authority. 4.

(1)The competent authority shall exercise all the f u nc t io n s , o b li g a t i o ns a nd p ow e r s a n d s ha ll s a ti s f y a l l th e requirements imposed on competent authorities by the EMIR Regulation.

(2)Without prejudice to sub-regulation

(1), the competent a u t h o r i t y m a y, f o r t h e b e t t e r i m p l e m e n t a t i o n o f t h e E M I R Regulation, exercise any of the powers assigned to it under the Act in relation to persons acting as central counterparties or trade repositories and, or who are responsible for clearing and bilateral risk-management requirements for OTC derivatives and, or who are responsible for reporting requirements for derivative contracts. Registration of central counterparties. 5.

(1)No person shall operate a central counterparty in or from Malta, or shall provide, or hold itself out to be or provide the services of a central counterparty in Malta unless such person has been granted a registration for this purpose issued by the competent authority in terms of this regulation.

(2)An application for registration to operate a central counterparty in terms of sub-regulation

(1)shall be made to the competent authority in writing and shall be accompanied by such documents as the competent authority may specify.

(3)The competent authority shall not grant registration to operate a central counterparty in terms of sub-regulation

(1)unless it is satisfied that the applicant or applicants are fit and proper persons and are in a position to comply with any conditions which the competent authority may deem fit to impose. FINANCIAL MARKETS ACT (OTC DERIVATIVES, CENTRAL COUNTERPARTIES AND TRADE REPOSITORIES [ S.L.345.17 6. The competent authority shall not register, and it shall withdraw a registration issued under regulation 5, as the case may be, where: 3 Withdrawal of registration. (

1. a)the holder thereof is not fit and proper to act as a central counterparty; (
2. b)the holder thereof does not fulfil the requirements of registration, or has contravened any of the conditions of registration; (
3. c)the holder thereof, or a person acting on its behalf, has furnished the competent authority with information which is false, inaccurate or misleading; (
4. d)registration has been obtained through false statements or by other irregular means; or (
5. e)at the request of the holder thereof. 7. Nothing in these regulations shall be construed as enabling or empowering a central counterparty to perform a function or activity which requires an approval or authorisation in terms of the Central Bank of Malta Act. Authorization in terms of the Central Bank of Malta Act or any other law. Cap. 204. 8. For the better carrying out of the provisions of the EMIR Regulation and of these regulations, the competent authority may, from time to time, issue and publish Financial Market Rules which shall be binding on all persons acting as central counterparties or trade repositories and, or who are responsible for clearing and bilateral risk-management requirements for OTC derivatives and, or who are responsible for reporting requirements for derivative contracts. Such rules may lay down additional requirements and conditions in relation to these matters as the competent authority may consider appropriate including: Financial Market Rules. (
6. a)the operation of the EMIR Regulation or of these regulations; (
7. b)any matter relating to the functions, obligations and powers of the competent authority under the EMIR Regulation; and (
8. c)any other matter arising in connection with the EMIR Regulation or these regulations. 9. The provisions of the EMIR Regulation shall apply to persons acting as central counterparties or trade repositories and, or who are responsible for clearing and bilateral risk-management requirements for OTC derivatives and, or who are responsible for reporting requirements for derivative contracts in or from Malta and such persons shall exercise all the obligations and satisfy all the requirements imposed on such persons by the said EMIR Regulation. Applicability of the EMIR Regulation to certain persons. 10. For the purposes of article 31

(5)of the EMIR Regulation, the competent authority may, whether or not at the request of the propo sed acqui re r in a cen tral coun terparty, i ssu e a pub li c statement indicating the reasons as to why it has refused the Publication of reasons for refusal. 4 [ S.L.345.17 FINANCIAL MARKETS ACT (OTC DERIVATIVES, CENTRAL COUNTERPARTIES AND TRADE REPOSITORIES proposed acquisition of the central counter party requested by the proposed acquirer. Administrative penalties.

1. Where a person acting as a central counterparty or trade repository and, or who is responsible for clearing and bilateral riskmanagement requirements for OTC derivatives and, or who is responsible for reporting requirements for derivative contracts contravenes or fails to comply with any provisions of the EMIR Regulation, these regulations and any Financial Markets Rules issued thereunder, the competent authority may, by notice in writing and without recourse to a court hearing, impose on such person an administrative penalty not exceeding one hundred and fifty thousand euro (€150,000). Appeals.
2. A right of appeal to the Financial Services Tribunal shall lie from a decision of the competent authority to impose a penalty under regulation
3. EMIR Regulations to prevail in case of any inconsistency.
4. Upon the coming into force of Title III of the EMIR Regulation, these regulations shall be construed and applied in accordance therewith and, insofar as the provisions of these regulations are inconsistent with the provisions of the said EMIR Regulation, the provisions of the EMIR Regulation shall prevail and the provisions of these regulations shall not apply to the extent of the inconsistency. 14.

(1)Until 3 July 2020: Transitional Provisions. Added by: L.N. 431 of 2018. (a) the clearing obligation set out in Article 4 of the EMIR Regulation and the risk mitigation techniques set out in Article 11

(3)thereof shall not apply to C6 energy derivative contracts entered into by non-financial counterparties that meet the conditions in Article 10

(1)of the EMIR Regulation or by non-financial counterparties that shall be authorised for the first time as investment firms as from 3 January 2017; and (b) such C6 energy derivative contracts shall not be considered to be OTC derivative contracts for the purposes of the clearing threshold set out in Article 10 of the EMIR Regulation: Provided that C6 energy derivative contracts benefiting from the transitional regime set out in the first sub-paragraph shall be subject to all other requirements laid down in the EMIR Regulation.

(2)The exemption referred to in sub-regulation

(1)shall be granted by the competent authority. The competent authority shall notify ESMA of the C6 energy derivative contracts which have been granted an exemption in accordance with sub-regulation

(1).".