L.S. 345.04 Regolamenti dwar Swieq Regolati (Ħtiġiet ta' Awtorizzazzjoni)

(1)The title of these regulations is the Regulated Markets and Market Operators (Authorisation Requirements) Regulations.

(2)The scope of these regulations is to transpose Article 4

(1)paragraph

(37), Article 45

(1)to

(3), sub-paragraphs (

1. a)to (
2. d)of Article 45

(4), Article 45

(5)to

(8), Article 47, Article 53

(1)and

(2)and Article 54

(1)to

(3)of MiFID, as herein defined and shall be interpreted and applied accordingly. Title and objective. Substituted by: L.N. 385 of 2017. Amended by: L.N. 249 of 2024.

(3)The purpose of these regulations is partially to implement the relevant provisions of Articles 37, 39, 42 and 43 of the Directive and shall be interpreted and applied accordingly. 2.

(1)requires: In these regulations, unless the context otherwise "Act" means the Financial Markets Act; "applicant" means a person who has submitted an application to the competent authority to become authorized as a regulated market or market operator; "DORA Regulation" means Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/ 2014, (EU) No 909/2014 and (EU) 2016/1011, as may be amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "European regulated market" means a regulated market as defined in Article 4

(21)of MiFID authorised by its European regulatory authority within the meaning of Article 44 of MiFID; "market operator" means a person or persons who manages and, or operates the business of a regulated market and may be the regulated market itself; "MiFID" means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Regulation (EU) No 596/2014" means Regulation (EU) No 596/ 2014 of the European Parliament and of the Council of 16 April 2014 on market abuse as amended from time to time, and includes Interpretation. Amended by: L.N. 385 of 2017; L.N. 60 of 2024; L.N. 249 of

1. Cap.
2. 2 [ S.L.345.04 REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) any implementing measures that have been or may be issued thereunder; "Regulation (EU) No 600/2014" means Regulation (EU) No 600/ 2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012; "the Schedule" means the Schedule to these regulations. "senior management" means natural persons who exercise executive functions within an investment firm, a market operator, or a data reporting services provider as defined in point

(36a)of Article 2

(1)of Regulation (EU) No 600/2014, and who are responsible and accountable to the management body for the day-to-day management of the entity, including for the implementation of the policies concerning the distribution of services and products to clients by the firm and its personnel.

(2)Words and expressions which are also used in the Act shall have the same meaning as in the Act. Authorisation requirements. Substituted by: L.N. 385 of

2. The Schedule sets out the authorisation requirements which must be satisfied by an applicant if it is to qualify as a regulated market or a market operator and which must be satisfied by each regulated market or market operator on a continuing and ongoing basis if it is to remain a regulated market or a market operator. Satisfaction of authorisation requirements. Amended by: L.N. 385 of
3. 4.

(1)In considering whether an applicant, a regulated market or a market operator satisfies the authorisation requirements applying to it under these regulations, the competent authority may take into account any other circumstances that it may deem relevant in each particular case.

(2)An applicant, a regulated market or a market operator may satisfy authorisation requirements applying to it under these regulations by entering into an agreement to the satisfaction of the competent authority for any functions specified in the said agreement to be performed on its behalf by another person.

(3)An agreement as referred to in subregulation

(2), hereinafter referred to as the "delegation agreement", shall be made in writing, and entered into between an applicant, a regulated market or a market operator, as the case may be, and the person who is to perform any functions on behalf of such applicant, regulated market or market operator. Such delegation agreement shall be executed by duly authorised officials of the governing body of the respective entities.

(4)Where an applicant, a regulated market or a market operator enters into any delegation agreement, any such agreement shall not affect the responsibility imposed by the Act on such applicant, regulated market or market operator to satisf y au thor isati on requirements applying to it under these regulations.

(5)The liability of the regulated market or market operator for any breaches of the authorisation requirements or any other regulations or Financial Market Rules issued under the Act, shall REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) [ S.L.345.04 3 not be affected or reduced as a result of the regulated market or the market operator entering into any delegation agreement.

(6)Any person who, not being a regulated market or a market operator, is to perform any specified function in terms of any delegation agreement shall be confirmed, after due verification, by the applicant, the regulated market or the market operator as the case may be, as being a fit and proper person being able and willing to perform such functions. This confirmation shall be made by the governing body of the applicant, the regulated market or the market operator, effect which shall be submitted to the competent authority together with a duly authenticated true copy of the relevant delegation agreement.

(7)Notwithstanding anything in the foregoing, the regulated market or the market operator shall be responsible towards the competent authority for the supervision of the proper performance of any functions performed by any person throughout any such period that any delegation agreement shall remain in force. 5.

(1)Where a person falling within the scope of these regulations fails to comply with any provisions of such regulations or any rules issued thereunder further implementing such regulations, the competent authority may, by notice in writing and without recourse to a court hearing, impose on such person an administrative penalty and other administrative measures in accordance with the provisions of the Financial Markets Act (MiFID and MiFIR Administrative Penalties, Measures and Investigatory Powers) Regulations, 2017.

(2)A right of appeal to the Financial Services Tribunal shall lie from the decisions which the competent authority shall take under these regulations and the provisions of Part VI of the Act shall apply mutatis mutandis. Administrative Penalties, other administrative measures and Appeals. Added by: L.N. 385 of

1. L.N.
2. Cap.
3. 4 REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) [ S.L.345.04 SCHEDULE (Regulations 3) Amended by: L.N. 385 of 2017; L.N. 249 of 2024; L.N. 214 of
4. AUTHORISATION REQUIREMENTS Financial Resources 1.

(1)The regulated market must have financial resources sufficient for the proper performance of its functions.

(2)Without prejudice to the generality of the foregoing, each regulated market shall satisfy at all times those minimum financial resources requirements and minimum financial reporting requirements that may be required by the competent authority from time to time. Requirements for the management body of a market operator or regulated market 2.

(1)The market operator or regulated market must be a fit and proper person to perform its functions and be of good standing.

(2)The persons who effectively direct the business and the operations of a regulated market must satisfy the fit and proper criterion, by being of sufficient good repute and possess sufficient knowledge, skills and experience to perform their duties so as to ensure the sound and prudent management and operation of the regulated market. The overall composition of the management body shall reflect an adequately broad range of experience: Provided that in the process of authorisation of a regulated market, the person or persons who effectively direct the business and operations of an already authorised regulated market in accordance with the provisions of MiFID shall be deemed to comply with the requirements prescribed in sub-paragraph

(2)above.

(3)Members of the management body shall, in particular, fulfil the following requirements: (

1. a)All members of the management body shall commit sufficient time to perform their functions in the market operator. The number of directorships a member of the management body can hold, in any legal entity, at the same time shall take into account individual circumstances and the nature, scale and complexity of the market operator’s activities. (
2. b)Unless representing the Government of Malta, members of the management body of a market operators that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities shall not at the same time hold positions exceeding more than one of the following combinations: (
3. i)one executive directorship with two non-executive directorships; (
4. ii)four non-executive directorships: Provided that executive or non-executive directorships held within the same group or undertakings where the market operator owns a qualifying holding shall be considered to be one single REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) [ S.L.345.04 5 directorship; Provided further that directorships in organisations which do not pursue predominantly commercial objectives shall be exempt from the limitation on the number of directorships a member of a management body can hold. (
5. c)The competent authority may authorise members of the management body to hold one additional non-executive directorship. The competent authority shall regularly inform ESMA of such authorisations. (
6. d)The management body shall possess adequate collective knowledge, skills and experience to be able to understand the market operator’s activities, including the main risks. (
7. e)Each member of the management body shall act with honesty, integrity and independence of mind to effectively assess and challenge the decisions of the senior management where necessary and to effectively oversee and monitor decision-making.

(4)A market operator shall devote adequate human and financial resources to the induction and training of members of the management body.

(5)A market operator which is significant in terms of its size, internal organisation and the nature, scope and complexity of its activities shall establish a nomination committee composed of members of the management body who do not perform any executive function in the market operator concerned.

(6)The nomination committee shall carry out the following functions: (

1. a)identify and recommend, for the approval of the management body or for approval of the general meeting, candidates to fill management body vacancies. In doing so, the nomination committee shall evaluate the balance of knowledge, skills, diversity and experience of the management body. Further, the committee shall prepare a description of the roles and capabilities for a particular appointment, and assess the time commitment expected. Furthermore, the nomination committee shall decide on a target for the representation of the under-represented gender in the management body and prepare a policy on how to increase the number of the underrepresented gender in the management body in order to meet that target; (
2. b)periodically, and at least annually, assess the structure, size, composition and performance of the management body, and make recommendations to the management body with regard to any changes; (
3. c)periodically, and at least annually, assess the knowledge, skills and experience of individual members of the management body and of the management body collectively, and report to the management body accordingly; (
4. d)periodically review the policy of the management body for selection and appointment of senior management and make recommendations to the management body. [ S.L.345.04 6 REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS)

(7)In performing its duties, the nomination committee shall, to the extent possible and on an ongoing basis, take account of the need to ensure that the management body’s decision making is not dominated by any one individual or small group of individuals in a manner that is detrimental to the interests of the market operator as a whole.

(8)In performing its duties, the nomination committee shall be able to use any forms of resources it deems appropriate, including external advice.

(9)A market operator and its respective nomination committee shall engage a broad set of qualities and competences when recruiting members to the management body. A policy promoting diversity on the management body shall be put in place for this purpose.

(10)The management body of a market operator shall define and oversee the implementation of the governance arrangements that ensure effective and prudent management of an organisation, including the segregation of duties in the organisation and the prevention of conflicts of interest, and in a manner that promotes the integrity of the market.

(11)The management body shall monitor and periodically assess the effectiveness of the market operator’s governance arrangements and take appropriate steps to address any deficiencies.

(12)Members of the management body shall have adequate access to information and documents which are needed to oversee and monitor management decisionmaking.

(13)The competent authority shall refuse authorisation if it is not satisfied that the members of the management body of the market operator are of sufficiently good repute, possess sufficient knowledge, skills and experience and commit sufficient time to perform their functions, or if there are objective and demonstrable grounds for believing that the management body of the market operator may pose a threat to its effective, sound and prudent management and to the adequate consideration of the integrity of the market.

(14)The market operator shall notify the competent authority of the identity of all members of its management body and of any changes to its membership, along with all the information needed to assess whether the market operator complies with sub-paragraphs

(1)to

(8)above. Organisational requirements 3.

(1)The regulated market shall have arrangements to identify clearly and manage those potential adverse consequences, for the operation of the regulated market or for its participants, of any conflict of interest between the interest of the regulated market, its owners or its operator and the sound functioning of the regulated market, and in particular where such conflicts of interest might prove prejudicial to the accomplishment of any functions delegated to the regulated market by the competent authority.

(2)The regulated market must ensure that: (

1. a)it has available on an ongoing basis, sufficient financial resources to facilitate its orderly functioning, having regard to the nature and extent of the transactions concluded on the market and the range and degree of the risks to which it is exposed; (
2. b)it is adequately equipped to manage the risks to which it is exposed , REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) [ S.L.345.04 7 including to manage ICT risk in accordance with Chapter II of the DORA Regulation; (
3. c)it has appropriate arrangements and systems to identify all significant risks to its operations and it has effective measures to mitigate those risks; (
4. d)Repealed by Legal Notice 249 of 2024; (
5. e)it has effective arrangements to facilitate the efficient and timely finalisation of the transactions executed under its systems; (
6. f)it has arrangements in place to ensure that it meets data quality standards pursuant to Article 22b of MiFIR; (
7. g)it has at least three

(3)materially active members or users, each having the opportunity to interact with all the others in respect of price formation.

(3)The regulated market shall have transparent and non-discretionary bye-laws and procedures that provide for fair and orderly trading and establish objective criteria for the execution of orders.

(4)A market operator shall not be allowed to execute client orders against proprietary capital, or to engage in matched principal trading on any of the regulated markets it operates. Access to a regulated market 4.

(1)The regulated market shall establish and maintain transparent and nondiscriminatory bye-laws, based on objective criteria, governing access to or membership of the regulated market.

(2)Those bye-laws shall specify any obligations for the members or participants arising from: (

1. a)the constitution and administration of the regulated market; (
2. b)requirements relating to transactions on the market; (
3. c)professional standards imposed on the staff of the investment firms or credit institutions that are operating on the market; (
4. d)the conditions established, for members or participants other than investment services licence holders; (
5. e)the requirements and procedures for the clearing and settlement of transactions concluded on the regulated market. Monitoring of compliance with the bye-laws of the regulated market and with other legal obligations 5.

(1)Regulated markets shall: (

1. a)establish and maintain effective arrangements and procedures including the necessary resource for the regular monitoring of the compliance by their members or participants with their bye-laws; and (
2. b)monitor orders sent including cancellations and the transactions undertaken by their members or participants under their systems in order to identify infringements of those rules, disorderly trading conditions or conduct that may indicate behaviour prohibited under Regulation (EU) No 596/2014 or system disruptions in relation to a financial instrument.

(2)A market operator of a regulated market shall: 8 [ S.L.345.04 REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) (

1. a)immediately inform the competent authority of significant infringements of its rules or disorderly trading conditions or conduct that may indicate behaviour that is prohibited under Regulation (EU) No. 596/2014 or system disruptions in relation to a financial instrument: Provided that the competent authority shall communicate this information to ESMA and to the competent authorities of the other Member States or EEA States; Provided further that in relation to conduct that may indicate behaviour that is prohibited under Regulation (EU) No. 596/2014, the competent authority shall be convinced that such behaviour is being or has been carried out before it notifies the competent authorities of the other Member States or EEA States and ESMA; (
2. b)supply the relevant information without undue delay to the authority competent for the investigation and prosecution of market abuse on the regulated market and to provide full assistance to the latter in investigating and prosecuting market abuse occurring on or through the systems of the regulated market. Promotion and maintenance of standards 6.

(1)The regulated market must be able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of activities by persons in the course of using the facilities provided by the regulated market.

(2)The regulated market must be able and willing to cooperate, by the sharing of information or otherwise, with the competent authority, and with any other authority, body or person having responsibility for the supervision or regulation of any regulated activity or other financial service, or with an overseas regulator.

(3)For the purposes of the foregoing provision, the regulated market must have appropriate arrangements with its members enabling it to obtain confidential information from its members and to disclose such information to the competent authority and other appropriate bodies and in particular, to assist and collaborate with the competent authority without delay in response to a specific written request received from the competent authority in the performance of its functions according to law. Complaints 7.

(1)The regulated market must have effective arrangements for the i nv e s t ig a t io n a nd r e s ol ut i on o f c om p la in t s a ri s i ng in c on n e c t ion w it h t he performance of, or failure to perform, any of its functions: Provided that the foregoing does not extend to complaints about the content of bye-laws made by the regulated market.

(2)The arrangements must include arrangements for a complaint to be fairly and impartially investigated by a person independent of the regulated market, and for him to report on the result of his investigation to the regulated market and to the complainant.

(3)The arrangements must confer on the person mentioned in paragraph

(2)the power to recommend, if he thinks it appropriate, that the regulated market: (

1. a)makes a compensatory payment to the complainant; (
2. b)remedies the matter complained of, or takes both of those steps. REGULATED MARKETS AND MARKET OPERATORS (AUTHORISATION REQUIREMENTS) [ S.L.345.04 9

(4)Paragraph

(3)(b) is not to be construed as preventing the regulated market from making arrangements for the initial investigation of a complaint to be conducted by the regulated market. Default bye-laws in respect of market contracts 8.

(1)The regulated market must have default bye-laws which, in the event of a member of the regulated market being or appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken in respect of unsettled market contracts to which he is a party.

(2)The bye-laws may authorise the taking of the same or similar action in relation to a member who appears to be likely to become unable to meet his obligations in respect of one or more market contracts.

(3)The regulated market must have adequate arrangements for ensuring that parties to the contract are notified as soon as reasonably practicable of the default, the identity of the other parties to the contract and of any decision taken under the bye-laws in relation to contracts to which they are a party.