L.S. 370.29 Regolamenti dwar Over-Reliance on Credit Rating

(1)The title of these regulations is the Over-Reliance on Credit Rating Regulations. Citation and scope.

(2)The purpose of these regulations is to implement Articles 1, 2

(2)and 3

(2)of Directive 2013/14/EU of the European Parliament and of the Council of 21 May 2013 amending Directive 2003/41/ EC on the activities and supervision of institutions for occupational retirement provision, Directive 2009/65/EC on the coordination of laws, regulatio ns and adm inistrative p rovi sio ns relati ng to undertakings for collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Funds Managers in respect of over-reliance on credit ratings. 2. In these regulations, unless the context otherwise requires - Interpretation. ''Alternative Investment Fund'' or ''AIF'' means a collective investment scheme, including subfunds thereof, which raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which does not qualify as a UCITS Scheme in terms of the UCITS Directive; "Alternative Investment Fund Manager" or "AIFM" means a legal person whose regular business is managing one or more AIFs; "competent authority" means the Malta Financial Services Authority established by the Malta Financial Services Authority Act; "credit rating" shall have the same meaning as that assigned to it in paragraph (a) of Article 3

(1)of the EU Regulation; "credit rating agencies" shall have the same meaning as that assigned to it in paragraph (b) of Article 3

(1)of the EU Regulation; "EU Regulation" means Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies; "Maltese management company" means a management company licensed by the competent authority with its head office and registered office situated in Malta and the regular business of which is the management of UCITS; "Maltese UCITS" means - *see regulation 1

(3)of these Regulations, as originally promulgated. Cap. 330. 2 [ S.L.370.29 Cap. 370. S.L. 370.16 Cap. 370. Cap. 514. OVER-RELIANCE ON CREDIT RATING (

1. a)an investment company, a partnership en commandite or a limited partnership with its registered office and head office situated in Malta and licensed in terms of the Investment Services Act; (
2. b)where the UCITS is constituted as a common fund, a UCITS domiciled in Malta in terms of the Investment Services Act (Contractual Funds) Regulations, and licensed in terms of the Investment Services Act; (
3. c)where the UCITS is established as a unit trust, a unit trust whose proper law is the law of Malta; "occupational retirement scheme" means an occupational scheme as defined in article 2 of the Retirement Pensions Act and licensed by the competent authority in terms of the said Act; "sole and mechanistic reliance on credit ratings" occurs when an action or omission is the consequence of any type of rule based on credit ratings without any discretion; S.L. 370.18 Over-reliance on credit ratings. "UCITS " means undertakings for collective investment in transferable securities in terms of regulation 3

(2)and

(3)of the Investment Services Act (Marketing of UCITS) Regulations. For the purposes of these regulations, a UCITS shall also include subfunds thereof. 3. Taking into account the nature, scale and complexity of the activities of UCITS, AIFs and occupational retirement schemes, the competent authority shall: (

1. a)monitor the adequacy of the credit assessment processes of the Maltese management company or the Maltese UCITS, AIFMs and occupational retirement schemes; (
2. b)assess the use of references to credit ratings issued by credit rating agencies in the investment policies of UCITS, AIFs and occupational retirement schemes; and (
3. c)where appropriate, encourage mitigation of the impact of such references to credit ratings, with a view to reducing sole and mechanistic reliance on credit ratings.